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BW Businessworld

Monumental Blow

The government response to the paralysing impact the pandemic has had on the economy has left the tourism and hospitality sectors out in the cold. As joblessness in these sectors cross 35 million, BW Businessworld takes stock of the ground realities

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Eeader of the Bolshevik Revolution and founder of the Russian Communist Party, Vladimir Lenin had once said, “There are decades where nothing happens; and there are weeks where decades happen.” His words aptly describe the situation that unfolded with the spread of the coronavirus pandemic and the deadly impact it has had on businesses across sectors.

In his Independence Day speech last year, Prime Minister Narendra Modi had said that tourism is one of the key pillars of our economy. Now nine months later in May 2020, there is hardly any doubt that this pillar now rests on shaky ground.

True, that almost every aspect of the economy has been adversely affected   by the Covid-19 pandemic, but tourism and hospitality enterprises are among the worst hit. The reason is simple. Social distancing norms, a new zero touch world, almost a blanket ban on travel, allowing for travel only on emergencies and advisories to stay home, are diktats that at once render travel and tourism untouchable as a business. Already the industry stares at a loss of Rs 10 lakh crore and there seems to be no respite in sight.

Six Feet Under

The Tourism and Hospitality sectors are among the biggest employers in India, with a workforce strength of 55 million. These two sectors contribute around 10 per cent to India’s annual GDP. The Covid-19 induced dip in footfalls, grounding of flights, sealing of inter-state travel and emergence of the six-feet-distance culture, has already resulted in over 35 million job losses and the count rises upwards with each passing day.

With Covid positive cases breaching the five million mark and death count crossing three lakh globally, the World Tourism Organisation (UNWTO) has warned that international travel will be down by between 60 per cent and 80 per cent. The economic losses of this sector have crossed $2 trillion globally.

According to Nakul Anand, Executive Director, ITC and Chairman FAITH, the current situation has forced the tourism and hospitality sectors into an unprecedented “copeability vs capability” mode. 

“Every disaster brings with it seeds of opportunity, but we must remember these seeds of opportunity are perishable. We are optimistic in believing that revenge holidays will take place,” says Anand. He believes that the current phase will lead to the rise of sanitised travel and people will travel more intelligently and less impulsively. 

“Sanitisation will be the new security and thermal scanners will be the new metal detectors. For the hotel industry, it will not be enough to be just aesthetically clean. Our hotels have to become cleanliness theatres with visible demonstration of cleanliness taking place. Housekeeping will become the epicentre of hotel operations,” he added.

Government Apathy

Even though the hospitality and tourism sectors are virtually in the ICU, cash being their only bloodline, the relief package announced by the government to resuscitate the economy, surprisingly ignored them. It won’t be out of place to say that nearly every government has recognised tourism and hospitality as sectors that are big cash earners for the state. So what explains the government’s apathy to the crisis that mires them?

Jyotsna Suri, Chairperson and MD, Bharat Hotels (Lalit) attempts to fathom the stance taken by the Indian government. “There is a perception among policy makers that we are an elitist industry and have a lot of money to be able to cope up with this situation. However, it is not correct,” she says. “I can’t understand why this industry is being overlooked. It is going to be the frontrunner in kick starting the economy. The tourism and hospitality industries had few demands, they were looking at a moratorium. In the hotel industry the biggest payout is the payroll. The payroll is becoming a huge issue in the absence of a fiscal stimulus,” Suri says. She then goes on to ask, “How long can we sustain that big payroll is a question?” 

Patu Keswani, Chairman and MD, Lemon Tree Hotels says that the hospitality business is already capital intensive with high fixed costs and a volatile demand. Government apathy has just added to this crisis, she says.

“We have just come out of the ten years of global economic crisis and then you get hit like this. We as hoteliers cannot depend on the government to help us. It is not like the US where 85 per cent salaries are being paid by the government. The Indian government is known for doing too little, too late. If  we go with that premise, we should try our best but we should expect very little,” says Keswani.

Green Shoots

With no vaccine in sight and not likely in the next 22 to 24 months,the world will witness ‘a new normal’, as it learns to live with restrictions.  Businesses across sectors are waking up to this reality and reimagining and repurposing their strategy to stay relevant. The tourism and hospitality industry is already on this course. In China, where the pandemic began,  recovery is fast becoming a global inspiration for businesses. 

If we look at China’s road to recovery in the context of the hospitality sector, the occupancy has grown from single digits to 35 per cent to 40 per cent over the past few months. Some tourism players are confident that demand will witness a significant rise as a sustained lockdown is not practicable. They say India will have its own success story to share globally.

“Can anything replace an experience of travel, the excitement and exuberance, the effervescence it creates, the joy and smiles it brings to visit those breathtaking locations; those streets and cafes, savouring those local cuisines and delicacies, the misty mountains, those blue seas and white sand beaches, the forests and wildlife?” asks Naveen Kundu MD, EbixCash, Travel & Holidays 

Kundu believes that this is a temporary disruption and we should not get desperate and take measures which hurt the industry. “Let us stay determined and dedicated to our mission of reviving travel, which is a driver of happiness and pleasure. Our business may be a bit fragile, but we as travel professionals and travelers are not fragile. We have bounced back on several occasions in the past whilst hoping we shall do it again.”

According to Vikram Oberoi, CEO, The Oberoi Group, fact-based data sharing can go a long way to help boost demand and revive the hospitality industry. Oberoi says that there needs to be a perceptive shift, especially among younger people, that there is less risk if protocols are adhered to. In his view it can only happen if fact-based information is shared.  This in turn, will spike demand and drive businesses and finally the economy.

Vocal For Local

With a ban on international travel, the tourism and hospitality industry is banking on local demand now. Even if international travel is allowed, experts say the new safety protocols will only encourage urgent business or emergency travel and leisure travel will take a backseat.  

To increase footfalls, reviving local demand is going to be the new focus for the tourism and hospitality sectors. Neeraj Govil, SVP, South Asia, Marriott International, says that all hospitality players in India will pivot towards the domestic traveler. He says to boost customer sentiment, hotels will have to go out of their way to make customers feel secure and safe. “We have to do everything as an industry to adjust to the new normal which may be right sizing the business or repurposing the business, to attract customers,” says he.

Customer Expectations

With the lockdown easing in a phased manner and the government making attempts to strike a balance between controlling Covid-19 and resuming trade and commerce, the big challenge for the tourism and hospitality players will be coming to terms with changed customer demand. 

There is consensus among experts that customer expectations before the advent of the novel coronavirus and after, will be poles apart. Safety, physical distancing and contactless service have upstaged that warm handshake. The rules of customer engagement have changed and it’s high time for tourism and hospitality players to make it part of their playbook. Sunjae Sharma, Country Head & VP, India Operations, Hyatt Hotels & Resorts says, “Once the lockdown opens, the expectations are going to be on us. We need to answer three questions: what are the expectations of our customers, what are the expectations of our associates and what are the expectations of our owners?” Those, of course, are million dollar questions!