The impacts of Covid 19 on India tourism PDF

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FOREIGN TRADE UNIVERSITY FACULTY OF ECONOMICS AND INTERNATIONAL BUSINESS

IMPACTS OF COVID-19 PANDEMIC ON THE TOURISM INDUSTRY IN INDIA

Group 10 Lecturer: Ph. D Hoang Xuan Binh

Group Members: 1. Đinh Lê Quỳnh Thu - 2013280034 2. Kiều Yến Ngọc - 2013280025 3. Vương Minh Ngọc - 2012280027 4. Trương Đức Huy - 2012280016 5. Nguyễn Thị Yến Phương - 2013280029 6. Nguyễn Ngọc Hải - 2012280014 7. Nguyễn Thu Hoài - 2013280015

Ha Noi, 9 – 2021

TABLE OF CONTENTS I. INTRODUCTION

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1. Rationale of the topic: ....................................................................................................... 4 2. Purpose of the paper: ........................................................................................................ 4 3. Scope of research: ............................................................................................................. 4 II. BACKGROUND:

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1. Overview of the Indian tourism industry before Covid-19............................................... 4 1.1. Indian inbound tourism

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1.2. Indian outbound tourism

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1.3 Indian domestic tourism

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2. Overview of the Covid-19 pandemic in India ................................................................... 5 III. THE IMPACTS OF COVID-19 ON TOURISM SECTOR:

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1. Transportation ................................................................................................................... 6 1.1 Aviation

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1.2. Road transport

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1.3 Railway

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1.4 Maritime Transport

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2. Accommodation ................................................................................................................. 9 2.1 Serviced Accommodation

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2.2 Self-serviced Accommodation

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3. Food and Beverage: ........................................................................................................ 11 3.1 The overall impact of COVID-19 on F&B industry

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3.2 The impacts of COVID-19 on F&B industry during the lockdown

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3.3 The impacts of COVID-19 on F&B industry after reopening

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4. Travel companies and travel agents................................................................................ 13 4.1 Overview about travel companies during the COVID-19 pandemic 1

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4.2 Impacts of temporary closures due to travel restrictions

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4.2.1 Booking cancellation and visa suspension

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4.2.2 The unemployment

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5. Recreation and attractions .............................................................................................. 15 5.1. Recreation

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5.1.1. Mobility trends

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5.1.2. Cricket

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5.2. Attractions

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5.2.1. Religious Tourism

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5.2.2. Centrally Protected Ticketed Monuments

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IV. POLICY IMPLICATION:

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1. Fiscal policy and stimulus package ................................................................................ 18 2. Monetary policy and taxation ......................................................................................... 18 3. Other latest supporting policies....................................................................................... 19 V. CONCLUSION

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I. INTRODUCTION Tourism is one of the most essential factors in the success of many economies around the world. It increases the economy's earnings while also enhancing the country's value, and identity. The importance of tourism in India stems from the benefits it provides. With a ranking of 7, India accounted for 4.97 percent of international visitor arrivals in the Asia Pacific Region in 2019 (tourism.gov.in, n.d.). Coronaviruses (CoV) are a broad family of viruses that cause symptoms ranging from the common cold to more serious diseases like MERS-CoV and SARS-CoV 1. On December 31, 2019, China notified the World Health Organization (WHO) of instances of pneumonia with an unknown cause discovered in Wuhan, Hubei Province, China. The first case of COVID-19 infection was reported in Kerala, India, on January 27, 2020, when a 20-year-old woman with a one-day history of dry cough and sore throat presented to the Emergency Department of General Hospital, Thrissur, Kerala (Andrews et al., 2020). On January 30, 2020, the National Institute of Virology announced her oropharyngeal swab result as positive for COVID-19 infection. COVID-19 has had a significant impact on the tourism industry in India. The difference between two-year trends (2019–2020) can be seen in table 2 (Chandel, Kanga and Singh, 2021).

Figure 1: Comparison of Tourism Loss During April - December (2019 - 2020) The tourism industry is the greatest revenue-generating; however, it is seeing a decline owing to the pandemic effect. As a result, the crisis provides a chance for the Indian government to reconsider how tourism interacts with other economic sectors, with the goal of better measuring and managing it while keeping to the primary goal of reviving the tourism industry.

