Globally, 2020, the beginning of the new decade was looked upon as the milestone year and was set to begin with a bang. The travel, tourism, and hospitality sector has witnessed tremendous growth in the last 8-10 years and India market has been looked upon as the most promising market in terms of both inbound and outbound. Novel destinations, airlines, hotels, DMCs, cruise liners, etc ventured into the India market with aggressive promotional strategies in last one decade, only to reap the benefit in present and beyond.
With all set-in place, late 2019, the globe, more specifically Asia started witnessing a new viral outbreak which spread rapidly and by early 2020 was declared a pandemic. Countries across started closing borders, restrictions on international flights, hold on visa applications.
According to UNWTO, International tourism numbers went down by 65 per cent in the first eight months of the year which translated into a loss of 700 million international arrivals and about US$ 730 billion in export revenues from international tourism. This is more than eight times the loss in international tourism receipts recorded in 2009 amid the global economic and financial crisis.
“This unprecedented decline is having dramatic social and economic consequences, and puts millions of jobs and businesses at risk,” warned UNWTO Secretary-General Zurab Pololikashvili. “This underlines the urgent need to safely restart tourism, in a timely and coordinated manner.”
By regions, Asia and the Pacific, the first region to suffer the impact of the pandemic, saw a 79 per cent decrease in arrivals in January-August 2020. Africa and the Middle East both recorded a 69 per cent drop this eight-month period, while Europe saw a 68 per cent decline and the Americas 65 per cent.
Starring at the crumbling tourism segment, governments and private stakeholders have shifted their focus towards domestic market in most of the countries. International travel, barring a few short-haul, will take long to recover.
But there comes silver lining amidst dark clouds as few vaccine trials have been successful to a great extent. With a vaccine in place, the global economy including the tourism sector will recover much rapidly than forecasted by experts.
The year that was
The year deterred growth for almost all sectors of the industry with aviation being the first and most impacted as international and domestic operations came to a sudden halt. Despite these challenges, airlines tried their best to stay afloat and adopted a whole new strategy. While some of them filed for bankruptcy, few with deep pocket and right strategy, tried to generated business through cargo and rescue flights.
Willy Boulter, Chief Commercial Officer, IndiGo, stated, “The year 2020 has indeed been a very challenging one for not just the aviation and travel industry but the global economy, and it is the economy which drives demand for our business. The difficulties of 2020 allowed us to explore uncharted territories and emerge stronger with more result driven strategies in place – for instance our ‘CarGo in cabin’ operations contributed to generating revenue, in an otherwise slow phase, helping us to come out stronger from this situation and optimise our cash flow. During the initial lockdown, we operated over 30 relief flights, transporting medical equipment and other requisite resources across the country at our own cost. Since then we have operated over 3000 CarGo flights, which have opened up a strong stream of revenue. By earmarking 10 aircraft for CarGo charter flights exclusively, and reworking our strategy, we were able to turn CarGo into a much bigger player internally. With this example, we can say that the aviation industry must rethink its strategies to survive and thrive when faced with future “black swan” type events – like Covid-19.”
Similarly, the hospitality sector also suffered a major blow, reinvented and restructured itself quickly to adapt to the new normal. Most of the top hospitality players created quarantine facilities, entered the food delivery business, converted rooms to workstations for corporates, etc.
Speaking about the year 2020, Vijay Dewan, Managing Director, Apeejay Surrendra Park Hotels & Deputy Chairman of CII – Eastern Region, stated, “This year has been a huge learning curve. Given that the travel, tourism and hospitality sector particularly was the most affected by the challenges of the pandemic, it also picked up and adapted to the odds. The industry relooked at its cost structures, created different and new business models from scratch, used the agility and nimbleness which helped to work almost as startups this year. Considering the evolving nature of business environment owing to the current situation, the industry has adopted and embraced technological innovations to keep things afloat. While COVID-19 had just hit the country, we quickly created a revenue stream for take-away and food delivery, and further upskilled our employees during the lockdown with online and e-learning modules.”
