The COVID-19 outbreak is the first and foremost human disaster in 2020. More than 200 countries and territories have confirmed cases of Corona Virus (SARS-CoV-2) declared a pandemic by the World Health Organization.
The scientists are putting their best effort to stop the action of this pandemic virus for the last couple of months. But till day there is no such good news about the innovation of medicine and or vaccine to finish this unpredicted nature of this virus leading to loss of thousands and thousands of lives. The number of affected people in the world is increasing every hour and at the same time, the number of deaths is also increasing drastically. There are hardly any reassuring signals coming from anywhere. The entire situation is very pathetic and people all over the globe have become panic-stricken and frustrated with the present situation.
The Central Government’s swift decision to break the chain of this deadly virus by putting the country on a complete lockdown effective 24th March 2020 until 14th April 2020 and further extended till 3rd May 2020, has significantly slowed the growth rate of a deadly situation.
As we know, the aviation industry and tourism industry go hand in hand. This sector contributes 2.4% & 9.2 % to India’s GDP as per FY18 and contributes handsomely to the country’s foreign exchange kitty. WTTC (World Travel & Tourism Council), in a report, showed that India was placed 3rd among the 185 countries showcasing the highest contributors in terms of travel and tourism in the year 2018.
This industry created a large number of job openings in the tourism and hospitality sector numbering to 8.1% of the total job market. The pandemic created havoc in this sector, based on travel restrictions and an expected global recession, IATA (International Air Travel Association) estimates that global air transport industry revenues could fall $252 billion, 44 percent below 2019’s numbers. The Indian government has the spending of INR 37.89 billion and INR 25 billion on aviation and tourism (20-21 year) with the lockdown in force the aviation industry is suffering a huge loss in passenger flights. India with large scale cancellation of tourist reservations due to restriction on travel showed a loss of INR 85 billion as estimated by Indian Association of tour operators. Foreign tourist arrivals in India, which saw a 9% decline in February 2020 (1.02 million) over January (1.12 million), and a 7% fall from February 2019 (1.09 million), further plummeted in March.
The aviation industry did show a rise in February due to mass booking of air tickets on the announcement of evacuation in various parts of the country and world at large on the contrary March 2020 showed a stiff fall in the industry with lockdown commencing from 23rd march 2020. The jolt of the lockdown is felt by both the white-collar and blue-collar jobbers in this sector. The Indian hospitality sector is suffering a major loss in this lockdown levelling to a loss of revenue of 6 billion bifurcated between the free-standing and alternate segment.
The domestic hotel industry states that their working capital and revenue showed a stiff fall in the balance sheets from the month of march with a huge number of cancellations of reservation by large corporate houses which badly affect the tier 2& tier 3 hotel line in the part half f the month. With more case of corona showing up the scenario, the business started to deteriorate around the first week of April 2020.
Looking at a fragment of the hospitality industry, the business travel segment has reported cancellation of international business travels rating to 92% by the corporate houses who already scheduled their business travels early this year due to volatile situation over the globe and unstated lockdown situation, as stated by a survey done by the Global Business Travel Association (GBTA). The Federation of Associations in Indian Tourism & Hospitality (FAIT) has said that India is already showing the consequences of job loss of 3.8 crores in this sector. The hotel industry also showed a contradictory scenario when it opened their space for making it isolation centres for covid patients.
Many big shots like ITC, OYO have joined hands with the governments to let their hotel rooms to be used as isolation centres. The situation as paved the path to developing new business models and opportunities, in defining, for instance, new delivery concepts, human capital sharing platforms, initiatives in promoting the “staycation or holistic concept” and the use of the less productive time to work on activities that were normally pushed forward like asset counts, security plans, defining standard operating procedures, social media plans etc. This would have a positive impact on this sector.
Few observations of COVID-19 impact on Tourism Allied Industry are:
- Due to this pandemic inbound and outbound travel tourism has completely closed for that reason aviation fuel has substantially declined.
- A huge amount of cancellation of reservations of flight tickets, train tickets and hotel reservation may face huge loss
- COVID-19 pandemic impact likely to be felt in all levels of employees
- According to World Travel and Tourism Council (WTTC) estimates this pandemic crisis to cost the travel and tourism sector at least US$22 billion, the travel sector shrinking by up to 25 per cent in 2020, resulting in a loss of 50 million jobs.
- As per International Air Transport Association (IATA), 2020 global revenue loss for the passenger business is estimated between US$63 billion (11 per cent) and US$114 Billion (19 per cent).
- Social Media platforms like Facebook, LinkedIn, Instagram, and Twitter have extensively utilized for promotion of Indian tourism through Blogs, travel magazine, Youtube Video etc to advertise to promote Indian Tourism to explore India.
The Way forward after this Pandemic situation
One does not require to gaze through a crystal ball to visualize some of the developments once we have been able tame the COVID 19 monster. To state a few important ones:
- Business travel is likely to remain muted until the end of 2021 or early 2022, since the requirements of social distancing may be required to continue until this period.
- In fact, many organisations have started questioning the need for frequent business travel, given the generally positive experience with online meetings. Thus a reduction in business travel, especially over long distances, maybe a long term phenomenon.
- The domestic travel industry is expected to be similarly affected, at least for the period social distancing is in force.
- This is bound to impact the hospitality industry whose fortunes are intimately tied to the travel industry.
The industry must carefully chalk out its response to these threats. Some of the possible solutions are suggested below:
- One of the peculiarities of this globally linked generation has been a lack of exposure to the world close to their homes. India is land of incredible diversity ad there is ample opportunity to showcase local travel as an attractive destination. The restrictions on long-distance travel in general and foreign travel, in particular, will yield a huge base of travel enthusiasts itching to find good travel opportunities, and this segment would provide a great opportunity for local tourism.
- The hospitality industry has to rise to the occasion and provide high-quality accommodation and tourist services in such destinations.
- The governments, especially state governments and local governments have a great role to play in building up infrastructure in these areas, coordinate with all the stakeholders and help in the marketing of these destinations.
- Part of the hospitality has used the need for self-isolation to travellers by converting parts of hotels to provide comfortable accommodation to such individuals who can afford it. This opportunity might present itself a few more times since the second or third waves of the pandemic have been predicted.
- Since the transportation segment is expected to revive much faster than the other components, hotels close to transport/travel hubs are likely to see better demand ad need to prepare themselves for it by providing solutions unique to these times such as social distancing, 100% pick-up and drop solutions, flexible cancellation policy etc.
- The transportation sector lined to tourism is likely to see a shift in demand from long-distance travel to domestic and local travel. Similarly, innovative solutions which can allow social distancing while travelling can expect high demand.
- All the above ideas have to be uniquely packed and communicated to target audiences with a much greater focus in digital media as stated earlier.
To summarize, the industry, which is currently facing one of its greatest challenges, can certainly survive to live another day.
Not only that, but the learning from this crisis can also be effectively leveraged to uncover hitherto neglected segments and will ultimately lead to a booming business within the next 3-4 years.
*Co-authored by
- Dr Prithvish Bose, Associate Dean and HOD, School of Management, ADAMAS University, West Bengal
- Ms Tanisha Mukherjee, School of Management, ADAMAS University, West Bengal
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