Shifting Sands of Revival

2021-03-04
/
/ New Delhi
Shifting Sands of Revival

After the worst year in living memory, outbound tour operators of India remain cautious about prospects this year but hope for revival later in 2021.
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For close to two decades, the outbound tourism market in India had grown at a fast clip, rising six-fold in the period from barely 4.4 million departures in the year 2000 to over just under 27 million in 2019. For almost 20 years, India had been competing with China for the title of the fastest growing outbound tourism market in the world.

Rapid and consistent growth in demand for outbound travel, year after year, had become a habit for the Indian operators and every year, almost all of them ended each year in a far better place than where they had been at the start of the year. And in January 2020, it was the same story for Kolkata-based Dolphin Travels.

Just like every preceding year, 2020 was also well stacked for Riddhi Roy, operations manager at Dolphin Travels. In January, she had two back-to-back trips of Europe, eight trips to Bhutan, two to Sri Lanka, Thailand, Malaysia and Singapore, Dubai, US and Canada. Bookings for domestic market were also full to the brim with almost 40 travellers in each group.

However, by February, the situation had turned on its head and Roy began to be overwhelmed with cancellations, as overseas destinations started closing down borders and travellers turned towards the agents seeking cancellations.

Situation continued to worsen dramatically and before March was over, an unprecedented strict lockdown brought the entire country to a complete halt, stopping all kinds of businesses instantaneously. The sudden stoppage caused the biggest blow ever in the history of Dolphin Travel, says Roy. “Our company has never faced a situation like this. All the bookings for summer vacations had to be cancelled or postponed. We had full bookings till May. From a sweet dream, the experience had quickly turned to a bitter nightmare,” Roy tells India Outbound.

While India was hit by the lockdown on March 25 evening, the tourism industry had already gone into a partial coma on March 22 when international flights were banned. It was a time when India had slammed the door shut on its Atithis or God-like guests and also blocked its own tourists, key source for more than 50 countries around the world.

Delhi-based La Vacanza Travel is a predominantly outbound holiday travel company selling holiday packages, hotels and activities. For Shad Siddiqui, managing director, ominous clouds over his business had seemed evident even before the brutal lockdown was announced.

“As the news of pandemic grew in January 2020, our customers started holding their travel plans, unsure if travel would happen or not. Finally, cancellation of existing bookings started and by the end of February and March 20 one thing became clear to all of us that 2020 was a lost year. The news of the pandemic had a significant impact on our volumes even before the lockdown started,” Siddiqui tells India Outbound.

Tourism is waiting for the wind of demand revival in its sails

Tourism is waiting for the wind of demand revival in its sails

Big business, bigger disappointments

Tourism industry accounts for USD 247 billion or nearly 10 pc of India’s GDP and employs over 55 million persons, across the entire spectrum of hotels, transport, restaurants, entertainment and souvenirs. The entire structure came tumbling down with the lockdown. According to a report by KPMG, a financial services and business advisory firm, due to Covid-19 the Indian tourism and hospitality industry could have lost around 38 million or 70 pc of the total workforce.

Over the next two months, the situation turned worse for the travel sector. Seeing that governments, the world over had opened their purses to help all industry, including tourism, Indian travel agents too looked forward to some fiscal support from the government. However, the Indian government chose to look the other way, letting the industry stay comatose. The situation was so dramatic that many organisations including Travel Agents Association of India (TAAI) threatened to resort to the Gandhian way of protest against the government for its failure to provide any relief to the tourism industry.

Yet, no help was coming forth from the government even then. Since end of June 2020, as the government began easing the lockdown, domestic tourism began as a trickle. But there was no respite for overseas tourism as government kept the airports closed to international flights, except for emergency evacuation to and from India.
By July, as Europe reopened and life seemed to be returning rapidly to normalcy, there were hopes that overseas travel could restart. But the government kept the international flights to a bare minimum. By mid-autumn, Europe was already in its second wave and US saw situation deteriorate dramatically, ruling out any rapid reopening of overseas tourism as even most of the short haul destinations also remained closed to India as its own Covid-19 cases seemed to be racing ahead without any breaks.

By the end of the year, with barely a handful of overseas destinations open for the Indian tourists and the complications involved in travel meant that for overseas tourism, at least, the year 2020 was a total washout. “This year in a nutshell was pathetic. We have not seen this kind of a year in travel industry, even though travel industry is the first one to get affected with any kind of calamity or disorder. However, in the past its impact was limited. But this time it was the entire world that closed its doors to each other. So, it was a major setback for us. And recovering from that is also very difficult,” adds Roy.

2021: Revival in the offing?

As 2020 gave way to 2021, most travel operators were hoping that the new year would come with the much-awaited good news especially with vaccinations in progress in many parts of the world and that the governments would rapidly open up tourism and remove barriers to travel. “As destinations ease restrictions and with positive news of the vaccine, there has been renewed consumer confidence to travel in 2021. With distribution of the vaccine spread by the first quarter we estimate business pick up in coming quarters of 2021 with recovery towards the end of 2021 and full recovery by early 2022,” Daniel D’souza, president & country head, Leisure, SOTC Travel tells India Outbound.

