Prime Minister Narendra Modi’s recent move of demonitisation of higher denomination currency under the fight against black money has certainly been well received by the citizens, though there is shortages of cash till the new notes come into existence. This bold and immediate move has given rise to a sudden spike in the online/ cashless transaction. The decision can play a game-changer in making the unorganised and traditional travel and hospitality sector into a modern and organised one.
Applauding the move, Tarun Gulati, Co-founders, DJUBO said, “The move from PM Modi is a brave and bold step into the right direction. It catapults the Indian economy to the next level benefitting larger sections. Online payments are not only convenient but a significant boost in organising the large segments of the unorganised Travel sector. Djubo makes it all the more easier especially for the small hotels which were not having any card swiping machines for accepting plastic money. The Quick pay tool allows even the smallest of hotels and BnBs to conveniently collect payments from even the walk-in guests without the hassle of dealing with cash. With this move of the central government we are already witnessing rapid early growth in the usage of these direct booking platforms.”
On the contrary, some of the online travel agents feel that due to less cash flow there will be a slowdown in the leisure travel segment, Rohit Khetrapal, Co-Founder, FindMystay said, “As the country has gone cashless for the next two days with PM Modi’s announcement to remove 500 and 1000 rupee notes, it will shift the offline bookings in travel domain to online bookings but leisure travel will be slow over few days because of cash not available in the market that people need for Food Transport etc. For example Goa doesn’t have Ola or Uber and travelling is a challenge in a sense of cash. This is a revolutionary step to curb corruption.”
Aurvind Lama, Co-Founder and CEO, Travelyaari said, “The move came as big surprise for everyone. Aimed to curb black money from the economy, it certainly deserves appreciation and support. We are completely in support with government policy. People who are travelling or on vacation will get affected by this sudden move. Our agents are in touch with the travellers to ensure they do not face any problems.”
In the tourism segment, forex plays a very key part. Experts feel that the demonitisation will hit the travel industry and have a major impact on international travels. Also Donald Trump’s victory in the US Presidential Elections has made the USD volatile. Speaking about the forex impact, Sudarshan Motwani, CEO and Founder, BookMyForex said, “Victory of Trump on similar grounds as brexit that is anti-immigration will create more trade protectionist regime that is expected to discourage immigration to US. US$ is already down against major currencies but for India, this could mean flight of capital from India from debt market and hence a dearer USD. We expect USD to go past 67 to 67.20 – 67.30 range in near term.”
He further added, “INR 500 / 1000 demonetisation will have major impact on travel industry – almost similar to real estate or the wedding market. Forex travel spends can be significant and use of cash in travel related business is rampant. Although RBI limits cash payment for purchase of forex to Rs. 50000 only, but this limit is per person. For instance, four members in a family can buy forex against cash for total Rs. 2 lacs. Apart from that there is no credible check on if these four people can be stopped from going to four different money changers and use Rs. 2 lacs cash for forex four times over. With demonetisation, this should change dramatically and while it will be a loss to local money changers who deal in cash for large numbers of transactions, it is major gain for online forex marketplace companies like BookMyForex that have introduced online forex and have been promoting plastic money (forex travel cards) against online or electronic payments. Rough estimate of forex against cash is at least half official outbound retail forex market of US$15 billion and hence impact from demonetisation would be extremely significant. The demonetisation will also impact private overseas remittance (money transfer) market and we expect Banks to gain from this move.”
Even the hotel industry has joined hand in curbing the huge black money issue in the nation. The discontinuation of the higher denomination will surely hit the smaller hotels throughout the nation, but these smaller players are ready to cooperate.
Restaurateur Dinesh Arora, Owner, Tourist Janpath, CP said, “It is a very big step for the economy but has taken everyone off guard. The move is likely to cause a huge amount of uncertainty and will disrupt transactions, especially for smaller hotels, restaurants like us. Today it’s a little bitter but this is for our country bright future country.”
