It will take time for stimulus benefits in the travel sector to materialize

Vivek Agarwal, Partner – Infrastructure, Government and Healthcare (IGH), KPMG in India, opines that the recent landmark announcements by the Union government for the travel sector can potentially bolster momentum, but given the business-as-usual scenario, it’ll take a considerable amount of time to witness the positive domino effect of these reforms pan-sector.

IBT: What is the current situation of the travel and hospitality sector as the country encounters the second wave? How different is the situation from last year?

Vivek Agarwal: For an otherwise flourishing sector, the two waves of the pandemic have brought in rather an interlude in the entire tourism ecosystem. At the core of the issue in FY’20 remained immediate border closures, social distancing measures and quarantine rules causing long periods of closure. Further, causative factors included lack of capital, dearth of workforce, standstill in tourist footfalls, reduced service levels throughout the calendar year for a contact-intensive sector.

However, reduced number of infections, augmentation of health infrastructure, and a nationwide inoculation drive in FY 21 have helped in reinstating the confidence in people and given a significant boost to domestic tourism and brought about light new travel trends amidst the pandemic.

IBT: Which countries are using vaccine passports or are likely to use them in the near future? How can they help in reviving overseas travel? What other benefits do they have?

Vivek Agarwal: The pace of vaccination around the globe has resulted in an upward trend in international passenger traffic and is expected to further rise in the next few months. A vaccine passport or immunity passport is a documentary proof the traveller has been vaccinated against COVID- 19.

China, Japan, Russia, UK and the European Union have launched vaccine passports. The United States hasn’t announced a plan yet, though several companies within the United States are developing digital vaccine certificates via an app. These measures are being adopted to curb the spread of COVID-19 and help instil confidence in people from travel and hospitality industry to reopen their business.

IBT: Besides vaccine passports, which other measures can revive the travel & hospitality sectors?

Vivek Agarwal: Every crisis opens a window of opportunity. However austere the present situation might be, this period of temporary paralysis is also an opportunity to reflect on our future. Tourists will not travel the same way as before. Travel patterns are going to change – shorter trips, higher concern for hygiene, greater focus on wellness/nature, etc. Countries need to evolve and adapt to these new trends. Various stakeholders within the industry need to adapt, restructure and formulate offerings and assure safety to travelers.

IBT: What is your view on the digitization of the travel and hospitality sector?

Vivek Agarwal: Digital transformation is an absolute need of the hour in a much-awaited modus operandi needed in the tourism and hospitality landscape. Digitisation of the travel and hospitality sector shall provide access to a wider community within the sector and shall help up people’s readiness, helping travellers as well as travel service providers in creating a seamless and enhanced experience in lines with a B2C concept.

IBT: What are your views on the stimulus package for the tourism sector that the government announced recently?

Vivek Agarwal: The pandemic has reinstated the economic and social importance of tourism, as has also been acknowledged with the recent reforms in pipeline and in action. Neither the industry nor the Centre were prepared to deal with such a crisis. From the outset, the Central Government with its recent landmark announcements in May & June has underscored the main areas for action. Collectively envisioned, these reforms behold capacities to bolster momentum, but given the business-as-usual scenario, it’ll take a considerable amount of time to witness the positive domino effect of these reforms pan-sector.

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Vivek Agarwal is a Partner – Infrastructure, Government and Healthcare (IGH) KPMG in India. Prior to this, he was a Manger at Accenture and a Senior Consultant, EY.