Purpose Statement: To find out how Demonitization has affected the business of Tours and Travels companies, the difference of impact between foreign and domestic travelers, whether holiday planning patterns have changed, and to understand the effect on various stakeholders.
Stakeholder Mapping: Travelers & tourists, Local vendors, Travel agencies, Tour guides, vehice renting companies, local restaurants and eateries, airline companies, Hotels Motels and guest houses, all persons in the service industry (drivers, hotel staff, waiters, etc.)
All currency denominations of INR 500 & INR 1000 ceased to be legal tenders, effective 9th November 2016, following the bold step taken by the Ministry of Finance & RBI and Honorable Prime Minister Narendra Modi to fight the problem of black money, counterfeit currency, and corruption and to move to a cashless economy. This step termed as ‘demonitization’ shook up every sector of the economy, making the Travel and tourism industry one of the major ones.
While the country still debates on the impact of this historic step, I would like to draw your focus on the vast array of affected groups in this particular industry.
Demonitization has obviously led to an increase in the number of online bookings. However, people travelling to off-beat locations such as ‘Kasol’ or ‘Leh’ where there is no ATM access face terrible money crunch. As a result of this, all tourists especially foreigners find it difficult to make local purchases and payments. Imagine the plight of small local vendors, local handloom and artifact makers and eateries that solely survive on income from tourists! It did not even spare the vehicle renting companies as the number of bookings slashed majorly. Demonitization also left the tour guides almost useless and jobless due to strained money supply in the country.
In an interview with Mr.Govind Mahek, Manager at Harmony Tours & Travels Matunga East, with an experience of over 15 years in the industry, we discovered some amazing facts. He said that in our country people have two ways of planning holidays. One group of people who plan their vacation well in advance and make prior bookings. This group usually prefers to pay in cash and mostly plan foreign trips. The second group of people are instant planners, mostly domestic and short trip planners. This group also prefers to pay in cash but due to short notice they don’t mind making online/ card payments.
But after demonetization, the most affected segment is the one that plan foreign trips; because foreign trips have been a way of disposing off black money in big amounts. Advance bookings have almost stopped, and no bookings received for New Years, which has always been one major travel period.
However, it did not affect their regular and loyal customers. As a whole, Harmony’s business is affected when it comes to abroad bookings, but their domestic business still stands strong.
Conclusion: Small and local stores, vendors especially in cities that depend on tourism for a living see demonetization as a curse but as for travel agencies, their game still stands strong.