Handling the COVID-19 Crisis & Comeback Planning - Vinod Zutshi, Former Tourism Secretary

TRAVEL AND Tourism Sector would have the hardest impact globally and on India, among all economic sectors, due to COVID-19. In view of unprecedented travel restrictions and almost complete lockdown, all over the world, UNWTO expects that international tourist arrivals will be down by 20 to 30% in 2020. This expected fall can translate into a decline of international tourist receipts by 300-450 billion US Dollars.

The immediate likely impact, however, would be that millions of jobs both in India and globally are at risk of being lost, as most of the tourism business is in MSME Sector. Further, liquidity crunch and a shortage of working capital with travel & tourism companies is another urgent threat.

COVID-19 DISRUPTION

Prior to COVID-19, the entire industry, all over the globe was in an expansion mode. India Tourism had also been expanding on all fronts viz inbound, outbound and domestic tourism. COVID-19, would, however, slow down the expansion mode. Even for the Industry, it will be appropriate to first “recover the lost ground” and then after due consolidation process, to go again for gradual expansion. Till such time, the domestic and International travelling reaches the pre-COVID-19 level, it will not be a feasible proposition to expand. The industry should wait for the new ‘Supply-Demand Imbalance’ arising from COVID-19 and then should take a call on expansion. I feel that more than expansion, the Industry needs innovation, diversification and digitalisation to meet the challenges of disruption caused by COVID-19.

DEALING WITH THE PANDEMIC

The industry professionals, during this period, should deliberate on taking all possible steps to sustain themselves financially by ensuring the required liquidity and working capital. This is the immediate step which will help them to retain the jobs of their employees and workers, honour their financial commitments and continue to operate in the market, as and when the lockdown is lifted.

The industry must prepare “New Operational Plan” for their own business in the light of new global order. The professionals should study the new demand-supply pattern and should innovate and adapt themselves by strengthening the health protocol, follow SOPs and become digitally strong. It is likely that domestic tourism will begin first, in the initial phase of post lockdown period. Therefore, Industry must put their immediate focus on domestic tourism, more than inbound or outbound.

The tourism associations and industry chambers must come on a common platform to seek support from Union and State Governments in the form of bail-out package, reliefs in taxes and by way of special schemes for easing the liquidity flow to the industry players.

RECOVERY ASPECTS

Looking at the current scenario of COVID-19 crisis all over the world, it may take some time for the industry to recover. It is only when the lock-down ends, and after assessing the extent of damage to the economic and public health all over the world, that it will be appropriate to estimate the horizon of recovery.

How soon the Industry recovers will also depend on:

* The extent of ‘safe zones’ and ‘safe destinations’, from a health safety point of view, that emerge after the crisis.

* The financial health of key Industry players like Airlines, hospitality and travel-trade, and

* How the Industry is able to transform and innovate itself to the new global order.

One another issue is that post-COVID-19, as the business operations in travel and tourism sector will have to start at a slow pace initially, involving less volume of business, the Industry may face the issue of viability in operations, till it attains an optimal volume of business.

GOVERNMENT SUPPORT

The Industry can seek support from the Government in many ways. However, at this point of time when the first and foremost requirement of the Country is to overcome the present health emergency, the Industry should extend its unconditional and whole-hearted support, proactively, to strengthen the Government machinery.

Government support can be sought in the following respects:

* Ensure ease of liquidity through soft loans/working capital at reduced interest rates, through financial institutions. Creation of a National Corpus Fund can also be considered to serve the immediate credit needs of the industry.

* Reduced tax burden including lowering of GST rate and deferred GST.

* Relief in taxes and charges by State Governments in the form of a waiver of entertainment tax, luxury tax and reducing the power and water rates.

* Ministry of Tourism could consider constituting a ‘National Tourism Recovery Committee’ to address the issues and demands of the industry and to bring out a ‘Recovery Package’ comprising short term, medium-term and long term, fiscal and monetary measures.

POST COVID-19 SCENARIO

Let us all be very clear, that even after the COVID-19 threat mitigates, the global order of the travel & tourism sector, will see a paradigm shift and a reset. There shall be a new ‘protocol’ both for International and domestic travelling, primarily based on health safety of traveller and of the host destination. Countries will revisit and review their Visa policies. The New Visa regime of countries is likely to be guided also by the health safety of the host country. Governments all over the world are likely to put health protocols and Standard Operating Procedures (SOPs) in place, for industry and for travellers to follow.

“Health Safety” shall, henceforth, become an important pillar of the Travel and Tourism Competitive Index. Tourists, particularly leisure and holiday travellers, will, in the initial 1-2 years, prefer a destination which has remained relatively safe during the COVID-19 crisis and is perceived as a safe destination. Travel & Tourism Industry will, therefore, have to adapt itself to the new national and global order of travelling, by ensuring the health protocol and health safety of the travellers.

And therefore, those in the Industry who can innovate and adapt better to this new order will be the fittest and sharpest to recover faster than the others.

INDUSTRY PROMOTION SUCCEEDING PANDEMIC

If India overcomes the COVID-19 crisis relatively more successfully, we shall emerge as a ‘Safer and Healthier’ tourist destination in the world. In times to come, the destination which can brand itself as a ‘health-safe’ destination, will be a preferred destination for travel. Within India also there may emerge ‘safer regions and destinations’. The domestic travellers, as well as inbound travellers, therefore will prefer to visit such safe destinations only in the initial period.

The branding and promotion strategy of Government and Industry will have to be built around two factors. Firstly, how travel could be made “seamless and health-risk free’’ and secondly, how ‘health-safe’ is the destination.

Travel and Tourism Sector’s historic resilience and its capacity to deal with crisis situations are very well known. The travel & tourism industry will certainly stage a come-back, sooner than later, with more resilience. India Tourism also has to become more resilient and should become strong enough to absorb such unexpected shocks. The country also needs to embrace Sustainable and Responsible Tourism in totality.

My concluding advice to ‘One and All’ is, “Stay home today – to be able to travel tomorrow”.