{"id":61913,"date":"2020-03-24T16:52:16","date_gmt":"2020-03-24T11:22:16","guid":{"rendered":"https:\/\/dwarkaparichay.com\/blog\/?p=61913"},"modified":"2020-04-23T11:17:14","modified_gmt":"2020-04-23T05:47:14","slug":"dr-pradeep-k-dhingra-opines-on-the-damaging-and-insurmountable-effects-of-the-pandemic-covid-19-on-the-hotel-tourism-industry","status":"publish","type":"post","link":"https:\/\/dwarkaparichay.com\/blog\/dr-pradeep-k-dhingra-opines-on-the-damaging-and-insurmountable-effects-of-the-pandemic-covid-19-on-the-hotel-tourism-industry\/","title":{"rendered":"Dr. Pradeep K. Dhingra opines on the damaging and insurmountable effects of the pandemic, Covid -19 on the hotel & tourism industry"},"content":{"rendered":"\n

India\u2019s growth has been\non a decline since the last few quarters, and the last quarters\u2019 growth of 4.7%\nwas considered as the bottoming point.  It\nwas expected that financial year 2020-21 would provide impetus to growth. And growth\nwould help us achieve our dream of 5 trillion economy. But due to an unprecedented\nvirus in the World, the most important word on earth is now \u2018Lock-down\u2019<\/em>.  <\/strong>As we discuss now at this point of time,\nalmost 80% of India is in lock-down.<\/p>\n\n\n\n

Tourism and Hotel\nindustry is one of the biggest employment generators in the World alongside\nconstruction, textile, and IT industry. In India, tourism provides employment\nto approximately 30 million people directly and roughly 40 million people,\nindirectly.  This is one sector along-side\naviation where the employment opportunities are in abundance for both genders and\nis skewing more towards women.<\/p>\n\n\n\n

Hotel and Tourism Industry\nwas not doing well from 2008-2009 till 2015-16 despite Common Wealth Games in\n2010. However, the industry started to look up in the last three years despite\nhaving below expected growth, demonetisation and the general elections in\nIndia. <\/p>\n\n\n\n

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India is becoming the\nmost digitally advanced travelling nation in terms of the digital tools being\nused for planning, booking, and experiencing a journey. India\u2019s rising middle\nclass and an increase in disposable income has continued to support the growth\nof the domestic and outbound tourism. On the basis of information received from\nthe Bureau of Immigration, Ministry of Tourism reported foreign tourist arrival\nin June 2019 was 7,21,905 as compared to 6,83,928 in June 2018; registering a\ngrowth of 5.3%. The percentage share of foreign tourist arrival in India during\nJune 2019 among the top 15 ports was highest in Delhi – 22.6%.<\/p>\n\n\n\n

Indian tourism and\nhospitality industry have emerged as one of the key drivers of growth among the\nservice industry. Tourism in India has significant potential considering the\nrich cultural and historical heritage as well as the, ecology, terrains, and, natural\nbeauty spread across the country. It is also a significant source of foreign\nexchange for the Country. According to the report of the World Travel and\nTourism Council, the direct contribution of travel and tourism to GDP in 2018\nwas USD 2750.7 billion (3.2% of GDP) and this forecast rose up by 3.6% to USD\n4065 billion (3.5% of GDP) by 2029. <\/p>\n\n\n\n

The growth of this\nsector was encouraging and this year was expected to be the best in the last\nfew years. Increase in international and domestic travelling can be gauged from\nthe fact that in Delhi alone, the room capacity has almost doubled in the last\nfew years after the inauguration of Aerocity near the airport. All hotels in Aerocity\nare either four- or five-star establishments with large room capacity and huge\ninventories. Despite the addition of multiple chains of four-or five-star\nhotels near the airport, the city hotels have survived and have given tremendous\nresults. The same is true not only for chain hotels but also for stand- alone\nhotels as well. Though the Average Room Rent (ARR) remained subdued but the\noccupancy has been quite reassuring even with these increased capacities. This\nis the case for every metropolitan city in India. Tourist arrival in India has\nincreased from 8.03 million in 2015 to 10.6 million in 2018-2019, showing a\ngrowth of approximately 32%.<\/p>\n\n\n\n

Now, the industry is\nentering into an uncertain stage unless some real strong measures to lift the\neconomy are announced by the Government. Hotel industry is a bit cyclical in\nnature and except for some tourist destinations which may have tourists around\nthe year.  Business travelers prefer\nwinter and that period is typically from September till March\/April. Now the\nlast month of the season burst completely and even April is expected to be\nquite bleak due to suspension of visas by the Government.  As the overseas tourist arrival is nil and there\nis no sign of its immediate revival, the chances of collapse are inevitable\nunless supported by strong economic measures. <\/p>\n\n\n\n

Hotels and other\nactivities are capital intensive industries and only bigger players with deep\npockets would be able withstand such pain as the fixed costs are quite high which\ninclude running and maintenance costs. Hotel operators usually have several\nloans and chances of defaults are not to be ruled out.  <\/p>\n\n\n\n

There are voices\nalready out about comparing the effect of this pandemic to the great depression\nwhich was faced by the world in 1930\u2019s. A similar contrast is being made with\nthe Spanish flu when  50-60  million people died and in India death figures\nwere between 10-15 million with a de-growth of 10.5%, highest in our recorded\nhistory till date. It may be too early to say  but, it is quite clear that the World may have\nnegative growth in the coming year and as the two largest economies i.e. USA\n& China are in huge trouble the growth of the World may trip in next 2-3 quarters\nand full year growth might be in negative.<\/p>\n\n\n\n

India has a large\npopulation and consumption-based economy with largest young population in the\nWorld but, it is not insulated from the World. The impact of the pandemic would\nbe seen in India and growth which was expected to be around 6% for next year\nmight go down to 3-4% or even lower. <\/p>\n\n\n\n

With falling growth,\nthe sector which would be mainly affected would be:<\/p>\n\n\n\n