The hotel industry takes a big hit as domestic and international tourists stop checking in

In the eighth part of the Gaon Connection series “FiasCorona”, read how the hotel industry, especially the smaller hotels and their support staff, has been affected as tourists defer plans

Swati Subhedar
| Updated: Last updated on March 19th, 2020,

“Not many tourists were visiting in the first place. We started getting fewer bookings. I asked my manager (the reason) and he told me about this new disease (Coronavirus). I had no idea what it was. He explained it to me and also told me that it is going to affect us, again,” said Mohammad Iqbal Batt.

Iqbal, 27, works as a cook with the Breezewood resort in Pahalgam, Kashmir. In August 2019, after the government scrapped Article 370 and imposed a lockdown in the region, Iqbal, and other tour operators, hoteliers and houseboat owners in Jammu and Kashmir, kept waiting for tourists, but they never arrived. As the business was bleak, Iqbal’s resort manager asked him to take up some other job until the situation improved. In November, Iqbal went to Rajasthan — first to Jaipur and then to Udaipur — to sell Kashmiri carpets. He came back in February. “The (tourism) business had picked up, but it is now likely to slump again due to the new disease,” said Iqbal.    

India has imposed stringent curbs on entry into the country after the World Health Organization (WHO) declared the Coronavirus outbreak a pandemic. The government has suspended all existing visas (except diplomatic, official, UN/international organisations, employment, project visas) until April 15. The visa-free travel facility for overseas citizens of India (OCI) holders has also been suspended. Besides, the health ministry has said a 14-day quarantine is mandatory for all travelers, including Indian nationals, arriving from or having visited China, Italy, Iran, South Korea, France, Spain and Germany after February 15.

Gaon Connection spoke to those associated with the hotel industry to understand how factors like the Coronavirus scare and the visa restrictions necessitated by it are going to affect the number of tourists and, in turn, the hotel industry – especially the small and mid-budget hotels. 

India has imposed stringent curbs on entry into the country after the World Health Organization (WHO) declared the Coronavirus outbreak a pandemic. Pic: Swati Subhedar

“Yes, there have been cancellations” 

“The hotel industry is a sensitive industry. We have to keep our eyes and ears open. Any kind of disturbance — be it financial, political or now this — hits us first,” said Umesh Pandey, public relations officer, Kumaon Mandal Vikas Nigam (KMVN), who is based in Ahmedabad. The government entity offers tour packages for the Kumaon region in Uttarakhand.

Yadav added: “Yes, there is panic in the market. I have had a few cancellations in March. When the government has issued an advisory, people don’t want to take a chance. People are avoiding rail and air travel. These factors will have a spiraling effect and this may hit the hotel industry hard.”

As per a research by the World Travel & Tourism Council (WTTC), travel and tourism in India contributed 9.2% of the GDP and provided 42.7 million jobs — 8.0% of the total employment — in 2019. Its variant, the hotel industry in India, is expected to touch a value of Rs 1,210.87 billion by the end of 2023, expanding at a compounded annual growth rate (CAGR) of ~13% from 2018 to 2023, owing to the high arrival rate of foreign tourists and business delegates.

“We are dependent on foreign tourists,” said Tarun Thakur, who manages the Yerpa Hotel in Kasol, Himachal Pradesh. “We don’t have many foreign tourists at the moment. We haven’t seen any booking cancellations as yet, but no new bookings have been made in the past week. If the Coronavirus scare stays, then we may have a problem in the long run,” he added. Kasol is also known as ‘Mini Israel’ due to the high percentage of Israeli tourists there.

The hotel business at many locations in India is cyclic in nature and is season-based. In Himachal Pradesh, for instance, most hotels have to shut shop during winter when it snows heavily. “March to June is the peak tourist season for us. If, because of the Coronavirus scare, tourists are going to put their travel plans on hold, we will be in a fix,” said Tsering Tsang, who co-manages the Sakya Abode hotel in Kaza, Himachal Pradesh, with her husband.

