There are a few sectors in the economy that are not doing so well right now. But we know for sure that in future they will be able to come out of this depression phase that they are going into. But there are a few sectors who are impacted so much because of the virus that coming out the losses might be a huge challenge for them.
The tourism and hospitality sector of India is the pride of India. The diverse culture and the diverse topography along with the demographic conditions of the country make it a very popular hotspot for all the people from all around the globe. The wealthy people in India make many visits abroad and go ahead with global hospitality. Tourism is on the verge of breaking down. People are not able to move from one place to another in their own town, let alone from one country to the other or from one state to another. It is often said that since the onset of the pandemic, there is a fear which is instilled in everyone’s mind about leaving their own country. People have changed their mindset of traveling abroad for a period of time. The airways and the trains have also stopped working. This is causing a lot of loss for the government and for the companies which are prevalent in the sector. The indirect effects of this will be on the hospitality sector. With no customers coming to the hotels, hotels are on the verge of shutting down.
Forward bookings for various conferences and leisure travel bookings by families to various foreign destinations have been canceled already. Apart from that, the holiday period in India is usually in the summer. For the states of Kerala, Rajasthan, and Goa, about 50 to 60% of the bookings have been canceled. According to the research, hotels need to restructure their plans according to the COVID-19 impact.
This might have a positive impact in the near future also. The demand for MICE from other Asian countries is expected to be diverted to India up to some extent but the benefits of this will only be seen later on.
It is estimated that in India, hotels that are branded and organized by the Indians account for about $5 billion in revenue. This revenue will go into the drain if relief packages are not given to the sector.
It is essential to know that the tourism sector was already facing some trouble before the starting of the pandemic because of the global economic slowdown. Since plenty of hotels in India are shut down, the race towards recovery will be slow.
There seems to be a potential job loss of around 38 million which is around 70% of the total workforce working in this segment. The hotel, aviation, and travel sector together may incur a loss of about Rs. 85 billion. This is because of the large scale cancellations and the restrictions imposed by the government. As per the world economic forum, the Coronavirus pandemic will cause a decline in the jobs of 50 million people globally, and about 60% of those will be from Asia.
Hyatt, one of the biggest hotel chains all over the world, has laid off 1300 employees and is restructuring the various roles which are available. If such a big hotel chain can do this, how will the smaller ones survive?
Oyo hotels and homes have laid off hundreds of employees in the United States because of a lack of revenue. They had earlier laid off about 360 employees. The company‘s investment in the United States has come down to a quarter. The employees that were sacked are given pink slips in the first week of April. The CEO of the company had said that they would fire about 5000 employees globally because of the restructuring they would have to do.
Travel companies such as MakeMyTrip, Goibibo, other booking platforms have also laid off plenty of employees in order to cut on the cost.
Marriot, a massive chain of hotels sees net income fall to $31 million for the first quarter of 2020 which is a huge downward trend towards this hotel.
Flynote, a leading start-up in this domain had raised crores of money from early-stage venture capital funding. The company recently laid off about 90 employees without any notice. According to sources the company has a lot of debts and the firm is running low on revenues. Plenty of employees are saying that the salaries for the month of March have not been given.
Online travel companies, travel triangle, have let go of about 250 employees.
Many peoples jobs are on stake. If this trend continues, there will be a setback for national employment. It has about 13% of employment in the total country. This includes both the direct and indirect sphere. It not only employees the urban people but also provides a livelihood to people across all the social strata in rural India.
Over 95% of the small enterprises in the sector are falling short of cash. 53,000 travel agents, more than one lakh tour operators, nine lakh tourist transport, and about five lakh restaurants are facing issues related to their operations during this time. This industry is facing the biggest challenge of all time and there seems to be no fix for this in the future.
It is believed that in the near future a lot of concentration will be put on the mid-scale and affordable branded hotel segments rather than the high-class ones. If social distancing norms continue to function in offices and they refuse to travel and have physical meetings, this sector will again be sharply hit.
All tourism entities like airlines and the hospitality sector must be treated as the topmost priority of the government during all the relief schemes otherwise these sectors would collapse and there would be no coming back.
The government must help the sector with soft loans, working capital, and zero interest on the loan repayment.
If and only if we stay together, we stay together as travelers and the suppliers stay together with us as operators, we can get through this.