Travel and Tourism: Survive, Revive and Thrive in Times of COVID-19
Travel and Tourism: Survive, Revive and Thrive in Times of COVID-19
Travel and Tourism: Survive, Revive and Thrive in Times of COVID-19
June 2020
Contents
FICCI Foreword 3
The COVID-19 pandemic has resulted in the loss of lives and The government has also leveraged e-visa capabilities and
livelihood all across the globe. Industries across the spectrum extended it to 169 countries making it easier for individuals to
have been impacted by the pandemic, the travel and tourism visit our country.
industry has felt maximum impact due to grounding of planes,
closure of railways, hotels and other establishments. Looking ahead, domestic tourism will be the way forward
as inbound tourism will take longer to revive and open up.
The travel and tourism industry has proven its importance as Although the Indian travel and tourism industry has not
an economic growth engine for the world economy. For nine received much support from the recent announcements on
years consecutively, the industry’s growth rate has surpassed the economic relief package by the government, it should
the growth rate of the global economy. In 2019, the industry be considered as a priority sector. In order to achieve this,
grew at 3.5% compared to global GDP growth rate of 2.5%. government, industry and institutions must make collaborative
Accounting for 10.3% of total GDP, the industry contributed efforts to create a supportive ecosystem for tourism.
USD 8.9 trillion to the global GDP and created approximately
330 million jobs, one in 10 that year. We are happy that a National Tourism Taskforce (NTF) has
been formed by the Ministry of Tourism, Government of India.
The tourism sector makes a significant impact on the economy It will play a major role in the survival and revival of the Indian
of our country. The data by World Travel and Tourism Council travel and tourism industry so that it can once again be the
(WTTC) reveals that in 2019 the tourism industry in India torch bearer for the Indian economy.
contributed INR 194 billion to India’s GDP. The industry also
supported 87.5 million jobs, 12.75% of total employment in We are pleased to present the FICCI - Grant Thornton report,
2018-19. Due to the impact of the pandemic on the global Travel and Tourism: Survive, revive and thrive in times of
economy, the WTTC is estimating losses of up to USD 2.7 COVID-19, which looks at the impact of this crisis and the
trillion with up to 100 million jobs at risk. The travel and tourism recommendations for survival and revival. This document will
industry in India is looking at up to 40 million job losses (both facilitate a better understanding of the challenges faced by
direct and indirect) and about USD 17 billion in revenue loss in the industry and the opportunities for revival, both by the
the next one year. government and private sector.
All across the world, countries are looking at tourism as the Dr. Jyotsna Suri
main driver to revive their economy. The central government Past President, FICCI
plays an important role in developing a strong visitor economy Chairperson, FICCI Tourism Committee
which is evident from the fact that the Ministry of Tourism has Chairperson and Managing Director,
also undertaken a slew of initiatives, such as the Incredible The Lalit Suri Hospitality Group
India 2.0 campaign focusing on niche tourism products
Mr. Dilip Chenoy
including wellness and adventure tourism, as well as investment
Secretary General, FICCI
into the industry through schemes, such as PRASHAD and
Swadesh Darshan, which have proven to be successful in
increasing the number of foreign and domestic visitors in India.
While industries and sectors across the spectrum have been Rohit Arora
severely impacted by the novel coronavirus, the travel and Chartered Accountant,
tourism sector has been worst hit. Experts at the WTTC estimate Gurugram
travel and tourism GDP to be eroded by approximately USD 2.7
trillion in 2020 with up to 100.8 million jobs around the world at
risk.
10,000
8,810.96
9,000
7,674.79 7,650.17 8,900.00
8,000 7,094.29
7,000 6,259.57 6,108.56 7,444.04 8,240.74
6,000 1,629.02 7,432.19
6,925.29
5,000 1,809.37 5,803.03
4,000
2,381.10 2,750.65
3,000 2,207.37 2,388.31
1,629.02 1,928.47 1,911.51
2,000 2,892.94
2,157.06 2,304.81 2,320.93 2,567.88
1,000 1,809.37 1,794.88
0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
All figures are in USD billion Direct contribution Total contribution
Uttar Pradesh
Rajasthan
285.08 15.4%
50.24 2.7% Madhya Pradesh
Gujarat
10 2 83.97 4.5%
54.37 2.9%
9 8 7 West Bengal
Maharashtra
5
119.19 6.4% 85.66 4.6%
6
Karnataka
Andhra Pradesh Telangana
3 4
214.31 11.6%
Tamil Nadu 194.77 10.5% 92.88 5.0%
1
385.91 20.8%
Growth of travel
and tourism in India
COVID-19 has disrupted international travel trade and country, 40-50 million jobs will be at risk in 2020, both directly
supply chains in an unprecedented way. Several countries and indirectly employed in the industry.