When asked if they have to lay off staff during a lull period, she said: “We try not to. Last year, there was a time when the hotel was near-empty. We didn’t lay them off. Our cooks work in Goa during the winter months when the hotel is shut. But they do come back in February-March. So, it just doesn’t feel right to fire them when there are fewer or no tourists.”

The travel ban will affect the mid-budget hotel segment the most. Pic: Swati Subhedar

Mid-budget hotels will be affected more

The mid-market, or mid-priced, segment refers to hotels that are two-, three- and four-star properties, categorized as business hotels, resorts, boutiques, havelis, and full-service or limited-service hotels. They are broadly priced at Rs 4,000 a night or less. In 2002, while the number of branded rooms has increased five times to 1,25,000, the size of the mid-market segment has increased about nine times to 53,200. The mid-market segment today accounts for 43 per cent of all branded rooms in the country.

Between March 2002 and March 2017, while the supply of chain-affiliated rooms grew at the rate of 11 per cent a year, the mid-priced segment expanded at a compounded annual growth rate of over 15 per cent.                                                                                         

But when the influx of tourists is low, it is this segment that gets affected the most. Swarup Singh, manager of Khuri Desert Camp in Jaisalmer, Rajasthan, said: “We have seen a 40% dip in the number of tourists in the past 15 days. Luckily, this has happened when the season is ending. We don’t get many tourists in summer. But it’s still a loss considering we are in business until April end. I didn’t have an option but to tell 50% of my staff to start looking for other options. I can’t afford to keep them.”

The beaches in Goa are also deserted these days. “Because of visa suspension, there are no foreign tourists around. Goa is a full-year deal and such things affect us. When there is no work, it becomes difficult to manage my staff, which includes cooks, cleaning staff and water sports managers. I can’t ask them to leave, but I have to pay them,” said Sam D Man, who runs the Shining Star Beach Shack resort at Baga beach in Goa.  

“I am at the Banaras Ghat right now. There is a sea of people in front of me, but there are no foreign tourists. All my bookings post-April 15 are being cancelled. Right now, I am catering to those foreign tourists who are already here, but there are no fresh arrivals. Sadly, the hotel industry gets affected first in any kind of crisis, local or international,” said Indrajeet Kumar, managing director of Varanasi Day Tours. He designs travel packages for visiting tourists in and around Varanasi.

There are many, like guides and drivers, who are dependent on hotels for work. “When we get fewer tourists, it affects us immediately. People like me manage homes with the money we earn on a daily basis. If we don’t get work for 3-4 days, we don’t even have money to buy vegetables. There are very few tourists right now. People are too scared to travel. Bigger five-star hotels still have screening machines, but the smaller ones can’t afford to have these things. People have a good reason to postpone their travel plans,” said Dhanushdhari, a driver by profession, who works in Varanasi.  

Travel and tourism in India contributed 9.2% of the GDP and provided 42.7 million jobs in 2019. Pic: Swati Subhedar

‘It will take months for the sector to bounce back’

By 2023, Kerala is expected to be the leading provider of hospitality services in the country, with a total of 440 approved hotels. However, the situation right now is grim and is not likely to improve in the near future.

“In Kerala, the government has asked us not to accept any tourist, domestic or international. I guess, this lull period is going to stay for the next 6-8 months; until the last case of Coronavirus is wiped out of the country. Then it will take another 6-8 months for the international tourists to start coming. At this moment, I have no guests. We are planning to rotate the staff or ask them to report to work only for 15 days. We won’t be throwing them out because at this moment there is no possibility of getting any other job,” said Janeesh Jallal, director, operations, Our Houseboat, a houseboat hotel in Alappuzha, Kerala.

An email sent to Kerala Hotel and Restaurant Association and The Federation of Hotel and Restaurant Associations of India did not elicit any response till the time we published this story.

“More than Coronavirus, I am more worried about the stock market crash. Coronavirus can affect anyone. But the stock market crash will affect our industry. Those who have money or good savings, they are the ones who travel, but a shaky stock market will discourage people from travelling because that won’t be a priority for them. It takes time for any sector to recover from such shocks,” said Pandey from Kumaon Mandal Vikas Nigam. 

Read Part 1, Part 2, Part 3, Part 4, Part 5, Part 6, Part 7