India's tourism sector struggles despite reopening of historic monuments

As Covid-19 cases continue to surge, hotel occupancy rates are not expected to rise until next year

A group of Indian tourists pose for photographs in-front of the Taj Mahal monument that was reopened after being closed for more than six months due to the coronavirus pandemic in Agra, India, Monday, Sept.21, 2020. (AP Photo/Pawan Sharma)
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India's tourism sector will continue to struggle despite last week's reopening of the historic Taj Mahal and other top attractions as part of the country's ongoing efforts to kick-start the economy, according to industry experts.

With international tourism into the country still largely restricted, and even Indian citizens put off travel because of the Covid-19 pandemic, the slowdown in the sector will be more prolonged than previously forecast, analysts predict.

“Because of this pandemic, people aren't even prepared to travel within the country,” says Ankit Singh, the founder of Extra Edge Travels, a New Delhi-based company that offers tours in India and abroad. “It's almost like this industry has come to a halt now. We've been impacted financially and we had to issue some refunds out of our own pocket.”

Despite the reopening of the 17th-century Taj Mahal and other tourist attractions, coronavirus infections continue to surge in India. On Saturday, India's total confirmed Covid-19 cases crossed 5.9 million after more than 85,000 new infections were added in 24 hours, according to government data.

According to a report released this month by the Confederation of Indian Industry (CII), the travel and tourism industry is expected to lose a total of $65.57 billion (Dh240.8bn) as a result of the pandemic.

“The coronavirus pandemic has given a crippling blow to the Indian travel and tourism industry,” CII says in the report.

“The shutdown and slowdown, which was initially expected to affect revenue streams until October, have now indicated otherwise and it will be far more prolonged than the sector had earlier anticipated.”

Hotels in India are only likely to be able to achieve an occupancy level of 30 per cent until the start of next year, according to CII, which adds that revenue streams are likely to be eroded by 80 to 85 per cent.

“The figures are quite alarming and the industry needs immediate measures for survival,” CII says.

Because of this pandemic, people aren't even prepared to travel within the country.

The travel and tourism industry in India makes up 9.2 per cent of the country’s gross domestic product and employs 8.1 per cent of the population, its figures reveal.

In a report released in June, Grant Thornton in India and the Federation of Indian Chambers of Commerce & Industry (FICCI) forecast that there could be more than 40 direct and indirect million job losses in the travel and tourism sector.

The latest data available from India's Ministry of Tourism shows that the country received 10.56 million overseas tourists in 2018, which generated $28.59bn in foreign exchange earnings. Two of India's biggest source markets for tourists are the United States and the United Kingdom, which are also struggling to contain the spread of the coronavirus.

A notice is tied to a railing inside the premises of Taj Mahal after authorities reopened the monument for visitors, amidst the coronavirus disease (COVID-19) outbreak, in Agra, India, September 21, 2020. REUTERS/Alasdair Pal

At the beginning of the government-imposed lockdown in March, which closed hotels and brought commercial flights to a standstill, “We fell of the cliff there and we were completely locked out for two months, as was the rest of the country", Vibhas Prasad, director of Leisure Hotels Group, says.

With limited flights within India restarted in May and the government permitting hotels to open in June, Mr Prasad says the company, which has 27 properties in India, including in the states of Uttarakhand, Goa and Himachal Pradesh, was up and running again within a matter of days.

But he says occupancies have remained low because of strict requirements imposed by individual states, which, for example, require domestic travellers entering from another state to have a Covid-19 test and to enter quarantine for up to 14 days.

There is still no clarity on when commercial international flights will reopen for India –  beyond limited "air bubble" agreements with certain countries, including the UAE, which allows essential workers and Indians to travel into the country.

Within India, restrictions are steadily being relaxed and the peak festive travel season is approaching. But hoteliers fear there will not be a rush of domestic travellers given the spread of the virus and low consumer confidence as people are concerned about their jobs.

“We do expect some pent-up demand to materialise,” says Mr Prasad. “So from virtually a 5 per cent occupancy, we are hoping in another month's time we'll be at a 20 to 25 per cent occupancy.”

“This is nothing to look forward to in the short term, but this occupancy will perhaps lead us to operational break even, so we'd not be haemorrhaging money on a monthly basis."

Hoteliers have also faced the challenge of having to adapt to the crisis to reassure travellers they are safe and meet government requirements, including investing in sanitisation equipment and training staff in the necessary hygiene procedures.

This comes as hotels are also seeing a sharp drop in room rates.

“Room rates are down by 50 per cent – that's across the whole market,” says Ankur Bhatia, executive director of Bird Group, an Indian travel and hospitality company that operates a chain of luxury hotels.

Like Mr Bhatia, many are hoping that domestic travel could at least partially help to revive the sector, as they turn their focus from abroad to the major market on their doorstep.

The number of domestic tourism trips in India totalled more than 1.85 billion in 2018, according to the country's Ministry of Tourism.

Now, with Indians unable to freely travel overseas, for many the only option is domestic travel.

This is nothing to look forward to in the short term, but this occupancy will perhaps lead us to operational break even, so we'd not be haemorrhaging money on a monthly basis.

“My hotels in Delhi are doing 80 to 90 per cent occupancy over the weekends, and these are people who are citizens of Delhi who want to have a respite and they're checking in for a staycation to take a little break without getting into the hassle of moving from one state to another or taking a flight,” says Mr Bhatia.

Many hoteliers say their marketing focus is on targeting potential customers who are within reasonable driving distance of their properties, with an expected increase in demand as lockdown restrictions continue to ease.

“Domestic travel has a huge scope for [the] Indian travel industry post-lockdown,” says Shalini Raj, founder of travel consultancy Journey Weavers. “The country has numerous tourist destinations ranging across mountain tourism, cultural tourism, wildlife tourism, adventure tourism and heritage tourism.”

But with a slow recovery expected, many industry insiders lament that there has not been a bailout package specifically for the travel and tourism sector.

The government has, however, launched some measures to help various sectors, including a moratorium on loans from the Reserve Bank of India until August 31 and a package from the government backing loans for small- and medium-sized businesses.

“There are a lot of livelihoods involved, so this industry is very critical,” says Anirban Chakraborty, managing director and chief executive of Tourism Finance Corporation of India.

He says there are several finance options to “tide over” companies in the sector with liquidity, which they are taking advantage of as they need working capital in the current environment just to stay afloat, as expansion plans are largely put on hold.

Mr Chakraborty says the tourism industry could play a major role in reviving India's economy and he expects domestic tourism to bounce back strongly next year.

“People will travel much more in domestic tourism locations in India rather than going abroad, which is quite economical also. There's a strong middle-class bracket.”

But all hopes for the industry are now resting on a Covid-19 vaccine.

Until then, a meaningful recovery looks difficult – even for domestic travel.

“We're looking forward to the vaccine,” says Mr Prasad. “People will be more comfortable travelling. We stopped being in denial mode a long time back. We realised that we can't expect inbound travellers to come in, in large numbers at least, for the next year or so.”