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What will it take for the tourism industry to recover?

What will it take for the tourism industry to recover?

We’ve all seen how the coronavirus has brought the world to a stop. The travel and tourism sector, in particular, has faced a lot of heat due to this pandemic. Looking back at the impact of the coronavirus crisis on tourism in India and internationally, it’s clear that this sector has taken a tough blow. One estimate by the Confederation of Indian Industry (CII) reveals that India’s tourism sector may suffer an overall loss of Rs. 5 lakh crores. That’s not all. The CII also estimates that job cuts in this industry could impact around 5 crore people.

What will it take for the tourism industry to recover?

In spite of the adverse impact of the coronavirus crisis on tourism in India, there’s a small lining of hope. The recent developments in China’s travel and tourism sector may give us a peek into how things may play out for our own industry. With restrictions being lifted in China, hotel bookings in the country went up by 40% in early March. Peak daily flights showed an increase of 230%.

For India, although that phase may be at least 6 to 9 months in the future, there are still some ways in which the negative impact of the coronavirus crisis on tourism and travel can be cushioned. Here are some plausible ideas that could work.

Governmental aids

The tourism industry contributes to around 10% of the country’s GDP. Intervention from the government can help this key segment of the economy bounce back. Measures to prevent bankruptcy and solutions to work around mass layoffs are the need of the hour. Deferment of statutory liabilities like advance tax and GST can also help travel companies survive this crisis. Assistance from governmental bodies may prove to be crucial in helping this segment of the economy get back on its feet.

Flexible lending programs

The travel and hospitality industry needs financial assistance to undo the impact of the coronavirus crisis on tourism in India. However, with travel coming to an unprecedented halt, it’s unlikely that companies in this sector will be able to repay loans with strict terms. Instead, flexible lending programs that help travel and tourism companies financially after taking into account their paying capacity. An increase on the moratorium period can also be helpful for companies in this sector.

Focus on domestic travel

Aside from governmental and lending aids, another development that could help the tourism sector recover is domestic travel. While international travel may not pick up significantly in the near future, domestic tourism could show signs of improvement once the lockdown and other restrictions are lifted. By focusing on this domestic travel, the tourism industry could cash in on this area and begin its journey towards recovery.

Additional Read: How to Prepare for Coronavirus If You Have a Planned Travel Ahead?    

Conversion into quarantine facilities

If the pandemic escalates, the requirement for quarantine facilities will shoot up drastically. Here’s where the hospitality sector, which forms a key part of the tourism industry, can step in. Many state governments have already approached members of the Hotel Association of India with a bid to convert the premises into quarantine facilities. Hotels can monetize this opportunity by making arrangements with the relevant state governments to set up such facilities.

Given these developments, what are your investment options like?

If you’re a new investor, it’s likely that you’re understandably worried about your investment options during this crisis. This may be even truer if you’ve already invested in stocks or assets of companies operating in the tourism industry. If that’s the case, panic selling may not be the best idea. A more prudent long-term solution would be to hold your assets until the industry recovers, so you can start cashing in some gains.

Invest in mutual funds

If you’re apprehensive about investing in any one stock in particular, you could opt to purchase mutual funds. Here, you can invest in funds that consist of assets from various top performers in the tourism industry, so your risk is spread out considerably. A few months or years down the line, when this segment of the market picks up once again, your investments will begin to generate returns.

The Moneyfy app from Tata Capital can help you here. Designed keeping both new and seasoned investors in mind, this app is your one-stop shop to invest in thematic mutual funds rated by Morningstar and by Value Research.

You can also balance out your investment portfolio by investing in mutual funds that consist of other assets. For instance, with the Moneyfy app from Tata Capital, you can invest in gold funds and in tax-saver funds (ELSS). By including such diverse options in your portfolio, you can make sure that your risk-to-reward ratio is balanced.

Additional Read: Understanding Mutual Fund Terminologies

Investing today can help you achieve your vacation goals effortlessly. For instance, if you’re already dreaming of your next vacation once the tourism industry bounces back, take action and invest in the right funds today. This way, you can finance your vacation next year, once things are on the upswing again.


All in all, it may take a combination of various measures for the tourism sector to recover. However, if the companies involved play their cards right, they can come out of this crisis safely, and resume business as usual in the future. In the meantime, it’s advisable that investors like you follow the markets and adopt a ‘wait and watch’ approach, particularly when it comes to stocks and mutual funds that invest in the travel and tourism sector.

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