April 27, 2020 TnH Global

COVID-19 Crisis: Save tourism MSMEs to save tourism, millions of jobs

MSMEs engaged in India’s travel & tourism business need to be protected from the unprecedented shock of COVID-19 crisis. Any delay will be tragic for the Country’s Tourism Sector that offers millions of jobs.

By Prem Kumar

Coronavirus pandemic has been devastating for every sector of the economy, and tourism is among the most affected sectors. Besides COVID-19 caused demand shock, the tourism sector has been hit hardest due to the nation-wide lockdown clamped to prevent spread the pandemics. The tourism industry is in a coma, airlines are grounded, railway services suspended, hotels empty, buses out of the road, destinations deserted for visits; the scenario is quite gloomy for this labour-intensive sector.

Within the large space of travel and tourism, it is micro, small and medium-sized enterprises (MSMEs) such as travel agents, tour operators, MICE planners and organisers, DMCs, TMCs, restaurants and tourist transporters are among the segments hit the hardest. All these companies have very important roles in managing, operating, and facilitating tourism. These companies work as coordinating agents between customers and suppliers. These companies were already stressed but the COVID-19 global pandemic has been catastrophic for them, most of these MSMEs are struggling to remain in business as no new business, bookings are coming and their cash flows are choked, they don’t have a war-chest to sustain their operations in the absence of cash flow. If MSMEs form the backbone of the economy, MSMEs of the tourism industry is the backbone of this service sector.
In India, across the sectors, there are about 51 million MSMEs operating in manufacturing, services and supply chain sectors.

According to the figures provided by the Federation of Associations in Indian Travel & Hospitality (FAITH), there are 53,000 travel agents, 1,15,000 tour operators (inbound, domestic, outbound), 15,000 adventure tour operators, 2700 MICE organisers, 19,11,000 tourist transporters, 53,000 hospitality and 5 lakh restaurants, all of them are currently facing the heat due to lack of cash flows. COVID-19 Pandemic has jeopardized India’s once hailed 5 lakh crores tourism industry and employment of an estimated 3.8 crore jobs. But now many of them are on the verge of collapse as they were unable to pay to meet their operating costs such as salaries, rents and interests. The immediate challenge before them is to survive this critical time.

There are already talks of the government offering package to MSMEs sectors. Similar financial package must be also offered to MSMEs working in the tourism sector, affected due to the coronavirus lockdown, and the demand shock.

MSMEs in tourism sector employs a huge number of people; therefore, they should not be allowed to get out of the business. They should immediately be offered easy access to credit. Besides financial packages, the government should pledge marketing assistance to these companies to regain market access post-COVID period. During this lockdown, entrepreneurship skills of people running these firms should be improved; professionals employed in these organisations should be engaged proactively, offered additional professional and marketing skills to empower them for the new travel & tourism world post-COVID pandemic. They should be encouraged to adopt more and more technology to reduce their costs and offer better services. Such measures will help boost these companies to gain confidence and resilience. In the good time, MSMEs can emerge a game-changer for tourism if rescued and empowered today. At this critical time, their fate can’t be left to be decided by the vagaries of nature.

Their survival is critical not only for the travel and tourism sector but for the whole economy and society.