have suspended tourist and business visas and banned both
domestic and international air travel, bringing economies to a The Ministry of Tourism has constituted a National Tourism
screeching halt. The International Monetary Fund predicts a Taskforce, to be headed by the Minister of State (I/C) for
shrinkage of the global economy by 3% during 2020 due to the Tourism to meet the challenges posed by COVID-19 and will
novel coronavirus. include state tourism ministers, joint secretary level officers
of the concerned central ministries, and representatives from
With many economies yet to hit their infection apexes, experts associations, such as FICCI, CII, ASSOCHAM and WTCII, as
predict economies around the world to shrink in the first quarter well as heads of tourism and hospitality associations.
of 2020, with ripple effects expected to be felt in the following
months. The travel and tourism sector is the worst hit. With large scale cancellation of travel plans by both foreign
and domestic tourists, there has been a drop in both inbound
Of all the segments of the hospitality sector, the Meetings, and outbound tourism of approximately 67% and 52%
Incentives, Conferences and Exhibitions - popularly known as respectively from January to February as compared with the
MICE segment - has been hit the most with major international same period last year.
business events cancelled including Mobile World Congress
(MWC), Google I/O, and Facebook’s F8 event, leading to huge The aviation sector, which contributes 2.4% of Indian GDP, is
economic losses. among the worst affected sectors due to COVID-19. The spread
of the pandemic across the country, in the last two months,
Impact of COVID-19 on the travel and has led to a 47% decline in the passenger traffic. Following
the lockdown in March, airlines have been incurring parking
tourism sector in India charges as nearly 650 planes of Indian carriers are now
The pandemic is estimated to have a debilitating impact on the grounded. These airlines are liable to pay a lump sum amount
Indian travel and tourism sector, which includes hotels, travel of INR 6 million of parking and housing charges. Airlines are
agencies, tour operators, destinations, family entertainment also refraining from increasing prices for the summer season.
venues, restaurants and air, land and sea transportation, According to the Centre of Aviation (CAPA), the Indian aviation
amongst others. Overall, losses are estimated to total up to industry could bear losses up to USD 3.6 billion during April-
USD 16.7 billion. Being a large employment generator for the June 2020 alone.
The travel and tourism sector in India employs around 87.5 In addition, branded hotels have been offering rooms to
million people, directly or indirectly. This pandemic could healthcare workers at discounted rates and providing food
render up to 40-50 million people unemployed, which is up to to affected migrant workers in the country through their
approximately 57% of this sector’s entire workforce. Due to kitchens.
COVID-19, the Indian tourism industry is looking at pan India
bankruptcies, unemployment and closure of businesses. This, however, poses a health risk for the hotel staff working
on the frontlines to provide these services, despite health and
Several hotel businesses and travel operators in India including safety measures in place
Ixigo, MakeMyTrip, OYO, Mariott International, Treebo Hotels,
FabHotels, and Lemon Tree Hotels have announced plans to
reduce senior employee salaries and introduced unpaid leave Events
options in order to cope with the financial impact caused by
the crisis. In light of the pandemic, multiple events, conferences,
conventions and trade shows have been cancelled or
Approximately 8-10% of the total staff strength of the global postponed indefinitely across event categories including
cruise liners comprise Indians and approximately15-20% sport, cultural and geo-political events, impacting not only the
of employees across the branded hotel chains in India are venues but host countries too. Some of the larger events that
contracted or casual staff. With the industry facing financial have borne the brunt of the pandemic include the 2020 Tokyo
woes due to COVID-19, these employees may have to face Olympics, the EURO 2020 football championship, La Tomatina
layoffs. festival in Spain, Dubai Expo 2020 and the 36th ASEAN Summit.
Certain conventions such as the TED2020 have leveraged
The COVID-19 pandemic has also affected the livelihood of technology to move the event online.
workers in the Indian amusement parks that not only hires
80,000 people directly, but also employs 5,000 people
seasonally and indirectly supports various other industries. Due
to the nationwide lockdown and social distancing guidelines
imposed by the government, the main season to generate
revenues for these parks is ruined. Top players apprehend a
downslide in 2020 with losses amounting to approximately INR
11 billion.
Key highlights
• Six-month moratorium to be extended to a minimum 12-month moratorium period on all working capital, principal, interest
payments, loans and overdrafts
• Permit one-time rescheduling of principal/interest dues in line with the estimated cash flows of each project post recovery
from COVID-19 without treating it as restructuring, re-classification/downgrading in asset qualification and requirement
of additional provisioning.
