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The Economic and Psychological Impact of SARS-Cov2 on Travel and Tourism

Industry: With Special Reference to India

Article · May 2020

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 Juni Khyat ISSN: 2278-4632
(UGC Care Group I Listed Journal) Vol-10 Issue-5 No. 17 May 2020
The Economic and Psychological Impact of SARS-Cov2 on Travel and Tourism
Industry: With Special Reference to India
Uttam Kumar
Associate Professor
Department of Geography
MMH College (CCS University), Ghaziabad, India
Mob No. +91 9868989646
Email: [email protected]

Abstract
By the end of December 2019, the eruption of SARS-CoV2 popularly known
as COVID-19 started in the Hubei province of China. In just two months, COVID-19
spread across the globe. By the end of March 2020, more than 160 nations putting the
public health first, implemented countrywide shutdown, hence the travel and tourism
industry came to a complete halt.This paper highlights the significance of the tourism
industry and its role in the Indian economy; investigates the impact of COVID-19 on
the tourism sector, and proposes some possible recovery measures.
Keywords: COVID-19; Lockdown; Tourism; Economy; WTTC; UNWTO
Introduction
The term tourist was first time probably used in 1772 and tourism in
1881(Westcott M. May 2015). Tourism is referred as an industry mainly because it
not only amuses us but also employs a sizable amount of people. Tourism together
with travel sector becomes the largest industry in the world. Over the years, many
countries have deemed tourism as an important benefactor to economic growth. The
economies of some countries totally rely on this sector. If a country attracts a good
number of tourists, that country can’t be designated as a poor country.The irony of
tourism industry is that, any kind of economic setback to the states hits tourism
industry first as people start cutting down their travel expenditure first. But, in the
case of COVID-19 tourism somehow had played a direct role as it spread most in
those countries where tourist was in high number.
The countries, never in history have faced a challenge like COVID-19, where the
movement of people both domestic or international has come to stand still, affecting
travel around 25% this year that is almost equal to dropping of 3 months of travel.Due
to the Corona pandemic, as per estimate, there will be around 38% decline in travelers

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 Juni Khyat ISSN: 2278-4632
(UGC Care Group I Listed Journal) Vol-10 Issue-5 No. 17 May 2020
across the world (Sharma N, 2020). Alike other sectors of the economy Tourism and
travel industry will also bear the burn.
Economic Impact
By mid-March 2020, most of the countries across the world implemented
travel restriction within and across borders. P Zurab Secretary General of UNWTO
remarked "With tourism suspended, the benefits the sector brings are under threat:
millions of jobs could be lost, and progress made in the fields of equality and
sustainable economic growth could be rolled back"[1]. An estimates released by
WTTC in March 25th, 2020 almost 7.5 crore jobs in tourism and hospitality industry
are at stake worldwide.
In just two weeks their calculation jumped by 50% from the last
estimates. Almost ten lakhs jobs are being lost every day. The situation can be worst
with the further spread of COVID-19. The tourism industry according to WTTC was
the second fastest growing industry in the world. In 2018 it grew at the rate of 3.9%
followed by manufacturing that grew at the rate of 4%. The most recent study of the
council suggests that the Asia-Pacific region will be hit the most and might lose 4.9
crore jobs because of COVID-19. That will cause a loss to the tune of $800 billion to
the GDP of tourism sector [2].
Psychological impact
Travellers never halt their feet in any condition. Globetrotters are
waiting for the farewell of the COVID-19 virus. However, the change in the mindset
of people will affect the hotel and travel business once the lockdown is over.
Following radicalchanges could be noticed-
- Post lockdown people will start travelling but instead of international
destination they will prefer domestic travel, as the corona fear in the mind of
travellers will stop them from stepping out of the home country, at least for a
year or two.
- People will be conservative while choosing the destination; they will
prefer the places that are close to nature or places where the impact of
COVID-19 has been less or controlled.
- Hygiene will be the topmost priority; hence people will prefer clean and
virgin places to the popular and crowded ones.
- Booking of hotels may be checked twice as they might suffer from
germaphobia.

