How India’s Tourism Can Cope Up

The COVID-19 outbreak has resulted in widespread disruption across the world. 2020 will be remembered as a watershed year. This is when the world as we know it changed. Previous watersheds were probably 1945 (end of World war II and use of Atomic Bomb) or 1800 (invention of the steam engine) or 1334 when something uncannily similar happened when the Black Death or Plague devastated the world (it originated in you guessed it, the Chinese province of Hubei).
As with every watershed, there has been utter devastation but equally, because of the human race’s ability to adapt and adopt, we have come up with new technologies and new ways of life and emerged stronger. Of course, the price that we as a race has had to pay for this disruption has become progressively higher both in human and economic costs.

Each watershed in human history has seen the failure of hitherto strong sectors and emergence of new sectors of industry. 1945 saw the demise of the large streamliners and emergence of aviation as the future just to give a small example.

So are we going to see the demise of the travel and tourism industry as we know it and it being replaced by something else? How are we in India going to cope up with such a disruption? Do we see a realignment of the aviation industry? Is there going to be more inward looking travel with domestic short haul replacing international and long haul? Are group tours a thing of the past? All these questions can only be answered once the full quantum of the pandemic comes to fore. We are only at the beginning of the curve and it looks like it is going to take at least 2-3 months more to know how far it can go.

Meanwhile, the tourism industry has been one of the first and hardest hit during this crisis with the travel bans and subsequent lock-downs in most parts of the world. It would indeed be the tourism industry that would be the last to recover as well because travel and leisure travel would be the last on anybody’s horizon even after the crisis is over.

As the travel business is very labour intensive this disruption is causing immense hardship and hitting the most vulnerable sections of the society really hard. Government needs to come up with a clear roadmap for helping out the industry and this should be done on a short term (0-6 months) level from April 14th and medium term (6-18 months). The industry also needs to ramp up its act and take this as an opportunity to move away from traditional routes and circuits. The trend would be for more of FIT travel to off beat destinations with experiential and responsible travel taking more precedence. The first revival would probably be seen in the business and MICE segment alongwith domestic and pilgrimage tourism. This should be leveraged by the industry especially the transport and accommodation sector to keep the momentum. The downtime should also be used to upgrade and upskill so that we are ready for business when it comes. This holds true for all sectors of the industry.

While the industry bodies have given their wish list to the various decision makers, I have tried to compile a few points that could be done in the short term and medium term. Whatever package is coming, it should be announced immediately within the next 5-10 days so that it is started to implement by 1st of May. This of course does not include big ticket items like support for the airline and transport sectors that could come up as these sectors are large enough to demand their rightful share.

Short Term Measures (immediate level 0-6 months)

Government Level (apart from incentives as requested by the trade and presented already)

• Utilise funds from the Ministry of Tourism’s budget for giving soft or interest free loans to small and medium tour operators and travel agents over second quarter to tide over cash flow issues. A financial institution can be roped in for this and the funds transferred in terms of tourism bonds or such. Only stipulation being that minimum paper work be involved.

• Release all amounts pending for infrastructure projects and declare a moratorium on new projects for the next two years so that presently sanctioned projects are completed. The amount saved may be utilised for the cash flow scheme.

• Hotel sector would require new standards to be developed in terms of health safety and checks that are going to be de rigour after the crisis. Start work to set these protocols in place so that India can be first off the block.

• MICE is going to be the first sector that would see a revival the world over. Use a part of the infrastructure budget for identifying pending MICE projects and looking at capital infusion so that these projects are completed ahead of time as and when construction activity start.

• Interest subsidies/ soft loans to hotels and accommodation units wishing to undertake renovations.

• Direct credit transfer/ fees reimbursement of specific amounts to employees in tourism sector who would like to take up career advancement courses in languages, skill development, etc. from approved institutions. This can be continued like the Skills Future program of Singapore Govt.

• Take this time of slowdown to prepare a list of new destinations and projects that already have ready infrastructure and promote them in the domestic sector.

• Ministry of Culture to identify top 10 iconic destinations and top 10 second tier destinations and use the downtime to revamp facilities and introduce e-services in these destinations. This can also be used to provide employment to the locals when the lockdown is lifted.

• International campaign exclusively on social media reinforcing Incredible India brand (already boards like Visit Britain have started the #Dreamers campaign).

• Get the India Tourism overseas offices to increase their outreach to local tour operators and travel agents and promise them full support once travel starts and also organise webinars/ virtual roadshows on India destinations for travel agents.

• Provide Incentives in terms of strategy development and budgetary support to domestic tour operators and State Governments wishing to formulate plans to attract domestic tourism.

Medium Term (6-18 months) plans should be by both trade and Government

• Consider an across the board tax holiday/ tax deferment for 6 months.

• Extend moratorium on loan repayments for another 3 months with riders.

• Work with financial institutions to develop easy financing options for tourism sector specifically for capex requirements. An overall package to be announced by the Finance Ministry Task Force would be having such provisions but would be more manufacturing industry centric, we need terms and conditions favourable to service industry.

• Continue interest subsidies to hotels for introducing specific facilities like security systems, special quarantine rooms, health checks, etc.

• Encourage and incentive domestic travel by airlines for people using up their credit shells.

• LTC to be included for claiming Tax deductions.

• States to be asked to come up with specific promotional plans and packages for domestic travel. Competitive federalism to be encouraged by providing funding to State Governments especially those with less budgetary support for tourism for roadshows in major cities.

• Get India tourism domestic offices to organise roadshows from other states with suppliers being hosted.

• Improve the terms and conditions for marketing support to Foreign Tour Operators.

• Introduce subvention program for MICE events (any conference over 200 delegates automatically get one dinner sponsorship and any conference over 500 delegates get a fixed amount per delegate). This will be a major selling point for bidding for conferences for 2022 onwards which will start in later half of 2020.

• Encourage states to have subvention program for domestic conferences.

• Identify tier 2 destinations for development and marketing and tour operators to provide itineraries for these destinations as well to FTOs.

• Tour operators to consider up-skilling their employees and giving incentives (if possible, financial otherwise non financial) to employees learning new skills.

The above suggestions are for all the various components of the sector to come together and come out of this crisis stronger and resilient. However, whatever steps are to be taken, they should be done post haste as all competing destinations are also taking similar if not better measures. Every opportunity is a crisis and although a cliché the adage ‘coming out of it stronger’ is more true now than ever.