• 12-month waiver of all statutory dues including customs, excise and license fees and increase in insurance premiums
• Stimulus package to provide salary support to businesses
• ESI contribution to be deferred for 12 months. Insurance corpus of ESI should to be used to provide wages to all covered
workers
• Waiver and/or reduction of GST on products offered by the sector for a 12-month period
• Direct cash support for the aviation sector (airlines, ground handling and airports)
• Waiver of parking and landing charges
• Short-term, interest-free or low-interest loans for rebuilding businesses in the form of term loans and working capital loans
• Create a separate tourism fund under the aegis of Ministry of Tourism, accessible to the industry as a collateral free, 10
year loan, with a moratorium of two years and minimal rate of interest to support businesses stabilise in this time of crisis
There is an urgent need to take immediate steps to not only contain the spread of the virus but also to address the key pain areas
of the industry to minimise the impact of the outbreak on the Indian economy and businesses. A combination of monetary, fiscal
and financial market measures is needed to help the businesses and people cope with the crisis. Therefore, to be able to frame
correct actions and policy measures, it is important to understand clearly the specific problems that people and businesses are
currently facing. This alone can enable the government to take appropriate measures.
Relief measures requested for affected employees in the amusement park industry
• Provision of water and electricity to the amusement park
hotels industry for 6 months on concessional and subsidised rates
• Wavier of minimum/fixed cost charges levied by electricity
• GST rates on companies in hospitality should be slashed department (as exempted for industries by the state of
for at least two to three years. Currently, large hotels are Maharashtra, Gujarat, Uttar Pradesh, and Punjab
charged a GST rate between 12-18% based on room rate. • Waive off property tax/non-agriculture tax/gram panchayat
Now that hotels are almost empty, the GST rate should be tax of amusement park/water park/theme park as it is
brought down to 5-6% with immediate effect developed across huge land parcels for a period of 12
• 500 units of electricity per month and water to be provided months
free of charge to companies in the sector. Thereafter, • Lower rate of income tax and early settlement of income tax
subsidised rates can apply on actual consumption and not refunds to enhance cash inflow and to reduce cash outflow
against fixed load • Extend all existing licenses without charges for one year
• Export Promotion Capital Goods (EPCG) scheme to • To make the entry prices economical to attract patrons,
consider grant of extension in export obligation fulfillment complete holiday for 12 months (central and state level)
period by an additional three years (beyond current limit
of six years) for all the licenses expiring during current and
within this and the next financial year, without attracting
any penalty or interest
Tour operators and travel agents For e.g. a hotel can offer to provide a 10-day holiday
package for 60% of its original sale price. They can offer it
• Creating holidays with farmers and rural India. A positive as a coupon which can be redeemed by the buyer any time
push is required to co-create holidays with farmers and rural before December 2022.
India, which will help in wealth creation and distribution
Germany
The government has pledged an unlimited amount of cash
to prevent any company from going bankrupt. It is also
suspending legal obligations for firms facing severe liquidity
problems to file for the same, until September 2020. The
government’s liquidity assistance envisages a massive
expansion of loans of approximately USD 610 billion, provided
by the country’s development bank.
Portugal
The government has placed particular emphasis on the travel
and tourism sector by establishing a dedicated EUR 60 million
(USD 654 million) credit line for micro-businesses in the sector
and by working closely with stakeholders within the sector
to respond to the challenges resulting from COVID-19. Other
key measures include EUR 200 million (USD 218 million)
credit line for large businesses, extraordinary support for the
maintenance of employment contracts in a company in the
amount of two-thirds of the remuneration, and ensuring 70%
of Social Security, the remainder being borne by the employer,
offering of training scholarships in the Institute for Employment
and Vocational Training in Portugal (IEFP) and extending
the deadlines for payment of taxes and other declarative
obligations.
Established in 1927, FICCI is the largest and oldest apex business organisation in India. Its history is closely interwoven with India’s
struggle for independence, its industrialisation, and its emergence as one of the most rapidly growing global economies.
A non-government, not-for-profit organisation, FICCI is the voice of India’s business and industry. From influencing policy to
encouraging debate, engaging with policy makers and civil society, FICCI articulates the views and concerns of industry. It serves
its members from the Indian private and public corporate sectors and multinational companies, drawing its strength from diverse
regional chambers of commerce and industry across states, reaching out to over 2,50,000 companies.
FICCI provides a platform for networking and consensus building within and across sectors and is the first port of call for Indian
industry, policy makers and the international business community.
Contact details
4,500+
people
Chandigarh Dehradun
15 offices in New Delhi
13 locations
Mumbai Kolkata
Pune
Hyderabad
Chennai
Bengaluru
Kochi
GT Authors
Varun Parashar
E: varun.parashar@in.gt.com
Aastha Khatri
E: aastha.khatri@in.gt.com
Juhi Pilani
E: juhi.pilani@in.gt.com
To know more, please visit www.grantthornton.in or contact any of our offices as mentioned below: