The Federation of Associations in Indian Tourism and Hospitality (FAITH), the conglomeration that represents ten national hotel and tourism bodies has recently urged Indian Prime Minister, Narendra Modi to offer financial relief to the sector as the industry finds it difficult to absorb sudden revenue losses due to Covid-19 pandemic, putting at risk millions of jobs.
According to the industry observers, the total tourism business activity of India is estimated to be worth US $28 billion including Rs. 2 Lakh crore in the domestic tourism market. As per the Associated Chambers of Commerce and Industry of India (ASSOCHAM), India has lost about 15 Lakh foreign tourist arrivals for the months of March and April. According to the FAITH, mass unemployment is on the anvil with around 70 per cent out of a total estimated workforce of 5.5 crore (direct & indirect) could get out of work.
As per a letter addressed to the Indian PM, FAITH has requested for measures like tax holiday including deferment for 12 months of all statuary dues whether GST, advance tax payments, customs duties at the central government level or at any state government level the excise fees for the industry. FAITH has also requested a support fund for 12 months to support basic salaries with ‘direct transfer’ to affected employees working in the sector.
“We request you for a 12-month moratorium on our EMIs of principal and interest payments on loans and working capital from financial institutions (both banking and non-banking). Additionally, we request the doubling of our working capital limits and on interest-free and collateral-free terms. This will prevent all our tourism businesses from going bankrupt,” the communication read.
“We expect that some measures that will offer relief to the tourism industry will be announced soon. The first impact of coronavirus has been on our industry. Challenges at present are huge and we are fearing that the retrenchment of staff by some travel agencies is inevitable. Agencies in a situation of no cash flow are not in a position to pay salaries,” said Jyoti Mayal, President, Travel Agents Association of India (TAAI).
As per an aviation industry source who wishes not to be named, one of the domestic low cost carrier (LCC) that already had few of its aircraft grounded is in a critical situation without external support.
“We have seen domestic carriers like Jet Airways and Kingfisher Airlines becoming defunct in the past. On the other hand, travel agents who have booked air tickets on behalf of their clients are also worried if airlines would be able to provide refunds,” said Mayal. The Indian government in a new directive has also barred airlines to operate on domestic routes effective midnight March 24.
There was a video conference meeting on March 23 at the Prime Minister Office (PMO) to take stock of the impact of coronavirus on businesses and address economic challenges that have emerged. As per industry insiders, the government has asked different tourism and hospitality bodies to come on the same page to reflect the exact impact the pandemic is causing to the sector.
“We have been one of the largest job creators with many being employed in the unorganized sector. A lot of the workforce in the unorganised market will render jobless as companies there will find easy to lay off employees in the absence of robust human resource policy. We hope that the industry will be supported by a financial package. With cancellation of tours in the domestic markets, getting refunds from the suppliers in another major challenge we have to face,” said P P Khanna, President, Association of Domestic Tour Operators of India (ADTOI).
“We understand that the measures taken by the government like suspension of flight services are vital in the fight against the pandemic but we also expect that our industry will not be ignored when the government announces a financial relief package,” added Khanna.
The hospitality sector is also worst hit by the Covid-19 disruption across the globe. Hospitality consultancy, Hotelivate has estimated that the hospitality business in the country could take a hit of up to $1.5 billion in the best-case scenario.
Hotelivate anticipates that the blended occupancy across all of India will take a hit of anywhere between 18% and 20%. At present, there are approximately 140,000 hotel rooms registered in India’s organised sector, which represent a mere 5 per cent of all lodging facilities in the country.
For just this five percent, however, the loss in revenue from the lack of travel and tourism could amount to $1.5 billion, if not more, over the course of this year.
Sarbendra Sarkar, Founder and Managing Director, Cygnett Hotels and Resorts said, “We are hoping that the government will introduce new policies to revive the hospitality industry like a cut in the current GST rates and a no-tax period.”