Can domestic travel rescue India's tourism sector as pandemic curbs international visits?

Tourism played a vital role in India's economic boom before Covid-19 struck, with the country receiving 10.93 million foreign tourists in 2019

The Indian government has allowed for a reopening of tourist attractions, including the Taj Mahal. AP

Hotelier Vibhas Prasad reopened his properties across India just a few weeks ago, after being closed for two months amid strict Covid-19 curbs imposed during the devastating second wave of infections that swept the country.

Riddled with uncertainty, the pandemic has been the most challenging period of his career. Foreign flight and tourist visa restrictions, coupled with lockdowns, have decimated international tourism in India. The country is usually a hotspot of global tourism, its rich cultural diversity and varied landscapes attracting millions of visitors from all over the world.

“We've had zero foreign travellers [at our hotels since the pandemic hit],” says Mr Prasad, owner of Leisure Hotels, which operates 28 properties across India, including in wildlife resorts and mountain retreats.

Tourism played a vital role in the pre-pandemic economic boom in India. Before Covid-19 struck, the country received 10.93 million visitors in 2019 and the sector was a key source of foreign exchange earnings, which rose more than 5 per cent over the previous year to more than $30 billion, according to data released by India's tourism ministry in January.

While official figures have yet to be made public for 2020, the Federation of Associations in Indian Tourism and Hospitality forecasts that losses for the travel and tourism industry may reach $150bn during the pandemic.

“With significant uncertainty [still] looming ... travel in particular has been among the worst-hit industries, [affected by] border closures and [domestic] movement restrictions as a result of the spread of the virus across two waves,” says Nishant Pitti, chief executive and co-founder of EaseMyTrip, one of the largest online travel agencies in India.

Arun Bagaria, co-founder of TravClan, says that the Indian travel and hospitality industry had consistently showed “encouraging growth in the pre-pandemic years”. Covid-19 has not only knocked the industry off that growth trajectory, it has rendered millions in the sector unemployed.

The crisis – unlike any seen before by India's tourism sector – and the loss of international visitors has forced most tourism and hospitality businesses to look to domestic tourism to save the day. With a population of 1.4 billion people, India has massive growth potential in its domestic market, which has so far helped to keep the industry afloat.

Although, domestic tourism was also affected during the second wave of the pandemic, travelling within India is picking up pace again. Most curbs on movement are being lifted, as the number of daily Covid-19 infections has come down from its May peak of more than 400,000 cases a day. Hotel operators say they are seeing an influx of domestic travellers. The number of new cases on Saturday had fallen to 42,766, according to the health ministry.

Images were widely shared this month of Indians thronging hill stations, including Shimla and Manali, as they fled a heatwave in major metropolises, including Delhi. People are eager to get out after coronavirus restrictions were eased, but health professionals have cautioned that large numbers converging on hill stations and other tourist hotspots could increase infections once again.

The tourism industry is, however, benefitting from the recent rise in domestic tourism demand, eager to make up for the lost revenue from international visitors.

“We're currently only getting domestic travellers,” says Mr Prasad, adding that his hotels have seen a rise in bookings by local guests.

“I'm sitting at one of our properties right now and I can see a lot of bookings. Weekends are sold out.”

Residents generally prefer to travel to destinations that are within driving distance, because many of them are still uncomfortable with the idea of flying, due to the virus and Covid-19 protocols, he explains.

The group saw its hotels average 60 per cent occupancy in June, as a result of the surge in demand.

“June is normally one of our busiest months and pre-Covid we would be doing 90 per cent occupancy,” Mr Prasad says. He is nevertheless encouraged by the business trend so far “because we were at zero per cent in May – so zero to 60 per cent is a sharp recovery for us”.

Mr Prasad says that international tourism will take some time to bounce back, as India overcomes the pandemic and visitors regain confidence to travel to the country. Business travel, he says, will take even longer to return to pre-pandemic levels.

Amid the uncertain outlook, the government is taking steps to try to help the industry.

We're currently only getting domestic travellers. I'm sitting at one of our properties right now and I can see a lot of bookings. Weekends are sold out

Vibhas Prasad,
owner of Leisure Hotels

Last month it allowed the reopening of tourist sites, including the Taj Mahal, in an effort to help boost business for the millions of citizens who depend on the tourism industry for their livelihoods.

To lend more support to the battered sector, the country's finance ministry recently made a slew of announcements, including offering 500,000 free tourist visas. It also unveiled an offer of loans for individuals in the tourism sector, including registered tour guides and travel agents.

Industry analysts differ on whether enough is being done for the industry, but some have welcomed the government's efforts.

Sanjiv Mehta, senior vice president at the Federation of Indian Chambers of Commerce and Industry, says these are “much-needed” steps for the sector, which “continues to face heat due to the uncertainty that prevails”.

“The extension of working capital and personal loans with 100 per cent guarantees to people in the tourism sector to discharge liabilities and restart businesses should offer good support to this sector.”

“We are trying to help revive tourism,” said Nirmala Sitharaman, India's finance minister, as she announced the initiatives. The free tourist visas “will I think have a great incentivising impact for short-term tourists”.

Finance ministry figures show that the average length of stay of a foreign tourist in India is 21 days, with an average daily spend of $34.

India still hasn't started issuing tourist visas, so the incentive will not have an immediate impact.

The pandemic-driven crisis is also taking an enormous toll on tourism-related infrastructure development plans.

It has seriously affected companies such as Damodar Ropeways and Infra, which has been building cable cars and ski-lift systems across tourism destinations in India since 1974.

“Being dependent on tourism and the movement of people, we cannot do anything but wait for the pandemic to subside,” says Aditya Chamaria, joint managing director of Damodar Ropeways.

“As far as operational ropeway sites are concerned, revenues are badly affected not only for us but other players too, as tourists are not there,” he says, adding that “additional measures specific to our industry” would be a great help.

With a recovery of inbound tourism not on the horizon in the near term, the industry's hopes are pinned on Indians travelling within the country.

“As the vaccination drive in the country is set to amplify in the coming months, the travel industry is bracing itself to cater to the pent up travel demand, and we are expecting the sector to bounce back once at least 30 per cent of the Indian population is vaccinated,” Mr Pitti says.

But if a third wave of Covid-19 infections emerges – as many fear it will – and lockdown curbs are reintroduced, the industry would be reeling once again.

“The threat that most of us [think about] is when will the third wave hit us, if at all? That question is on all of our minds,” says Mr Prasad.