Muted demand delays tourist season in Goa

This is an EXCLUSIVE story. Do not reproduce or use in any manner whatsoever without the writer's permission.

Business for hospitality and tourism industry players in Goa is unlikely to reach the heights this peak season. In fact, the overall market scenario that was expected to improve in November and December months is yet to pick up steam. While some industry players are of the view that green shoots of revival are beginning to show up, a few others feel business is already down by 30%, if not more.

Rattan Keswani, deputy managing director, Lemon Tree Hotels and director, Carnation Hotels, said, the situation in Goa is not as robust as it should have been. “Demand is a bit muted than it normally is at this time of the year but we are seeing green shoots of revival,” he said adding that hotels being operated and managed by Lemon Tree in Goa are witnessing inflow of domestic travellers.

Chapora Beach (Picture Courtesy -- https://goa-tourism.org.in/chapora-beach-goa)

A sought after beach destination by international and domestic tourists alike, Goa has had a tough 2019 so far. While off-season months were full of challenges including those arising as a result of Jet Airways shutting down operations, the business season that would have typically compensated for the loss of revenues, isn’t looking any better either.

Santosh Iyer, vice-president - sales and marketing, GlobeTrott Leisure and Events, said, the market scenario in Goa is very subdued. “The economic slowdown, both in India and international markets, has only made it more challenging for the hospitality and tourism sector players. Compared to last year, business has taken a considerable hit and is down between 20% and 30% already. We are hoping situation to improve and business to pick up towards the last week of December,” he said.

A key reason for this scenario in Goa is the fact that tourist inflow via chartered fights from the European markets has stopped completely after the collapse of 178-year-old British tour operator Thomas Cook UK Plc. This significantly impacted business as a large percentage of these holidayers, estimated to be over 35,000, are unlikely to make it to Goa.

The industry was hoping for some respite after Goa chief minister Pramod Sawant’s assurance in September about the possibilities of direct flights by Air India from London to Goa, before the season begins. However, it’s already third week of November and nothing has happened on that front yet. This basically puts an end to the possibility of a large majority of European travellers coming to Goa this season.

Aloo Gomes Pereira, chief operating officer - Charters & Goa, Trail Blazer Tours India Pvt Ltd, chartered flights from Russia and other Commonwealth of Independent States (CIS) countries are still coming but the numbers are nothing to write home about. “Tourists from Ukraine will start coming in from December, so we’ll have to see how that pans out for the tourism industry in Goa,” said Pereira adding that the beach destination will see scanty international traffic this season.

According to a top hotelier, a lot of hotels in their competitive set were dependent on CIS charters and the numbers this time around are far less. “All hotels banking on charter contracts are having a tough time. Those with a right mix and not having too many charter contracts are protected,” said the hotelier adding that room rates continue to be under pressure.

Hotels were also hoping for better room revenues after goods and services tax (GST) rate cuts were announced on room tariffs. For rooms priced at Rs 7,500 and above, the GST rate was reduced to 18% from 28% earlier. Hotels selling rooms priced between Rs 1,000 and Rs 7,500 would have to levy 12% GST and hotels charging less than Rs 1,000 for their guestrooms have no GST.

“Room rates were hiked in October in the hope of a good business season. However, sensing the ground reality, majority of the hotel operators have re-priced their guestrooms and are now focusing on boosting occupancy levels. It’s all about optimising the total room inventory now,” said a top executive from one of the hotel chains operating in Goa.

While foreign arrivals into Goa was and continues to be a challenge, industry players were anticipating that demand and supply gap would be taken care of by domestic tourists. Unfortunately, the shutting down of Jet Airways earlier this year has already impacted domestic tourist arrivals into Goa. While it’s starting to creep back the numbers are not as expected.

“It’s too early as it’s the first month after Dussehra and Diwali. Normally numbers start to translate now and build up in December, and then carry on in January, February and March. Occupancy wise I don’t think there is too much trouble but total revenue wise I think there is a bit of a shortfall,” said another hotel chain operator.

What’s also ailing Goa’s tourism industry is the deteriorating infrastructure in the state. Road conditions have gone from bad to worse making travelling within the state a very painful exercise.

“The current government is all about false promises and irresponsible statements. Nothing really is happening on the ground. It’s such a horrible experience just travelling from the airport to the hotel. Why would tourists come to Goa if the administration isn’t bothered about providing basic infrastructure facilities even,” said a local tour operator.

Caught in a situation, the hospitality and tourism industry players are left with no option but to find ways and deal with the challenging situation at hand on their own. And with increasing stress in the Indian economy getting pronounced every passing day, it will have to be seen if domestic travellers will have a role to play in bailing out Goa this tourist season.
(The writer is a Mumbai-based independent business journalist and has extensively covered diversified consumer businesses over the last two decades. He can be reached at hello@ashishktiwari.com)