But some others remain more sanguine about the prospects in near future and say the leadership needed from governments to revive tourism and global economy is not yet visible in the absence of a coordinated multilateral approach, which is the need of the hour.

Jyoti Mayal, president TAAI & vice chairperson FAITH says, “Covid-19 has brought the world to a standstill and the industry is struggling with cash crunch & traveller confidence, the road ahead for the global travel and tourism sector appears uncertain. The vaccine is a relief, but we cannot wait for it to be disseminated to recover. Travel restrictions are the main barriers in the way of the recovery of international tourism & the lack of coordinated response among countries to ensure harmonised protocols and coordinated restrictions, as well as the deteriorating economic environment.”

Siddiqui of La Vacanza feels that as the pandemic stretches into the first quarter of the new year, the impact continues to be felt. “From an anticipated ‘best year’ we literally went to zero in a matter of only a few weeks in 2020 and it was not until January 2021 that we saw traffic returning to our website and we started getting bookings, mainly leisure with families and honeymooners for Maldives and Dubai as these are the only destinations accepting tourists with conditions and limited operating flights so far,” he says.

Europe is likely to be back as a favourite destination for Indians as soon as borders reopen

Europe is likely to be back as a favourite destination for Indians as soon as borders reopen

Revival pushed from early 2021 to second half

The emergence of variants of the coronavirus and the reimposition of strict restrictions in different parts of the world are not the kind of news that the tourism industry had hoped to have as the world transitioned from a pandemic-hit 2020. As of now, at least the first few months of 2021 appear to be as filled with uncertainty as most of 2020 had been.

From hoping for a quick turnaround in early 2021, now most operators are resigned to see only marginal improvements in the business atmosphere for the first half of the year 2021. Some believe that domestic travel will be the focus till the third quarter of 2021. “Staycations will continue to grow keeping in mind the safety protocols. As president TAAI, I look forward to preparing comprehensive tourism recovery plans to rebuild, to encourage innovation and investment, and rethink the tourism sector to support innovation to ensure stronger sustainable long-term economic resilience. We also look forward to ease of doing business to safeguard our investments & our business,” says Mayal of TAAI.

Even though the clouds of pandemic and emergence of new strains of coronavirus still hamper a clear visibility for the year, most surveys point towards a rapid revival as soon as the frontiers reopen. During a keynote address in a meeting organised by Saudi Tourism Authority for Indian travel fraternity earlier in February, chief executive officer Fahd Hamidaddin said that a survey was conducted by STA showed that 89 pc of respondents said they wish to resume travel as soon as possible.

In India, the Second Holiday Readiness Report in December 2020 by Thomas Cook reveals a significant increase in consumer confidence in travel with 67 pc respondents stating willingness to travel in the next six months while 33 pc indicated that they would wait for launch of the vaccine. The survey further revealed that 52 pc of respondents are likely to take a domestic holiday while as many as 48 pc of respondents likely to take an international holiday. According to Thomas Cook, international destinations of Dubai and Maldives lead the growth trajectory followed by Egypt; encouraging requests for 2021 include Turkey, Kenya and South Africa.

The Indian agents are also extremely positive that once the vaccination reaches a critical point across the world travel would resume in a big way on the back of release of pent-up demand. Many say they are already receiving fairly robust queries for the popular destinations, notably Europe, US, Middle East and the Far East. The beginnings are already visible. For instance, all theme parks in Dubai have begun to reopen and so are Disneylands in most parts of the world, with Hong Kong becoming the first one to again receive visitors from February 19. All these moves would drive outbound tourism in the initial phases.

“Indian holidaymakers traditionally love destinations with direct short flights and easy visa procedures, certainly Indian would be flocking to Indonesia (Bali), Thailand, Vietnam, Maldives, Mauritius and Singapore to make up for lost time. Towards the Middle East, Dubai and Abu Dhabi should quickly make up for the lost year and not to mention Saudi Arabia that is now open to the world due to its new tourist visa,” says Siddiqui.

Most tour operators are also betting that as vaccination progresses, Europe would also open up. Traditionally, Europe has been an all-time favourite for Indian tourists and tour operators say they expect to see a sharp demand as soon as the restrictions are lifted for Europe.

“Our expectations for the second half of 2021 are very positive and we see it as the time of recovery for outbound segment of travel, I am sure our government is also working on these lines and we hope scheduled flights to major tourist destinations resume in the month of March, at least in a phased manner to start with,” says Siddiqui.

For a government that has failed to even acknowledge the extent of trouble that tourism industry in India is, most tour operators hope that at least now it relents and does two things. Open up Indian skies for regular flights and remove local restrictions on travel. And open up its purse to alleviate the pain and suffering that tens of millions have been going through.

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