The tourism sector in India is experiencing serious turbulence. With floods creating havoc in southern and western parts, the uncertainty in Jammu and Kashmir (JK) after the abrogation of Article 370, weak corporate sentiments and steep air fares for domestic travel have weighed heavily on the tourism industry which is witnessing a 20-25 per cent drop in overall demand.
The tourism market in India is divided into Business and Leisure segments, and there is a slowdown in both of these. While floods and the situation in JK are impacting the leisure segment, the slowdown in corporate demand has affected business travel, particularly the thriving MICE (Meetings, Incentives, Conferences and Events) business.
Although the foreign tourist arrivals grew in the past financial year from 10.4 million in 2017/18 to 10.6 million in 2018/19 there’s a general sense in the industry that the past three months have been very weak.
Firstly, the election was a huge dampener for leisure travel, and now the political situation in JK is affecting leisure business. When the overall sentiment is down, then discretionary spending goes down too, said an industry expert.
Chennai, for instance, is doing badly because of the water crisis. The other major tourist states like Kerala, Karnataka, Maharashtra and Gujarat are being ravaged by floods for the past two weeks, affecting both domestic and inbound tourist demand.
The Kerala market isn’t doing well. It’s doing worse than last year. It started with the revival of the Nipah virus scare and the closure of Kochi airport last week. We have seen a lot of cancellations of inbound and domestic tourists. I don’t expect the market to rebound before the fourth quarter, said Pavethra Ponniah, V-P and Sector Head at ratings agency ICRA.
Arun Chowdhary, MD of Travel Care in Jaipur, said that people have cancelled their bookings because of the floods. A slice of domestic tourism from Kerala and Maharashtra has shifted to places like Rajasthan, but the worst affected is Jammu and Kashmir where absolutely no one is going. People are not even going to Jammu, which is rare, he said.
The inbound travel is weak in the past four months with growth rate hovering at around a five-year low. It’s ironical that the turmoil in the sector is coinciding with the extended Independence Day weekend which is supposed to be the peak season for tour operators.
The short and frequent weekend getaways which are popular with young working professionals have taken a hit. With the large-scale devastation of connecting infrastructure in flood-affected states, the travellers are left stranded, said a travel consultant.
As for the domestic leisure demand, the biggest proxy is the passenger vehicle growth numbers which are touching decade-low levels month after month. People who are buying Rs 8-10 lakh car are the ones who are staying in 3-4 star properties. Domestic leisure gets impacted because of thart,” said a travel consultant.
The ongoing unrest in JK has affected the peak tourist season, and its impact will be felt in the coming months. Search queries for flights and hotel bookings have gone down by 70 per cent in some key tourist areas affected by floods. Booking enquiries for Kashmir for the month of October have gone down about 89 per cent, said Aloke Bajpai, CEO and cofounder, IXIGO, a travel booking platform.
While speaking to Mail Today, Homa Mistry, CEO, Trail Blazer Tours, said, There is a level of uncertainty in the tourism sector in JK after Article 370 has been revoked. We know people are not going there for now. But we also know that once things settled, as is being perceived, it will pick up for good.
The business travel demand has been particularly weaker than expected. Given that the corporate performance outlook is bad, demand outlook will continue to remain muted for some time, said ICRA’s Ponniah.
Delhi and Mumbai, which accounts for 35 per cent of air traffic demand, are not just business centres but they are also gateways to other tourist destinations for inbound travel. Delhi, for instance, is the entry point for foreign tourists heading for Agra and Rajasthan.
The Jammu and Kashmir tourism has been going through a rough patch over the past few years owing to the continued border dispute between India and Pakistan and high GST rates. The regular issuance of travel advisories also impacted foreign tourist arrivals in the Valley.
According to some estimates, around 40 per cent tourists had to cut short their stay, and about 30 per cent, who were planning to visit the state, have put on hold the bookings for travel around Diwali.
Michael Lyngdoh, founder and COO of social travel platform Tripoto, said that the maximum impact at the national level has been felt by local tour operators who have seen a sharp decline in business. The operators in states like Himachal Pradesh, Kerala and Andaman and Nicobar are badly affected, he said.