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- People will prefer to travel by own vehicles than traveling by Cruises or
flight due to the fear of infection or compulsion of social distancing.
- Rather than going for a long vacation, people can prefer long drives
during weekends.
- Going to worst corona affected countries like USA, Brazil, Russia, U K,
Italy, Spain France Germany, etc.will be a taboo.
- China could be the most discarded tourist destination in the world due to
the land of corona virus eruption.
- The east European countries and the Baltic States could emerge as a
new tourist destination.
- For India, Middle East and S E Asia could be the new destination
because of less COVID-19 cases and close proximity (Marwah M, 2020).
India Scenario
The tourism industry plays an important role in the Indian economy and has
been a notable benefactor of country’s GDP. In addition to this, this sector generates
huge employment. So putting a halt on aviation and the closing down of popular
tourist destination including the 7 wonders of the world “Taj Mahal” by the mid-
march 2020, that attracts millions of tourist every years both domestic and
international, was an evocative sign of how the tourism landscape of India got
changed because of corona pandemic (Singh N, 2020). In relation to any other sector
tourism industry rely the most on free and optimistic movement of people, but the
countrywide lockdown and no movement possible, the tourism sector is being “badly
hit” remarked by the government.

Significance of Tourism industry in India

- It’s contribution to India’s GDP was 9.5% and generated more than 4 crore
jobs as of 2019 that makes 8% of country’s total employment [3].
- According to WTTC, out of 185 nations India ranks third in terms of its total
contribution to GDP (Aggarwal P, 2020).
- This industry accounts for over 12% of jobs (5% direct and 7% is indirect) in
India [4]. The tourism sector not only engages workers in urban areas but also
provides a platform for countryside people.

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- According to the latest report (2019-20) of MOT, over 8.6 crore people were
employed in the travel & tourism sector in India.
- As per an estimate, the total revenue of recognized hotels in India is around Rs
380000 million.
- The restaurant industry an important sub-sector gives direct employment to
over 70 lakhs people and has a turnover of around Rs 4 lakh crore.
- The air transport another important ally of the tourism industry employs more
than 4 lakh people directly and 9.4 lakhs indirectly(Singh N, 2020).
- According to WTTC, by the year 2028, foreign tourists’ arrival in India is
expected to reach over 30 billion[5].
Impact of COVID-19 on India’s Tourism Sector
Before the rise of corona pandemic, the tourism industry in India was already
facing the burn of a global economic slowdown. The deceleration of world economy
last year, resulting in low footfalls of foreign tourists consequently low earnings of
foreign exchange from tourism sector in India. This situation got further worsens due
to the pandemic and resultant nationwide lockdown that has halted the growth of
travel & tourism sectors in India. FAITH in its report said, “The industry is facing its
biggest economic challenge with the larger and combined effect of 9/11 and the
slowdown of 2009 and estimated bigger effect than the Economic Depression and
World War II” [6].

- Due to pandemic, the tourism and hospitality sector in India is assuming a

potential loss of nearly 3.8 crore jobs. The impact could be on both “White
and Blue collar” job.
- As per industry record by the end of March 2020 the hotel occupancy went
down to over 60 percent as compared to last year in the same period.
- IATO has estimated the combined loss of travel, hotel, aviation sector to the
tune of around Rs 8.5 crore due to the restrictions imposed on the arrival of
foreign tourists.
- India will witness an all time low in inbound and outbound travels due to
COVID-19.
- The hospitality industry is assuming almost zero earning in the current
lockdown period, and low revenue in the succeeding months (Singh N,2020).