The travel and hospitality industry have witnessed a tremendous impact with well over five crore job losses in India alone due to the pandemic.
“The COVID 19 viral outbreak has created a crisis brutally affecting almost every industry barring a few. The travel and tourism industry has been one of the worst-hit sectors due to the global pandemic with an estimated 70 per cent job loss of the total workforce. With sealed international borders, suspended flights, compounded further by countrywide lockdown with intercity and interstate travel forbidden for months – travel and tourism had come to a complete standstill & we are staring at a loss of Rs. 150 lakh crores and about five crore job losses across the entire country,” Jyoti Mayal, President, Travel Agents Association of India, shared.
Recovery path
Initially, the industry was clueless about the way of recovery and everyone started singing the songs of survival and revival without any strategy. There was a total chaos and confusion. Gradually, some clarity poured in and stakeholder started restructuring their business model. In India, domestic tourism resumed in a phased-wise manner. The Ministry of Civil Aviation has allowed airlines to resume operation from May 25 with restrictions on capacity for airlines and now airlines are allowed to operate at 80 per cent of pre-covid capacity. There has been a steady increase in demand for leisure post unlock.
Speaking about the recovery graph, Christoph Schnellmann, Chief Executive Officer, Delhi Noida International Airport, explained, “We foresee a stable recovery for the sector backed by various factors including strong domestic demand for travel, coupled with the fact that flying is the safest mode of travel even in a Covid world. The air traffic has already recovered to 42 per cent of the pre-covid levels and we expect the traffic to strengthen going forward from here. Also, the expected release of COVID-19 vaccination and the replacement of localized quarantine procedures by a robust end-to-end testing protocol as proposed by ICAO, ACI and IATA, will bring about a strong revival in travel demand.”
Experts feel that once the vaccine is in place still it may a longer period to recover. Pronab Sarkar, President, Indian Association of Tour Operators, stated, “Travel and tourism was the first industry to be brought to a halt to contain the spread of the coronavirus, and will possibly take longer to recover given that holiday plans have been put on hold, while the health situation remains a priority, coupled with economic and business uncertainties. We have to project a Covid free environment with proper sanitisation of our vehicles, hotels, monuments and airlines etc to project that we are safe to travel. A positive and innovative approach, creative marketing and optimistic thinking will help the industry to revive at faster pace.”
PP Khanna, President, Association of Domestic Tour Operators, said, “Efforts are being made by the Centre/State Govts. and the stakeholders to bring back the activities to pre-COVID period. Domestic flights have been restored partially and with opening up of some state boundaries for the tourists to visit destinations, things are moving slowly. Building confidence among the people to travel is the need of the hour. Similarly, hospitality sector is also ready to receive the tourists for a safe and secure stay by strictly following the SOPs as per the guidelines of WHO/ICMR/Government to guarantee the safety of the guests.”
Road ahead
The key focus segment in 2021 is the domestic market which is expected to provide some cushion to the sector. Suggestions are pouring in to divert the outbound traffic into domestic. However, the key criterion remains instilling confidence amongst travelers to thwart of the fear created by the pandemic.
Major state tourism boards have started promoting their unexplored destinations across potential markets within India. Domestic airlines getting a nod to operate at 80 per cent of pre-covid capacity will further boost the domestic travel market.
Pradip Lulla, President, Travel Agents Federation of India, added, “The green shoots currently is the resumption of domestic flights to 80 per cent levels to pre covid and in the immediate future would have to look into domestic tourism for sustenance. The current resurgence of covid in India and hopefully the wave not gaining momentum will provide succor. The good news of vaccines coming shortly will be a confidence booster for the international borders opening up. Domestic tourism will gain in substitution of International travel but proper and standardised safety operating measures will give it a fillip.”
