You just got off work and are barely in need of a bite to eat before heading onto the quickest Metro and enduring the tiring ride back home. The many options available at the metro station cafeteria provide you with a quick fix of donut and cold coffee, and you are good to go. Or, you have a free hour on a busy Wednesday morning. The small spot beside your college is your go-to. Or, you’re finally on that Goa vacation with your best buddies. The sunny beaches and pristine water are all your dreams come true — experiences accentuated by the ideal hospitality.
What Have Been the Impacts of the Pandemic on the Global Hospitality Industry?
As the world grapples with a deadly pandemic, these sights and instances have been reduced to the future notions of a ‘Post Pandemic World’. As the relief measures and crisis mitigation steps have started to kick into the various sectors of the economy, stakeholders are on the strive towards managing finances and ensuring as smooth a revival from the economic fall out of the pandemic as much as possible. However, the global tourism and hospitality industry has suffered one of the deepest and irrevocable brunts of the pandemic. With the social, behavioural, and financial changes that it has brought with itself, COVID-19 has truly changed the way we live our lives, and the tourism or hospitality industries are bound to keep up, innovatively.
The constantly expanding global tourism sector was one of the major factors driving the growth of the hospitality industry before the coronavirus pandemic outbreak. The number of international tourist arrivals had risen continuously over the past decades and as per the growth projection made by the World Tourism Organization (UNWTO), the number of tourist arrivals across the globe was expected to cross 1.5 billion by 2020. The factors affecting this constant rise in these numbers, before the pandemic struck, are multiple — ranging from the rise in disposable income over the decades, internet penetration and online banking, web-presence of the hospitality industry, overall global interconnectedness, and so on.
On the contrary, key factors affecting the decline in the market for tourism and hospitality services is the social distancing norms and other restrictions that have been out into place owing to the rise of the number of cases of the novel coronavirus, as well as the travel restrictions owing to the lockdown (air and otherwise). According to the UNWTO norms, the global hospitality industry is segmented on the following grounds — food and beverages, travel and tourism, lodging, and recreation. Of these, the travel and tourism sectors along with the recreation segment are largely declining due to the impositions of lockdown taking place across the world.
How is the Indian Travel and Tourism Sector Faring in the Pandemic?
According to Invest India, Travel and Tourism is the largest service industry in India was worth $234 bn in 2018. The industry has become the third-largest Foreign Exchange Earner in India with a 17.9% growth in Foreign Exchange Earnings (in rupee terms) in March 2018 over March 2017. According to The World Travel and Tourism Council (WTTC), tourism generated $240 bn or 9.2% of India’s GDP in 2018 and supported 42.67 mn jobs which is 8.1% of its total employment. The sector is predicted to grow at an annual rate of 6.9% to $460 bn by 2028 which is 9.9% of GDP. Not only do these numbers define the scope and ambit of the hospitality sector in India but go at great lengths to give a picture of the large-scale disruption and adverse overarching impact to the industry that the pandemic is bound to exert. To put things further into perspective, 90 percent of hospitality loans might have to be declared Non Performing Assets (NPAs) after August 31 2020, as average occupancy remains dismally low at between 10-20 percent in the different hotel and resort segments of the industry, according to the Federation of Hotel and Restaurants Association of India (FHRAI). The Association has also written to the Union Finance Minister as well as the Reserve Bank of India (RBI) governor, submitting a plea to consider the extension of the loan moratorium period that has been put in place till the month of August, by three months.
What is the Way Forward?
As several cafes and restaurants shut shop, hotels struggle to pay salaries to their employees, and layoffs gradually become the norm, the industry seems to be in the deep end. However, according to a few industry-experts and hoteliers, all hope is not lost. The industry is currently on its way towards recalibrating the services offered by it, and ensuring that exhaustive precautionary measures in the light of the pandemic are being taken into account.
Whether it is digital payments and bookings, or touchless call services, or even event halls and conference rooms that allow for social and physical distancing; innovation, resilience, and change are the three factors driving the revamp of the hospitality industry. “We are re-calibrating [and] localising supply chains, which will change the way we operate,” said Gurbaxish Singh Kohli, vice-president of the Federation of Hotel and Restaurant Associations of India, in conversation with Quartz. “Every fixed cost is being reviewed afresh. Each hotel will have its own review geared towards greater efficiency and making operations lighter.”
However, it cannot be denied that the hike is tough for the industry. As work-from-home culture catches up with the working class of India, corporations and companies are realising the power of remote work, and may even reconsider making their employees travel — a notion that is bound to create a dent in the coffers of the tourism industry. Furthermore, even if the travel restrictions have been lifted in the future, tourists and travellers will also be wary of taking trips due to pandemic-inertia, at least as long as the virus is here to stay. The impact is huge, and not yet predictable, on both revenue and supply chains in the industry, according to Deloitte. It is a matter of time before, either the industry is able to recoup and revive itself, or the pandemic changes the face of this sphere, forever.