Budget 2021: Expectations of the Travel and Tourism sector

Co Anchored by Dr. Anurag Batra, Chairman & Editor-in-Chief, BW Businessworld, and Exchange4Media Group and Megha Sharma, Senior News Anchor & Senior News Editor, NewsX, the discussion on ways to get business and economy back with Budget 2021 took place between eminent leaders from the travel and tourism sector.

The panel included Zubin Saxena, MD & VP (Operation), South Asia, Radisson Hotel Group, Dipak Deva, Managing Director, Sita India, Jyoti Mayal, President, Travel Agents Association of India (TAAI), Vinod Zutshi, IAS (Retd.), Former Secretary, Ministry of Tourism, Govt. of India Ministry of Tourism, Government of India, Ritu Mehrotra, Country Manager (India, Sri Lanka, and the Maldives), Booking.com, and Bhuvanesh Khanna, CEO BW Communities, BW Businessworld.

Dr. Batra opened the discussion by acknowledging the travel and tourism sector as a large employer and a large tax generator. He highlighted that the travel and tourism sector is an infrastructure sector without being called the infrastructure sector.  "This is the sector that needs to be kickstarted. It is also being done in the backdrop of vaccination, so the fear factor has gone away. Leisure tourism has grown as people are going to nearby destinations. Sharing an observation about the last weekend, he said, "Last weekend, a lot of hotels in and around Delhi were full. It augurs well for the tourism and hospitality sector."

Demand from the sector to get a space in the concurrent list had surfaced previously. Expressing his opinion on the subject, Vinod Zutshi said, "Getting into a concurrent list won't solve the immediate problem." Zutshi stated he expects the finance ministry to increase the budget outlay. He underscored that the outlay of the current year's budget for the tourism industry is 2500 crores. Zutshi said, "For a country like India, with a huge number of destinations and thereby great infrastructural needs, 2,500 crore are not sufficient. To get a stimulus package for the travel and tourism industry, this is the right time." During the discussion, he mentioned that last year, the budget outlay had increased by 15 per cent; however, that is not enough. "If we are getting a higher outlay, we can divert money into more projects in the form of schemes," he added.

Speaking about budget schemes, Megha Sharma stated that every year, budget schemes are announced, massive projects are taken, but there has been a limitation with the tourism, travel and hospitality sector. "The industry has been facing the brunt of all because it is a labour-intensive sector, with extremely thin margins, and where the organised sector is smaller than the unorganised sector," she said.

Then Dr. Batra  queried Zubin Saxena on the expectations he has from the finance minister. "The crisis is not over yet," said Saxena. Our industry had been sitting at suboptimal revenue levels for the last year. Industry-wide revenue loss has been of 95,000 crores across organised and unorganised sectors. 

Reviewing last year's situation, Saxena continued, "Last year, we had a real issue around demand, our occupancy levels went down, and massive layoffs happened. As the year ended, the leisure demand emerged." He further stated, "The crisis is not over yet." He admitted that the drivable distance is emerging as the "big trend" however, he was disappointed with the subdued average rates.  "We are entering into the next crisis of Non-Performing Assets (NPAs)," he concluded. Dr. Batra proceeded to ask about the policy tweaks and interventions that the Finance Ministry and Government can do to give a fillip to the growing trend of Indian tourists in domestic tourism.

Dipak Deva said, "The domestic market has been a saviour of the hospitality business. The domestic business has done well because the borders are sealed, and one cannot go overseas. Between Dubai, the Maldives, and the destinations in India, there is a lot of movement that is happening, which is very good for India's hotels as it has been able to save a lot of jobs."

He added, "This budget is not normal. We have to keep life simple this next one year because we are not talking of a budget of growth, we are talking about a budget to survive." Deva said that the Leisure business will be coming back from January 2022, but the Corporate business will suffer. The recovery of corporate business will not happen in a hurry. He further added, "The Government should pay the travel and tourism industry the due export incentive, a part of their revenue stream, which has not been paid for 2019-20. That is going to be the oxygen for survival."

Then he went on to speak about the serious steps that must be taken to uplift the travel sector. Firstly, Incredible India must have a budget of 5,000 crore to go out and attract the tourists back to India in the next 24 months. Secondly, to get the industry export status with zero GST. Lastly, there should not be any increase in taxes or visa fees. Carrying the discussion forward, Ritu Mehrotra stated, "The state of travel within our country is the most traumatising. Third of the global fleet has been parked for a long time, dozens of airlines have shut down. It has been a crazy time for our secor."

Underscoring that tourism has 5.5 million jobs, Mehrotra called it an important sector for all governments. "The kind of losses we will see in tourism will be 10-11 billion dollars. As a part of the green shoot, domestic tourism, the vehicle is moving from state to state. People are choosing to do domestic tourism. Since nine to five jobs no longer bind people, the window has increased for people to stay in these locations. This is a golden opportunity for domestic tourism to grow," she added.

On being asked about the kind of help that can be given by the government to individual travel operators, Jyoti Mayal said, "It is a challenging situation. Every tenth person in this country is related to tourism directly or indirectly. The budget especially should be building very strong policies and reforms which are needed. Also, The National Tourism Policy should be a milestone-driven policy that comes into play so that the people can actually adopt it." She further added, "The Budget 2021 should focus on enabling the development of MSMEs as most of the Industry falls into this category."

Talking about the positive side of the hospitality sector, Khanna said, "The hospitality industry has reinvented itself." While Zubin Saxena also highlighted that the domestic market is slowly seeing signs of revival. As India is an 87 per cent domestic market, he believes that "it has been the silver lining of the COVID-19 cloud." After that Dr. Batra pointed out that now that the vaccine is there, the government wants to do a demand-side stimulus. Earlier the government may not have wanted a demand side stimulus. He questioned Zutshi about his realistic expectation from the government.

"We should be happy if the finance minister addresses the demand of the industry by suggesting an amendment in section 147 in the budget speech, and that would pave the way for deemed status for the industry and GST benefit," said Zutshi."There should be an IT exemption up to 1.5 lakhs for the domestic tourists is one of the important issues to be addressed in the budget," he added.

The discussion moved forward with Mayal saying that Sustainable tourism is the buzzword for today and will stay. She said, "We need to rebuild on the circuits of tourism because it has a huge potential, and 'Vocal for Local' with 'Atmanirbhar 3.0' is going to be the absolute focus. But to build these, incentives are needed. We need more money to market and promote India as a safe country."

Carrying the discussion forward, she said that Conferencing and MICE should be going into Rural India and that Local tourism needs to be 'looked at' and 'invested in". It is also to be seen that the wellness index and the carbon footfalls remain. Mayal said, "We need to invest a lot in skilling and upskilling as e-commerce and digitisation is going to be here, and we need that as a link to see that the footfalls increase. Incentivisation through the ministry of Tourism should happen.”

“We also need insurances to come into place. A comprehensive travel policy needs to be adopted with a proper tax structure, marketing, insurances, incentivisation, GST reliefs, and rebates. All these need to be taken together strongly."

Deva adding to the point made by Mayal said, "India has a 7517 km coastline. The government should develop a beach policy of enhancing and using up the coastline in a sustainable way. Secondly, we need 100 good quality trains like Tejas in order to move people around. We need to look at value. The Government has to assist us in this going forward. "Mayal then said that 'Ease of business' should be facilitated for the entire industry.  The discussion concluded on a positive note with the travel, tourism, and hospitality sector hoping to benefit from the upcoming budget.