Domestic tourism: Silver lining in the post-Covid world

Domestic tourism: Silver lining in the post-Covid world

  • Vivek Agarwal, Partner |

By April 20 this year, the world had come to a standstill, 217 destinations globally are now subject to some form of travel restrictions. Of these, 94 percent destinations have completely sealed their borders for international arrivals across land, sea and airports. The world economy braces for an economic shock, the magnitude of which has been unseen since World War II. Travel and tourism is undoubtedly one of the worst-hit sectors as destinations reported a 22 per cent decline in international arrivals within the first three months of the calendar year. By the end of the calendar year we may well see international travel decline by almost 80 per cent.

The volume of international arrivals is traditionally the globally accepted barometer of a tourism economy’s success. Luckily for some countries international arrivals are not the predominant driver of tourism related economic activity. In India, foreign tourists represent less than a percent of tourism activity. The lion’s share of tourism activity being domestic, India’s travel and tourism sector will largely be insulated from the immediate aftermath of the pandemic.

Over the years, Indians have increasingly been bitten by the travel bug and have shown keen interest to rediscover hidden treasures in our geography and beyond. Between 2012 and 2018, domestic tourism activity grew from 1.05 billion to 1.85 billion with a growth rate of around 10 per cent. In the aftermath of the pandemic, we expect international travel to evidence muted growth until countries agree to common standards of pre-screening at origin destinations.

Restrictions on international travel will see a spurt in domestic tourism activity. KPMG in India estimates that domestic tourism activity will touch 2.8 billion by 2022. The drivers of growth could be two-fold. First, there would be multiple citizens coming out of nearly two months of lockdown who would be itching to travel and experience normalcy. We could see a weekend tourism boom, with people traveling to familiar destinations preferring cars over mass transit options. Second, 40 million Indians who would have otherwise planned to vacation overseas are largely restricted to domestic travel. As confidence in air travel resumes, long haul destinations beyond the ‘four-hour travel barrier’ will see heightened activity. Together these travellers will generate significant additional revenue for the currently ailing industry.

For perspective, Indians spent a whopping USD 26 billion on international travel last year, as per World Bank estimates. The quantum of money spent by Indians on foreign shores is equal to a tenth of the travel and tourism sectors contribution to the Indian economy. Contrary to what some may presume, Indians are among the most lavish spenders in the world. According to Forbes, an average Indian spends around US$ 1,200 per overseas trip. In contrast, an American spends US$ 700 while a Briton spends US$ 500. The average Indian spend is in fact almost four times more than even the Chinese, the biggest volumetric influence of global travel and tourism. With the sheer volume of activity that jet-setting Indians splurge on, there would be a resultant spike in economic activity.

The timing could not be more opportune as the Ministry of Tourism has been working tirelessly on strategies to boost domestic tourism. A result of the prime minister’s independence-day speech last year, when he exhorted citizens to explore 15 new destinations over the next three years. The ‘Dekho Apna Desh’ campaign by the ministry is likely to intensify in coming months as early initiatives and teasers have been well received.
We expect a post Covid-19 world will usher in some significant changes:

  • Domestic travellers would expect a perceivable change in health and safety standards when they have interface with stakeholders in the tourism value chain.
  • Hospitality particularly will see technological innovation percolate for confidence building measures of their guests.
  • Road trips from major population centres will see a sizeable uptake for the months to come.
  • Family and multi-generational travel will be in vogue.
  • Demand for responsible travel will be real, no longer limited to mere lip service and by lines as nature and wildlife products will grab the attention of high spenders.
  • Travellers will demand more gratifying ‘experiences’ as they bond with near and dear ones.
  • Travel insurance, once an afterthought will gain wider acceptability among flyers.

Confidence building measures should be the agenda for tourism administrators across the country. Citizens would require reassurance about health and safety standards during travel and stay, which in turn would require a healthy combination of outreach and innovation as they adjust to the new normal.

Our inherent cultural philosophies of ‘Padharo Mhare Desh’ and ‘Atithi Devo Bhava’ will certainly make us even more inviting for our fellow countrymen to come and explore our own country.

 Aalap Bansal, Associate Director, Infrastructure, Government and Healthcare services, has contributed to the article.

(A version of this article appeared in The Economic Times -Travel World.com  on 14 May 2020)