Khanna added, “With the relaxation in lockdown in a phased manner by the government, some of the services have got reinstated. People are moving out of their homes slowly. Unless the people take to travelling with confidence and move out of their houses, which is happening slowly now, scenario will not change for better. Let us hope that the 2021 could be a resurgence of ‘Domestic Tourism Year’ and bring a fortune to all stakeholders of the industry and the revival of tourism.”
One of the major demands by associations to the government have been to incentivize the domestic tourism. India, with an array of products, can grow multifold in terms of domestic if marketed through effective channels.
“We need to prioritize products and destinations that would be of interest in the target market and ensure that these deliver value for money. New segments such as Rural, wellness, Tribal, Adventure, MICE, Desert and Religious can be developed with a strong focus on the new norms. India has a robust domestic market which could soften the impact as compared with nations that rely largely on international tourists. India receives 11 million foreign tourists and around 26 million Indians travel abroad each year, spending an estimated US$25 billion. We must incentivize domestic travel to retain these high- spending tourists, which should not be difficult given the international travel restrictions in place. We need to incentivize MICE, get tax free holidays, rebates and moratoriums on domestic travel.” Mayal suggested.
Outlook
Despite challenges, industry stakeholders are bullish about the Indian travel and tourism sector. Experts feel that due to the nature of this market it can recover much quickly.
“India is a country with close-knit families and friend circles, and hence we believe people will continue flying and moving from one place to another to meet their loved ones. Therefore, leisure travel will see an increase towards the end of this month and early 2021, while corporate travel will remain subdued until we overcome the fear of the virus completely. There are also newer trends that we have witnessed such as ‘Workations’, which have picked up as a promising domestic travel trend, people moving out to newer cities and destinations to work remotely. With this we are optimistic with the overall growth and demand for domestic travel and we look forward to achieving pre-covid levels of traffic within a few months,” Boulter opined.
One of the major takeaways from the crisis is the upgradation of technology. To create a seamless and a contactless experience, every player are adopting tech-driven solutions.
“There is no denying to the fact that crises can also give rise to opportunities for doing things differently. One of the most pertinent shifts that COVID-19 has brought about, is the movement from physical to digital interface to ensure seamless and safe operations. Airports and airline companies have adopted ways and means to offer a contactless experience with facilities such as web check-ins, technology to self-print bag tags, UPI payments etc. If we talk about Delhi Noida International Airport, we will consider this in our planning,” Schnellmann added.
Echoing similar opinion, Sarkar said, “It is certain that the future of tourism will strongly rely on digital and technological discoveries such as the use of chatbots to make reservations, mobility patterns to manage visitor flows, artificial intelligence, the IoT, 5G, service-oriented robotic, gamification methods for emotional monitoring, etc. These innovations are going to shape the new tourist experience.”
Also, the hospitality industry has been successful in reinventing their business with new innovation never-seen-before concepts.
“Innovation has come out more strongly and has paved way for more technological adoption for the coming years. We have introduced digitalized interaction touchpoints: contactless check-in and check-out process, QR-based menus – both in the restaurant spaces and in-room dining, digital payments; rolled out workation, daycation, staycation packages that received impressive response. We took THE Park to guests’ home through Chefs and Bartenders at Home services, online food delivery services, and have even pruned our menus to make them leaner among introducing immunity boosting recipes, cocktails, and welcome shots the moment guests step into our hotels. Everything boils down to safety and hygiene which will supersede all the previously existing wants and desires. And technology will help to attain this in a big way,” Dewan informed.
With tour operators and travel agents being out of business since the outbreak, the industry has several suggestions for the government. The segment has not yet received any direct relief package despite several appeals.
“As we have not received any tangible benefits from the government some fiscal rebate to corporates in terms of tax not being charged on certain travel and tourism spend would be a booster. Even a reduction in GST with no inputs on airline tickets and travel agents service charges will be a good demand booster,” Lulla said.
