Tourism sector feels the heat of economic slowdown

S. Anil Radhakrishnan

THIRUVANANTHAPURAM: The global recession has had its repercussions on the burgeoning tourism industry in ‘God’s Own Country’ at a time when tourism is sought to be positioned as a major driver of the State’s economic growth and its direct and multiplier effects are to be harnessed for employment generation and infrastructure development.

Naturally, tourism is one of the obvious casualties of the recessionary phase with tourists either postponing or cancelling their trip to Kerala, which, ironically, is observing 2009 as ‘Visit Kerala Year.’

The tourism and hospitality industry is feeling the heat of the slowdown, with tourist arrivals falling by as much as 50 per cent this season. There has been a 50 per cent fall in arrivals of Free Independent Travellers (FITs) as well.

Charter operations from the U.K. have trailed off and the occupancy rate in hotels, including premium properties, and home-stays has fallen steeply. Around 55 per cent of foreign tourist arrivals are from the U.K., the U.S., France, Italy, Austria and Germany, the very same countries that are experiencing recession. Those who have managed to land here are mainly from the Scandinavian countries and the CIS states, which have not been hit as badly as the former.

MICE (Meeting, Incentive, Convention, Exhibition) tourism has also taken a bad hit after the recession took its toll on IT companies and multinational firms. Kochi and Kovalam have been the favourite spots of MICE tourism.

The drop in arrivals has affected the stake-holders in the industry such as hotels, tour operators, transport and travel agencies. Small hotels with 30 to 40 rooms and small entrepreneurs who made a decisive entry into the industry have since been the worst hit.

“It is the economic recession that has resulted in the present crisis. The terror attacks in Mumbai have only compounded the problem. Even prime properties are not doing well. The room occupancy is just around 50 per cent. February and March are tipped to be worse and some hotels have announced off-season rates from next month,” says a senior official of a leading tour operator in Thiruvananthapuram.

The crisis in the IT sector and the Gulf due to the economic slowdown has also affected arrivals to the State. “Tourist arrivals via the Gulf and business traffic have been affected and the properties in Malabar have started feeling the pinch. But, we have not reduced the tariff,” says N.K. Mohammed of Kadavu Resorts, Kozhikode.


Fifty per cent of the 440 houseboats that operate in Kollam, Kumarakom, Alappuzha and Ernakulam have been dry-docked owing to lack of takers. For houseboats, the five months from November is the peak period. “We survive on the income received during this period. We have since reduced tariff by 40 per cent, but the response has been poor. The daily loss is around Rs.15 lakh,” says Tomy Pulikattil of the Houseboat Owners Association.

About 95 per cent of the houseboats have been funded through bank loans. “All operators are struggling to make ends meet, much less repay loans,” adds Mr. Pulikattil.


However, the only solace, if it can be called one, is that there has not been a slump in those arriving for therapy to Ayurveda centres. “As many tourists had drawn up their travel plans one year in advance, there has not been any cancellation. But, there has been a fall in the FITs coming from Germany, France and the U.K. Many are avoiding the agents and directly approaching us,” says Sajeev Kurup of Pomally Aram Thampuran Ayurveda Mana, Peringode in Palakkad.

The worrying aspect for those running Ayurveda centres is that the bookings for the next year, and those from West Asia, for the coming June-July period have not taken off. The destination has turned to be costly in terms of pricing. Airfares are still high and connectivity with metros poor. Taxes, including luxury tax, are on the higher side.

“Even now, the dual pricing regime exists for domestic and foreign tourists during the peak season. We could have overcome the crisis by reducing the tariff and attracting domestic tourists, as we would have to depend on them for the next few years as well. But, no hotel is ready to bring down the rates.

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