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- In March 2020, FAITH the apex body of the industry predicted the loss to the
tune of 5 lakh crore. Due to COVID-19 the supply chain in tourism and
hospitality industry is breaking down severely, hence the estimation got
double to 10 lakh crore in April 2020 [7].
- According to a research firm “STR”, the room occupancies in hotels across
pan India dipped by 67% just before the announcement of countrywide
lockdown. The earnings were hit hardand wentdown to 72% by 21st March
2020, as against 20% registered on 7th March 2020. The room occupancies
dipped further up to 15% in April 2020, according to EIH [6].
- By industry experts if the current situation does not improve by June 2020
then it can affect 30 percent revenue loss to hospitality industry.
- Nearly 15 percent jobs in hospitality industry are at stake as there will be
hardly an immediate surge in demand even after the lockdown is over.
- The increase in air passengers is likely to have negative growth of 20-25
percent for the year 2020-21 (Singh N, 2020).
Revival Measures
The situation mentioned above indicates a slow or gradual revival of tourism
sector in India, although the important point to note is that there is hope left. After
alltourism is no longer a luxury, instead it has become part of everyone’s life to get
rejuvenation by breaking away from a boring routine life. Hence the revival of this
sector is just a matter of time. To revive the tourism industry the following few
measures could be adopted -
- More emphasis should be on domestic tourism to realize its full potential and
earn profit.
- ICC recommends constituting a “Travel & Tourism Stabilisation Fund” to
avoid monetary and job loss.
- The industry should also consider about operational “cost optimization” at
every level.
- FAITH has suggested that, the government is required to boost domestic
tourism “by giving 200 percent weighted reduction of expenses to Indian
corporates for undertaking their meeting, conferences, and exhibitions in
India”.

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- Further tax exemption should be given to LTA up to Rs 150000 to all Indians
“for undertaking domestic holidays, these exemptions to be availed against
invoices issued by GST registered Indian Tourism service providers” [6].

Road ahead
The comeback could be slow, but tourism being an integral part of
people’s life it will revive first for sure, once the pandemic is over. After a long stay
at home due to lockdown and no travel, people will certainly start exploring the world
once again. Further, China is a big inbound tourist destination, but COVID-19 will
certainly damage the market. This is a blessing in disguise, and India should try to tap
this opportunity once the business is revived.
References
Aggarwal Pallavi (March, 2020). “Indian travel market is growing at a steady
pace”,https://www.sundayguardianlive.com/lifestyle/indian-travel-market-growing-steady-pace
Marwah Munnmunn(May,2020). “Covid-19 and its Impact on
Tourism”.http://bwhotelier.businessworld.in/article/Covid-19-and-its-Impact-on-Tourism/12-05-2020-
191801/
Sharma Nimisha (March,2020). “How will Covid-19 impact Travel & Tourism industry”,
https://www.indiacityblog.com/travel/how-will-covid-19-impact-travel-tourism-industry-1395/.
Singh Nidhi (April,2020). “The Impact of Covid-19 on Travel & Tourism Industry in India and its
Future”.https://www.tourmyindia.com/blog/impact-of-covid-19-on-travel-tourism-industry/
Sara Farooqui (April,2020). “India coronavirus dispatch: Temporary troubles or a crumbling world
order?” https://www.business-standard.com/article/current-affairs/india-coronavirus-dispatch-
temporary-troubles-or-a-crumbling-world-order-120041400104_1.html
Westcott Morgan edt. (May, 2015), Introduction to Tourism and Hospitality in BC,
https://opentextbc.ca/introtourism/chapter/chapter-1-history-and-overview/
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millions-of-jobs-in-global-tourism-industry-un-body/articleshow/75194635.cms
[2] India’s Covid-19 lockdown may cause 38 million job losses in the travel and tourism industry 14
April 2020 https://scroll.in/article/959045/indias-covid-19-lockdown-may-cause-38-million-job-losses-
in-the-travel-and-tourism-industry
[3] Economic Impact Reports https://wttc.org/Research/Economic-Impact
[4] Distribution of employment in the travel and tourism sector across India
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[5] Indian Tourism and Hospitality Industry Analysis (March,
2020).https://www.ibef.org/industry/indian-tourism-and-hospitality-industry-analysis-presentation

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[6] COVID-19 impact | Tourism & hospitality on brink of collapse, appeals for relief package 23 April
2020https://www.moneycontrol.com/news/business/companies/covid-19-impact-tourism-hospitality-
on-brink-of-collapse-appeals-for-relief-package-5180671.html
[7] Covid-19 impact: Loss forecast for India’s tourism sector doubles to Rs 10 lakh crore, says FAITH
5 may 2020 https://www.financialexpress.com/lifestyle/travel-tourism/covid-19-impact-loss-forecast-
for-indias-tourism-sector-doubles-to-rs-10-lakh-crore-says-faith/1949030/

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