Holiday plans turn cold as hot cash goes scarce
The war on black money has taken a toll on the hospitality industry, as the ongoing cash crunch has compelled many to pack up their holiday plans for the next season.
The war on black money has taken a toll on the hospitality industry, as the ongoing cash crunch has compelled many to pack up their holiday plans for the next season. With long lines seen outside banks and ATMs, fewer people have queued up to board trains, buses and aircraft to commence their vacations.
According to industry experts, various segments of the travel and tourism industry like airlines, tour operators, hotels and even local guides have felt the slowdown unleashed by the demonetisation move, which came into effect on November 8 midnight.
"There has been a slowdown in the industry as a whole," Madhavan Menon, Chairman and Managing Director, Thomas Cook (India) Group said. "As a result of the cash crunch, people are prioritising their expenses and discretionary spends are being delayed," he added.
The timing of the move has also hit the sector hard -- the current peak travel season of October-December is expected to be the worst in terms of revenue generation in many years.
"Demonetisation has had quite an initial impact on both domestic as well as international tourism," Aloke Bajpai, Chief Executive and Co-founder, ixigo.com, said.
The saving grace, at least for the airline and rail-road sectors, has been government's decision to allow old notes to be used for purchase of tickets.
The exemption gave a sudden spurt to counter bookings at airports and railway stations, as travellers were seen booking tickets for the next season as well.
"At the onset, the sale of tickets at airport counters was seeing a 20 per cent rise owing to the acceptance of old Rs 500 and Rs 1,000 currency notes till November 24," Bajpai said.
"Those willing to buy flight and train tickets over the counter at airports and railway stations with old currency notes are actually making travel plans, for even several months in advance." Segment-wise, the airline sector started giving out discounts to cope with reduction in airline bookings after the government's recent decision.
"The airlines have reported a short-term drop in ticket sales after the demonetisation announcement by the government, and in an attempt to catalyse demand and bring travellers back to the market, we are seeing airlines and hotels offering discounts," Sharat Dhall, Chief Operating Officer (B2C), Yatra.com, said.
"While there was a significant dip in domestic bookings in the initial couple of days, however, things are expected to be normal soon. We did not see much of an impact in international travel," he added.
Some experts were of the view that the demonetisation move is likely to push people towards e-payments, which will have a major impact on offline travel agents. "We expect a consumer shift from offline agents to online travel agents to accelerate with this move," Dhall stressed.
Anil Khandelwal, Chief Financial Officer, Cox & Kings, said: "This move will see a decisive shift from unorganised sector to organised sector." On November 8, the government announced that Rs 1,000 and Rs 500 notes would no longer be legal tender, with some temporary exceptions, as an initiative towards curbing black money.
The old currencies are being replaced by new Rs 2,000 and Rs 500 notes. But, a demand-supply gap for the new currencies has resulted in a cash crunch in the entire country.
By Porisma P Gogoi
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