Hit by heavy downpour, travel industry now pins hopes on G20 summit, World Cup

Heavy downpour especially in North India has affected travel demand

With lower air and hotel fares leading to a higher number of bookings and 70 percent rise in travel during the monsoon this year, compared to 2022, the travel industry was in for a pleasant surprise.

However, the heavy downpour in many parts of the country is now playing spoilsport. Travellers are left with little choice than to reschedule or cancel their plans.

States like Uttarakhand and Himachal Pradesh have suffered heavily and tourism activity has come to a standstill, said P Khanna, Board Member, FAITH (Federation of Associations in Indian tourism & hospitality).

He noted that the heavy rains have led to a dip of around 10 percent in travel demand.

The industry is now pinning all hopes on two events -- the 2023 Men’s Cricket World Cup and the G20 Summit. While the World Cup will be played for over a month between October 5 and November 19, spread across the country, the G20 summit will be held in New Delhi in September.

Heavy rains, low travel demand

"There has been a dip in travel bookings to some popular destinations which have been affected the most by heavy rains and floods during the monsoon season this year. We have seen a 10-15 percent month-on-month (MoM) decrease in bookings in July 2023 to destinations like Guwahati, Mumbai and Jodhpur," said Rajnish Kumar, Group CPTO & Co-founder, Ixigo, an online travel aggregator (OTA).

Cancellations DRR (daily run rate) has increased by 33 percent in July 2023 in comparison to June, said Manu Sasidharan, Head of Hotels and Accommodation, Cleartrip, an OTA.

Delhi resident Arushi Kaushik, who had planned to travel to Rishikesh between July 20 and 23, to celebrate a friend's birthday had to reschedule her trip.

"Due to heavy rains, roads have become dangerous and unpredictable. We had to reschedule our bookings to a later date as the hotel in which we had booked rooms in advance did not refund our money but provided an option to visit at a later date. We have still not fixed a date," she said.

Occupancy in hill destinations like Manali is almost non-existent, while in Shimla, it remains quite low, pointed out Nandivardhan Jain, CEO, Noesis, a hospitality consulting and hotel investment advisory firm.

"This July, the situation has been challenging for hotels in these leisure markets, as they grapple with the combined impact of extreme weather conditions and connectivity issues. These adverse factors have led to a notable decrease in occupancy rates, with many establishments experiencing a surge in cancellations and rescheduling of bookings. Flooding, landslides, and transportation disruptions are causing tourists to postpone or cancel their travel plans to affected areas," he said.

Temporary dip

While travel in July increased more than 100 percent, compared to the same time last year, heavy rains this monsoon season led to a slight MoM decrease in travel, said Kumar. "However, this is a temporary dip and we expect bookings and travel to rise significantly from August onwards, as travellers are gearing up to attend the upcoming cricket season with the 2023 Men’s Cricket World Cup starting in October."

He added that while travellers are avoiding vulnerable mountainous areas like Himachal Pradesh till the rains subside, they have seen an increase in bookings to other leisure destinations, like Goa, Srinagar and Leh, this month.

"Once the deluge started, the bookings in Himachal Pradesh and Uttarakhand dropped. But destinations like Goa, Maharashtra, Jammu & Kashmir, Rajasthan, Gujarat, Kerala and North East have seen an upswing in travel bookings. Also, religious tourism is immune and carries on in the same manner," said Khanna.

World Cup, G20 summit may turn the tide

Travel operators had pointed out that this year the gap in travel demand between summer and the monsoon became less pronounced, compared to pre-COVID years. But the poor monsoon posed challenges to leisure locations in terms of travel demand.

While the monsoons have been uncertain for the travel and hospitality companies, they will benefit from events like the G20 summit and the ICC World Cup 2023 with expectations of pan-India premium hotel occupancy at 70-72 percent versus 68-70 percent in FY23, said Vinutaa S, Vice President and Sector Head – Corporate Ratings, ICRA, brokerage firm.

"The G20 summit will support occupancy across cities in FY24. Improved economic activity and business associations stemming from these meetings are likely to translate into incremental demand for hotels over the medium term," she said.