June 28, 2020

Existential Crisis in Tourism Sector; Workers Hardest Hit

Tikender Singh Panwar

MOST of the big hotels in Shimla, the capital city, and in the state of Himachal Pradesh have started laying-off their workforce; the medium and smaller ones did it a few weeks after the first lockdown began. The major hotels that have started laying-off their workers include Marina, Combermere, Landmark, Rajdoot, East Bourne, Shere-e-Punjab, Himland West, and almost a dozen others.  There is no intervention from the government to provide relief either to the workers or the hospitality industry to ensure that at least their wage bill could be taken care of.

The Hotel and Restaurants Association met the Himachal state government several times and had asked for a support of just Rs 3,000 per month,  per worker and an equal amount was supposedly to be provided by the hotel and restaurant owners. However, the government did not shed even a single paisa to either the association or to the workers.

In the state of Himachal Pradesh there are 3,679 hotels and 2,189 ‘home-stay’ units registered with the state tourism department. It is estimated almost 50 per cent more home stays are working under the B and B(bed and breakfast) category and various other international and national chains, which are not registered with the state government. The tourism sector contributes 7 per cent to the state’s GDP. The tourism sector is one of the most important economic activities in the state. The total inflow of tourists had jumped from 6.55 million in 2004 to 17.21 million people in the year 2019(the state’s population is about 6.8 million). Nearly 10 per cent of jobs in the state are from the tourism sector and other related activities like sightseeing, camping, trekking etc., provided additional employment in the sector. All of this is ruined for the moment.

All Himachal Associations of Hospitality and Tourism Forum, comprising 18 associations of hotels, restaurants, travel agents, etc., met the state government several times and had asked for support on the fixed expenditures. The government instead of being sensitive to their demands behaved in an offensive manner and one of the senior ministers in the cabinet even said, “You have earned for so many years, what if you have to shed some money in this period.” The government has blatantly refused to help the hospitality industry in the state.

The alternative, which became a subject of ridicule that was suggested by the chief minister of the state, was “destination quarantine”.  The chief minister was strongly condemned at such an idea, which later was given up. Destination quarantine would mean that the state which has, relatively, lesser number of Covid-19 patients would be flooded with people and for the BJP state government it was an opportunity, as the PM has also quoted at several places, rather than a period of crisis to save the lives of the people.

Tourism happens to be one of the most affected sectors worldwide. According to a report 96 per cent of all worldwide destinations have introduced restrictions or are completely shut. In Africa, Asia Pacific and the Middle East 100 per cent destinations are shut or restricted for the tourists. The activity has come to a complete standstill. According to the World Travel and Tourism Council, 50 million jobs worldwide and 30 million in Asia were lost in the travel and tourism industry. Asia will be the worst affected owing to various other reasons. It is estimated that even whence the outbreak is over it would take another 10-12 months for the industry to recover. This means that the tourism industry shall be able to be back on its toes by early 2022. What will happen to the large number of people that it employs? There are no answers at the moment!

The tourism industry accounts for 10 per cent of world GDP. Already there has been a loss of 850 million to 1.1 billion international tourists and a revenue loss of US$ 90 billion to US$ 1.2 trillion in export revenues from the tourism sector. Nearly 100 to 120 million jobs worldwide are at risk.

The Indian story is also no different from the world, with the only difference that in some of the developed nations some support was offered by their governments to this sector in the form of sharing their wage bill. However, in India nothing of the sort has happened. The only help rendered in India is to provide loans which the industry is not prepared to accept owing to bleak future, at least for the coming months.

The national federation of 10 tourism and hospitality organizations in India said that it is estimating an overall revenue loss of Rs 5 trillion(Rs 5 lakh crore) and  job cuts to 4-5 crore people. The CII(Confederation of Indian Industries) estimates a loss of Rs 1.58 lakh crore for the organised sector in the tourism industry. The CII has further categorized the estimated loss; it has said, the branded hotel groups are set to lose Rs 1.10 lakh crore, online travel agencies Rs 4,312 crore, tour operators Rs 25,000 crore, adventure tour operators Rs 19,000 crore and cruise tourism-Rs 419 crore.

In the months of April-June 2020, the tourism industry is estimated to have incurred a loss of Rs 69,400 crore. The foreign tourist arrivals(FTAs) stood at 10.9 million and the foreign exchange earnings(FEE) was Rs 210,971 crore during 2019 with UP, Delhi, Maharashtra and Tamil Nadu accounting for 60 per cent of foreign tourist arrivals. The foreign tourist arrival is now virtually negligible in the period from March 2020 to June 2020. And there are no signs of revival for at least another few months.

Nearly 80 per cent of the tourism industry in India falls under the MSME (micro, small and medium enterprises) category. The finance minister’s package of stimulus did not even reach out to this important sector. Though, the ministry of tourism has said that the government is considering providing the tourism sector with soft loans, a working capital and deferment on loan payments; however no respite has been given to the industry yet. The industry above all does not require loans, it is already under huge debt, and rather it requires a stimulus and a corpus fund to ensure that the people can survive, at the least.

One of the chief executive officers of the Federations of Associations of Tourism and Hospitality(FAITH) had recommended a salary corpus for this sector. Take for example in the state of Himachal Pradesh; had the government agreed to provide a mere Rs 3,000 per worker as a salary corpus to the tourism industry in the state, this would have cost the exchequer not more than Rs 20 crore for a period of three months. However, the governments both at the centre and at the state of HP are not prepared to provide this help, thus ruining the livelihoods of the people engaged in this industry.

The hotel industry hence is adopting the method of laying-off its workers as they know if they keep them during this period then they have to pay their salaries. The government, instead of proactively intervening in this sector has left it to the owners of the hotels and the restaurants and the workers unions, who have started holding protest demonstrations outside some of the hotels, which is termed as illegal retrenchment.