The travel industry is likely to take on an INR 8,500 crore loss as the government suspends all existing visas on Wednesday. Hotels and tour operators have seen a spurt in cancellations particularly after the World Health Organisation (WHO) declared the outbreak as a pandemic.
Although the government has not come out with any assessment on the impact the novel coronavirus (COVID-19) has had on the tourism sector, an industry chamber, the Confederation of Indian Industries (CII) assessment report said the impact is expected to be somewhere around 60- 65 per cent of the projected revenue of $28 billion for the October 2019 to March 2020 season.
Let's be aware & prevent the spread of #COVID19 at your workplaces! Follow these simple advisory released by CII to fight #CoronavirusOutbreak. #Coronavirus #CII4Health #cii4india @drharshvardhan @MoHFW_INDIA @WHO @NITIAayog @PMOIndia pic.twitter.com/O73KlsoySa
— Confederation of Indian Industry (@FollowCII) March 10, 2020
The CII tourism committee report suggested that bookings for the April-September period is expected to be bleak because of the restrictions on international travel. The Indian Association of Tour Operators (IATO), and Assocham saw job losses in the sectors as companies try to tide over the situation by cutting non-essential workforces.
A cascading economic impact:
IATO secretary Rajesh Mudgill in an interview with Times of India further states that “The ban on travel to India for a period of one month will have a cascading economic impact and will lead to job losses in the entire hotel, aviation and travel sector. We estimate that it will lead to direct loss of not less than INR 8,500 crore”.
Travel & tourism industry is the worst hit amid the #coronavirus outbreak. How will it impact India's online travel market? @JudeSannith24's report#COVID19 #CoronavirusOutbreak pic.twitter.com/fREcYOh41N
— CNBC-TV18 News (@CNBCTV18News) March 11, 2020
With cancellations reaching a further peak of almost 80 per cent in many Indian locations, the CII assessment highlights that the value at risk for the travel industry will be in multiples of tens of thousands of crores. The impact of India cancelling all visa for foreigners as well as the strong advise issued to Indians to refrain from unnecessary travel “will be worse” and have a marked effect on the Indian travel industry added the CII report.
Meanwhile, the Indian travel industry’s woes just don’t seem to be ending. The Industry players have started a twitter campaign called #SaveTheTravelIndustry, urging the government to roll back the Tax Collected at Source (TCS), that levies 5 per cent tax on overseas remittance and sale of outbound packages.
Thus, this further implies a larger loss in revenue for the travel industry as it takes away the potential business from outbound tour operators and travel agents, shifting business from Indian players to foreign players. With foreign hotels and portals exempt from paying GST, the travel industry will further have massive tax loss as Indian operators pay up to 5 per cent to 18 per cent GST.