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1. Rationale of the topic Tourism has long been recognized as a powerful prerequisite for economic growth, particularly for a globally fifth-largest economy. The lockdown in India has shaken the economy by hitting different economic sectors, especially the tourism industry, which has collapsed over the days. 2. Purpose of the paper Give an overall picture of India’s tourism and evaluate the risk of the pandemic on this industry. 3. Scope of research The subject of research: Tourism industry in India affected by the pandemic. Period of research: The research consists of data collected in 2020-2021.

II. BACKGROUND: 1. Overview of the Indian tourism industry before Covid-19 1.1. Indian inbound tourism According to the World Tourism Organization, the inbound tourism expenditure as a share of GDP was 1.1 percent in 2019. Foreign Tourist Arrivals in India increased by 2.8% (10.93 million) in 2019. Overall, India welcomed 28.9 million visitors including Non-resident Indians living abroad who visited India for various purposes (Yogendra Tripathi, 2020). India has been the destination of many foreign tourists. In 2019, the 5 most important source markets for Foreign tourist Arrivals were Bangladesh (21.37%), United States (13.80%) & United Kingdom (9.75%), Sri Lanka (3.35%) & Canada (3.32%). (Blinkvisa.com, 2020). 1.2. Indian outbound tourism India is one of the fastest-growing outbound travel markets in the world. With more than 1.3 billion inhabitants (2019), India has potential for future growth in outbound tourism. In 2019, almost 27 million Indian nationals departed on outbound travels from India, marking an increase from the previous year. In the same year, the outbound tourism expenditure over GDP was at 1.0 percent. Interestingly, since 2000, an exponential rise was seen in the number of Indian nationals traveling outside the country for leisure and other reasons (Statista, 2020).

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According to Yogendra Tripathi (2021), top destinations for Indian Nationals’ Departure are UAE (23.72%), Saudi Arabia (10.83%) and the USA (10.72%). Additionally, India took up 4.97% of international tourist arrivals in Asia Pacific Asia in 2019, with the rank of 7th. 1.3 Indian domestic tourism With a rich culture and breath-taking natural beauty, India is one of the leading tourist destinations in the world, leading to the increasingly monied middle-class of the country who are spending more time and money than ever before on domestic travel. In 2017, the domestic expenditure on tourism was around 186 billion U.S. dollars. At the same time, the collective government spending on the tourism sector that year was about 2.61 billion dollars. (Statista, 2020). In 2019, over 2.3 billion domestic tourist visits were made across India, an increase from the previous year. Furthermore, an exponential rise in the local tourist visits was seen from the year 2000 to the present across the country.

2. Overview of the Covid-19 pandemic in India So far, India has undergone two main waves of Covid-19. Up to 20 September 2021, this country recognised 3,34,48,163 cases of Covid-19 and the number of deaths was 4,44,838 with 1.33% of the death rate (Government of India, 2021). The first cases of COVID-19 in India were reported on 30 January 2020, and the peak of the first wave in September 2020 with over 90,000 cases reported per-day before dropping to below 15,000 in January 2021. In March 2021, the second wave took place in India, which was much more devastating than the first, with shortages of vaccines, hospital beds, oxygen cylinders and other medical supplies in parts of the country. By late April, India led the world in new and active cases. On 30 April 2021, it became the first country to report over 400,000 new cases in a 24-hour period (Wikipedia, 2021). Since July 2021, India has reported 3,998 COVID-19 deaths in a single day, the country’s highest death toll in a month, indicating that a third wave is imminent, which is currently under discussion refers to a possible surge in cases at the national level (Amitabh Sinha, 2021).

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III. THE IMPACTS OF COVID-19 ON TOURISM SECTOR: 1. Transportation 1.1 Aviation When the pandemic hit the country, all scheduled international flights and domestic passenger flights were canceled from March 23 and March 25 in 2020, respectively. The impact of this disturbance can be gaged by the loss figures of India's two biggest carriers. IndiGo incurred overall deficits of Rs 2,884 crore and Rs 1,194 crore in Q1 and Q2 of this fiscal respectively. SpiceJet posted overall deficits of Rs 600 crore and Rs 112 crore in Q1 and Q2, respectively. Due to COVID-19-related restrictions on flights in 2020-2021, India’s domestic and international passenger traffic diminished at a CAGR of -9.02% and -28.64%, respectively, from the fiscal year 2015-2016 to 2020-21. In 2020-21, airports in India reduced by 61.7%, and freight traffic declined at a CAGR of -1.77%. (According to Telangana Today article). Other wings of the aviation sector also took a hit. The revenue of Indian carriers declined by 86 percent, airport operators witnessed an 84 percent drop, and Air India reported a 78 percent fall in revenue during April-June 2020, compared to April-June 2019. (Mallapur, C., 2020)

