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Business News/ Economy / Travel sector may see up to 60% plunge in business

Travel sector may see up to 60% plunge in business

After a strong long weekend, sector took nosedive in January

Companies and hotels are reporting softening of demand for January after it had a flying start with a long weekend on New Year's Eve.Premium
Companies and hotels are reporting softening of demand for January after it had a flying start with a long weekend on New Year's Eve.

NEW DELHI : Hospitality and travel companies face growing headwinds from Omicron-induced uncertainty after inching toward recovery on the back of domestic leisure travel.

Tour companies and hotels are reporting softening demand for January after a flying start with the long New Year’s Eve weekend that spilt over into the first week of 2022.

The sudden surge in covid-19 related infections due to the new variant and subsequent restrictions and closures have dashed the sector’s hopes. Firms such as Thomas Cook, Luxury Escapes and EaseMyTrip said early numbers indicate demand has petered off.

With some forecasts of a 50-60% slump in business, MakeMyTrip is offering customers last-minute cancellation and date change options for the deluge of requests it is getting.

“While pent-up appetite persists, currently travel is largely due to urgent personal or business requirements, and this is understandable in the prevalent environment and restrictions," said Rajeev Kale, president and country head for holidays, MICE (meetings incentives conferences and exhibitions) and visa at Thomas Cook (India).

Group company, SOTC, has seen demand for immediate travel at only about 50% of expectations for the month. However, bookings are still coming in for late March and April since the company is offering flexible trips.

Leisure travel—the focus of Luxury Escapes, an online travel agency that helps customers book advance holiday packages for hotels—has seen subdued volumes since January began.

In December, the company saw a modest number of bookings every day for packages, but even those are evaporating.

Arun Ashok, regional head, India and the Middle East for the firm, said weekend curfews in some areas have played on the fear psychosis of people. In a recent survey on their website, where about 1,000 people participated, Ashok said about 40% or the largest cohort of participants said Omicron is affecting the way they want to holiday, and they may not end up taking a trip immediately.

“Historically, we have seen January as a very strong month for us. However, from two years ago (January 2020), for instance, we saw a 54% drop in check-ins this time," he said. This data captures Indian travellers checking into hotels in India and abroad. The company is seeing a lot of date change requests but not as many cancellations.

While online tour operator MakeMyTrip did not provide any data, it said it has been working closely with partners to offer customers easy and convenient booking modifications and cancellations.

Travellers, it said, can opt for a full refund against last-minute cancellations for over 90% of the hotels listed on its platform. Similarly, flyers booked through the app can also get a free date change. Its spokesperson said, “Assuring traveller safety and easing the overall travel planning process through flexible booking and payment options have been our key priorities during the pandemic."

The hospitality industry was slowly getting into a recovery mode on the strength of domestic tourism—leisure and events—only to plunge back into uncertainty, said the Hotel Association of India (HAI).

K.B. Kachru, vice-president of the association and chairman emeritus and principal advisor for South Asia, Radisson Hotel Group, said nearly 50% of demand had been hit in the first two weeks of January, especially in hotels in major metro cities.

“With the new restrictions, there have been limited conferences, events which have impacted business travel. But the leisure category has been doing better despite this. Locations like Gulmarg, Pahalgam, Shimla, Dharamshala, Jaipur, Munnar, and Ooty have seen an uptick in demand in this time," he said.

HAI said hospitality contributed 9% to India’s GDP, employing nearly 45 million people pre-covid and providing livelihood to around 160 million people. However, due to the pandemic, the potential shock to the livelihood of millions working in the industry has been gargantuan.

Prashant Pitti, the co-founder of online tour operator EaseMyTrip, said Omicron has had a significant impact on the travel industry and temporarily halted the revival they anticipated by the beginning of 2022. When the current omicron restrictions were announced, the company witnessed a 15% drop in domestic bookings.

International travel has also been impacted. “While there might be some disruptions right now, we believe that there won’t be a serious aftermath in the months to come as we have witnessed that a restriction period is always followed by a significant demand jump," he said.

He added that with the current restrictions and travel sentiments, the company has also started to see a change in overall travel trends. Travellers are again leaning toward a strong preference for destinations and hotels that emphasize safety and hygiene and are eager to travel to places that are in keeping with sustainability norms.

Vidhi Godiawala, business development manager, Central & South Asia for STR, which provides market data on the hotel industry, said unlike the first and second wave, demand for hotel rooms has not dried up completely. Although, hotels have witnessed several cancellations, especially for MICE bookings given the limit imposed on maximum number of people allowed to attend has reduced drastically.

She said large weddings, and also several business events that were returning, have been postponed. According to STR data, demand is tapering off gradually, and hotel occupancies are expected to lack luster until the Omicron wave plateaus and government restrictions are eased.

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Varuni Khosla
Varuni is an Assistant Editor at Mint. She writes engaging and informative stories on luxury brands, hospitality news, business of sports, business of advertising and marketing, gaming, tourism and travel, and the business of alcohol. She is skilled in communication, research, and analysis. Varuni is passionate about covering the latest trends and developments in the lifestyle and business sectors.
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Published: 14 Jan 2022, 02:31 PM IST
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