Tourism Sector – Roadmap to Revival

27 Sep 2020

Each year, the world marks the World Tourism Day on 27 September to highlight the contribution of the sector to overall social, cultural and economic fields. This year, with the Coronavirus pandemic, WTD has a special poignancy.

With work from home culture replacing normal office schedules, virtual meetings replacing physical meetings and conferences, and vacations becoming a thing of the past, the tourism sector has taken a huge hit due to Covid-19. In fact, all segments of the tourism and the hospitality industry have literally come to a standstill due to the pandemic and the subsequent lockdowns. 

The travel and tourism sector accounts for  9.2% of the country’s GDP and employs 8.1% of the population, with a contribution of approximately US$ 28 billion to foreign exchange. The entire value chain linked to this industry is likely to lose around INR 5 lakh crore or US$ 65.57 billion, with the organized sector alone likely to suffer a hit of US$ 25 billion. (1) 

CII has been engaged in extensive interactions with the Government, recommending policies and suggesting the roadmap for revival of the tourism industry.  

Policy Support

Infrastructure status

India needs world class infrastructure development in the tourist destinations. Investments are subdued due to high interest rates of bank loans. Tax benefits cannot be availed, unlike in other sectors of infrastructure like airports, ports, power projects, etc. 

The Government has granted infrastructure status to hotel projects that are above INR 200 crores. However, since the mid-market hotel projects come in at less than this amount, promoters have to pay back the loans in a relatively shorter time period of eight years. 

CII recommends infrastructure status to be given for lower investments so that more investments can be encouraged in the hotel sector. 

Tax benefits would help hotels secure long-term loans with repayment schedules of 15 – 25 years. This will help in getting increased return on investments.  

Declare hotels’ capex above INR 25 crores (excluding land) as infrastructure 

If the mid-market hotels that are worth less than INR 200 crores are granted infrastructure status and are given a longer tenure to repay loans, they will become profitable. 

This would also enable the hotel industry reap all benefits that are available to other sectors of infrastructure. 

Create an empowered National Tourism Board with involvement from the Government, private sector and tourism professionals on board to manage the overall tourism strategy. 

At present, there are several authorities like Ministry of Tourism, State Tourism Boards, Archaeological Survey of India, Ministry of Aviation, and Ministry of Environment, Forest & Climate Change tending to the tourism sector. However, there is no single umbrella organization with representation from all sectors. 

Countries that have very successful tourism sectors such as Singapore, New Zealand, Australia, USA and many others have unified tourism boards. 

Public Private Partnership (PPP)

The Government and the tourism industry should come together through PPP and promote India as a safe tourism destination for both international and domestic travelers. This could be a two-year partnership. 

Formulation of Taskforce 

CII suggests the formation of an inter-ministerial and inter-state taskforce to address the immediate, mid-term and long-term concerns of the sector. 

Building customer confidence 

In order to revive the tourism sector, it is vital that the customer’s confidence is brought back. A host of measures could be undertaken by the Government to facilitate this. 

Promoting safe travel is key for the revival to set in. Testing could be applied in domestic travel as is being done in international travel. 

Covid testing protocols for international, domestic and inter-state travels must be established. Also, in the case of inter-state travels, there needs to be uniformity in quarantine rules, availability of e-pass etc. At present, different states have different rules. In case of negative test results (RT-PCR or Antigen), quarantine requirements could be ruled out. 

For hotel accommodation, all guests putting up for more than three days may be administered Rapid Antigen Test within 48 hours of arrival. In case of positive results, guest should be quarantined and further administered a RT-PCR test.  

At the individual and collective levels, we are all striving to adjust to the new normal. With Covid redefining our lives and businesses, let us come together and revive the tourism sector, which is lifeline to many and a breather to the rest of us. 

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