Figure 1.1: The impact on aviation revenue of India during April-June 2020, over April-June 2019

Because airports are reliant on aviation operations, they are generating less money as a result of the pandemic. The number of passengers passing through AAI airports decreased dramatically from 14.5 million in January 2020 to 27,687 in April 2020. After the removal of 6

cubs and restrictions post the first phase of COVID 19 and public mobility resumed picking up with 2.97 million footfalls in August 2020. However, the second wave wreaked havoc on it once more. (C. Mallapur, 2020). For the first time since its inception, the Airports Authority of India (AAI) has incurred losses due to a drop in traffic at various airports. It registered a 65% decline in its revenue in financial year 2021, which fell from Rs 12,837 crore to Rs 4,482 crore resulting in a loss of Rs 2,814 crore as compared to a profit of Rs 1,985 crore. (Chandra, J., 2021) In addition, due to high infection rates, numerous countries with whom India has bilateral agreements to conduct charter flights, such as the United Kingdom and the United States, have restricted arrivals. (Shah and Freed, 2021)

1.2. Road transport COVID-related limitations cost the National Highways Authority of India (NHAI) an estimated Rs 3,512.62 crore in income in 2020-21. According to Gadkari, the approximate revenue loss in fee collection at National Highways Authority of India fee plazas due to COVID-19 limitations is Rs 3,512.62 crore in Financial Year (FY) 2020-21. The National Highways Authority of India (NHAI) continues to run up debt at an alarming rate. The highway agency’s debt hit a new high of Rs 3.17 trillion at the end of FY21, up 27 per cent from Rs 2.49 trillion at the end of March 2020. (According to The Economic Times and Business Standard Article) Suprio Banerjee, Vice President & Sector Head, ICRA Ratings, reported that the growing momentum has been impeded by the rapid surge of Covid cases in the second wave. The same is reflected by a reduction in E-way bill volumes and road freight volumes over April-May 2021. During Lockdown 1 and 2, only 1 to 2 % of normal services are operational. In response to government requests, 67 percent of the operators are only providing special services for medical and essential personnel. 81 % of the operators reported no ridership at all (According to the UITP Statistics Brief )

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1.3 Railway Traffic revenue of the Indian Railways fell by 42.3 percent in August 2020, as passenger train services were still disrupted by the Covid-19 epidemic. Union Railways Minister Piyush Goyal reported that the total number of originating passengers till the end of August 2020 was a meagre 1.27% of the corresponding period in the last financial year 2019. During the coronavirus pandemic, the Indian Railways lost Rs 36,000 crore, with a loss of Rs 6,500 crore on revenue generated from ticket sales (during the first two phases of lockdown itself) (According to The Economic Times and Times of India)

1.4 Maritime Transport During April-May of FY2021, overall cargo throughput at major ports contracted by 22%. Cargo segments like POL (petroleum products and liquid freight), thermal coal, and containers have all seen steep declines. Non-major ports also saw a 22-24% drop in volume during this time period. The terrible Covid-19 issue in India is threatening operations at several of the country's busiest ports, increasing fears that the action may cause shipping delays that will affect global supply networks.. After operations were "severely disrupted" by the epidemic, Karaikal Port in southern India declared force majeure until May 24, 2021, according to a post on its website. The terminal, which claims to be India's largest non-state port, handles a variety of commodities including coal, sugar, and petroleum. The port of Gopalpur in Odisha has also declared force majeure, according to IHS Markit According to G. Veeramohan, president of the Vizagapatam Chamber of Commerce and Industry, cargo movement at Visakhapatnam Port, one of India's major maritime terminals, is also hampered after the local traders' group declared force majeure in the port region till May 19. (According to the Business Standard) According to the Government of India, the growth in container traffic at major ports in India reached 9.98 TEUs (20-ft. equivalent units) in FY2020 at a growth of 1.12% year-onyear basis but declined to 4.93 TEUs during April-October 2020 due to the COVID-19-induced restrictions. (Statistic provided by The Ministry of Ports, Shipping & Waterways Report) 8

