Indian travel companies run A high risk of going bust
A majority have already gone for steep salary and staff cuts to stay afloat
New Delhi: The COVID-19 pandemic has created havoc for the travel and tourism sector with as many as 40 per cent of Indian companies facing the risk of a complete shutdown in the next three to six months. Another 35.7 per cent may go for a temporary shutdown, according to a recent survey by BOTT Travel Sentiment Tracker in partnership with seven national associations.
Its findings show that 81 per cent travel and tourism companies have lost their revenues by up to 100 per cent while 15 per cent of the companies witnessed it slide up to 75 per cent.
The survey interviewed over 2,300 travel and tourism business owners and company representatives over a period of 10 days. They said a total of 38.6 per cent travel companies are going for job cuts and another 37.6 per cent of the companies are considering the option with uncertainty looming large.
“The travel and tourism sector is going through a very bad phase. It has taken a severe beating due to the COVID-19 outbreak with lakhs of people dependent on it suffering immense losses and job cuts,” said Jyoti Mayal, President of the Travel Agents Association of India.
Cut the staff, payroll
As per the survey, 73 per cent of travel companies have gone for adjustment of workforce including pay cuts, deferment of salaries and termination of contracts while 67 per cent have gone for steps like reduction of overheads.
About 49 per cent are deferring their capital expenditures and interestingly, 41.6 per cent companies are introducing new services. This clearly shows that companies are conserving cash in hand as business growth trajectory has come to a standstill.
About 78.6 per cent of travel and tourism companies expect the government to create a tourism relief fund immediately followed by 68.2 per cent who want refunds of cancellations and advances of travel agents and tour operators from airlines.
About 67.7 per cent want the government to lower the applicable GST rates by 5 per cent as 54.2 per cent and 49.3 per cent of companies and professionals want a moratorium on repayment of EMIs of principal and interest for term loans for 12 months and deferment of TDS deposit for one year.