Global economic recession storm hits Tourism
The financial crises and economic showdown in the developed countries
The financial crises and economic showdown in the developed countries which contribute international tourist traffic to India are likely to have direct impact on the future tourist arrivals in India. Infact this will bring transparency slowdown. Nodoubt, our efforts will continue to minimize the negative effect of the crisis. In such developments, there is a general psychology to exercise economy on travel expenses. Thus tourism becomes first causality. With the global news of retrenchment of staff, slashing salaries, not to pay bonus etc. do not augur well for tourism business.
Indian tourism industry already had been passing through a bad time with airlines, hotels due to cut of commission, challenges from on line tour operators, sky rocketing hotels rates and general safety situation in metro cities. This global economic showdown seems to have followed suit to make the matter worst. Cash crunch is the main issue and ripple effect of the global financial sector crises to continue for some more time. This mean year 2009 will be the worst year for the industry. At present, our tour operators are just servicing the commitments of business they got earlier in the year, good luck that there are not immediate cancellation but they are already seeing a bit of softening in demand for the coming months (Even for December 2008). That is probably due to conservatism on the part of holidayers to the economic show down & uncertainty environment. People are looking very carefully at their economic investment, cash low flow and all the more no bank loans are coming forward easily. They are really cautions specially would not like to venture for long haul destinations. Insurance cost has also gone up due to advisories about visit to India on safety concern and nodoubt, increasing air ticket costs due to escalation of the cost of petrol.
With the rupee falling against the dollar, this would have been the time for overseas tourists to visit India now but it is not happening. Middle class travelers are not getting loans as banks in UK, USA, have now tighten the eligibility criteria in order to ensure customers don't default when the going gets tougher. This was not so earlier & this it is natural it has impacted large movements, even NRI's holding foreign passports who use to provide round the year movements are cautious on traveling expenses. Hospitality sector has been greatly impacted like the airlines sector in India due to the recent events in the financial market around the world. Now more aggravated with terrorist attack in Mumbai. This is amidst concerns of a cut down in corporate travel which provided business base for them even in slowdown of tourist arrivals from overseas. With airlines mull salary cuts, lay offs, there are many highfliers in other sector settling in new jobs at much lower salaries after being eased out of their previous position, cut in corporate travels, future of the travel industry/hospitality sector draws a grim outlook and many sector like Banking Insurance, financial services sector which used to provide incentive clients, business from these sectors looks more grimmer.
Infact traffic from USA will be impacted till the new Govt. takes over and what fiscal measures are introduced to save the interest of borrowers for home loans, transport loan, how new loans are sanctioned with the changing dynamics in the global financial crises. Many new Mergers & Acquisitions to take place and "Wait & Watch" will be the general norm. As tourism professionals, we should be prepared for a slowdown for at least the year 2009. It is just a matter of time to ascertain whether measures adopted by the respective Governments are right & can do away with worst happened. Accordingly they will go for future deals. One good thing, tourism has a big resilient power & it bounces back fast. People do not like to be bound in the four walls and venture out at least to Regional countries & slowly more toward long haul too. Now our tour operators must update their products and ensure the affordability part & the new experience. Put those packages on web so that customers have greater awareness. This will be first part of marketing and motivate to pay in staggering manner so that before 30 days of their arrivals, they can pay the full amount. Don't expect them to pay 50% at one go. We need to know the psychology & the paying capacity. Let them save & join. Conservative economic practice to continue till the situation improves.