2. Accommodation Due to the ongoing situation, travel restrictions are being observed at national and international levels. These travel bans, border closures, event cancellations, quarantine requirements, and the fear of spreading disease, have set outrageous difficulties on the travel industry and especially hospitality sectors (Kaushal and Srivastava, 2021). 2.1 Serviced Accommodation According to the Economic Times, less than 3 million foreign tourists visited India in 2020, a plunge of around 75 percent compared to the previous year, due to the travel restrictions imposed. Foreign tourist arrivals in 2019 stood at 10.93 million while in 2020, the figure was only 2.68 million . As of December 2020, most of the hotels in India are not fully open (Gautam, 2021). Also, it was believed that foreign tourists will not get back to India in a rush after the country’s standing as a safe destination, has taken a severe beating overseas due to the record-high Covid-19 caseload, surging death toll, and criticism over the authority’s handling of the second wave of the pandemic (Mahanta and Chaturvedi, 2021). As a result, according to the Statista Research Department, in fiscal year 2021, the occupancy rate of hotels in India was 33.8 percent, a significant drop from over 60 percent in recent years.

Figure 2.1.1: Occupancy rate of hotels in India from financial year 2001 to 2021 Pursuant to The Times of India, with Covid-19 restrictions being reinforced in Uttarakhand following the second wave of the pandemic, hoteliers across the Kumaon region said that the bookings for April had collapsed and many of the establishments were on the verge of closure. The hoteliers assumed that after suffering huge losses during the peak tourist season last year, they could not survive if yet another summer witnessed no tourist activity 9

(Jha, 2021). Among the various types of hotels, midscale hotels had the highest occupancy at nearly 37 percent, while the overall average was about 34 percent in 2021 which was a significant decline compared to previous years (Statista, 2021).

Figure 2.1.2: Occupancy rate in hotels across India in FY 2021, by category

2.2 Self-serviced Accommodation The pandemic has hit the travel and tourism industry so severely that it could take years for the industry to revive. However, unlike the serviced accommodation, the Covid-19 pandemic had paved the way for a new adaptation which was self-serviced accommodation in 2020. The popularity of homestays has increased manifold in the post-Covid era when social distancing, cleanliness, hygiene, and privacy have become the top priorities for travelers. Hotels have several touchpoints and larger footfalls compared to homestays, which has made the latter the preferred ‘get away’ accommodation in the current scenario (S Lamba and Mohan, 2021). In the financial year 2020, Airbnb, the most common online holiday rental and homesharing platform, had seen a significant increase compared to the two previous years. The revenue of the accommodation platform Airbnb India stood at 687 million Indian rupees in 2020 compared to the average of over 300 million Indian rupees in the years 2018 and 2019 (Statista, 2020).

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Figure 2.2.1: Revenue of Airbnb India from financial year 2018 to 2020 However, with the re-imposed restriction during the second wave in 2021, the summer season was impacted this year again across both the serviced and self-serviced accommodation. According to The Times of India, the owners of guesthouses and homestays in Kausani and Kasar Devi villages claimed that the bookings were down by 70 to 80 percent due to the surge in Covid-19 cases. Additionally, several tourists who had placed bookings are now asking for a refund (Jha, 2021). With frozen incomes, the focus for the hospitality industry is now on cost control and minimizing the fixed costs.

3. Food and Beverage: 3.1 The overall impact of COVID-19 on F&B industry In the recent research from Indian Food Service Report (IFSR) 2019 of India's National Restaurant Association, this sector has experienced tremendous growth in the last 3 years and generated significant employment opportunities for 7.3 million people in 2018-2019 (Bose, 2020). Being one of the largest service-based industries, however, the restaurant industry has also witnessed tremendous challenges, suffering the same downward trend with many economic sectors during the COVID-19 pandemic. According to the rating agency CRISIL, in 2020, the Indian restaurant industry is experiencing a 50 to 70% decline in revenues in this fiscal year because of the disruptions caused by the pandemic (Vig and Agarwal, 2021). In the recent report from The Quint, the most challenging problem in the crisis is...