Demonetisation: Cash crunch hits travel and tourism sector hard

Demonetisation has shed its gloomy shadow on the booming tourism and hospitality industry in India. The onset of the winter travel season has been stymied by the unexpected storm of demonetisation. People have curtailed overseas travel and instead are exploring various local tourist destinations. Getting money from banks and ATMs continue to be a hassle with no respite in sight.

The travel and hospitality industries are facing a tough time. Many foreign trips sponsored by big brands largely done through cash transactions is negatively affecting tourism industry and revenues due to the ongoing cash crunch. India’s hospitality industry has been severely affected as the hotels have lost a large number of pay-in-cash-only clientele due to demonetization. Around 60 percent drop in hotel bookings have been reported.

 Demonetisation: Cash crunch hits travel and tourism sector hard

Representational image. Reuters

At present, the scenario of the Indian citizens are worse, even if they are rich in terms of money. The wealthy and luxury-driven travellers are shifting their plans and in some cases cancelling holidays completely. When the rich and exclusive clientele from Delhi and Mumbai shift their birthday / anniversary extravaganzas to Goa instead of Prague or London, it is clear that demonetisation has trimmed their budgets simply because of unavailability of money. It has resulted in a drastic transformation that has veered ‘from International tourism to Domestic tourism’.

Not just travel and hospitality industry, but almost all sectors are feeling the impact of demonetisation. Not a single sector is immune to it. The industry's corporate clientele though is hit, the leisure segment is hit the hardest. Among the latter, the international leisure segment has been hit severely.

Impulse travelling too has come to a sudden halt. Visiting places like Dubai and Singapore as weekend trips have been suspended as of now. Business or work-related trips are something that cannot be overlooked or avoided are being delayed and only the most unavoidable trip are being taken up.

The accommodation section of hotels is much affected, but leisure segments like hotel banquets and high-end restaurants are feeling the pinch as weddings are being called off and many pre-bookings for different wedding ceremonies are also being cancelled. In addition to this, high-end restaurants are too facing drastic change as people are replacing fine-dining with pocket-friendly eateries.

It seems as if this is just the calm before the storm.

We hope that the storm of demonetisation will calm and settle down soon soon. And the travel happy citizens can get over this shock and get on to digital payments.

The hospitality industry is the most dynamic industry, especially when it comes to pricing and demand. Hopefully, there will be differently priced packages that will cater to all people so that they can still travel during these changing times.

(The writer is Founder, Internet Moguls, a digital marketing agency for hospitality and travel industry)

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Updated Date: Jan 15, 2017 20:59:38 IST