Is Economic Slowdown A Good Time For Cheap Travel

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An economic slowdown provides those with a wanderlust a good opportunity to benefit from prevailing lower prices in the market. Cost of packages for most destinations has dropped by 15-20%, while cost for travel packages to Sri Lanka has dropped by about 50%.

Viranga Bandara, Assistant Director, Marketing of Sri Lanka Tourism Promotion Bureau, said that the Easter Sunday attacks in Colombo earlier this year also caused a drop in tourism. And as such the country is now offering promotional packages. “After the terror attack, inbound tourists dropped by 70-80%. Now we are bouncing back.

Hence the promotional package,” said Bandara.However, Jigar Dudakiya, president of Travel Agents Federation of India (TAFI) in Gujarat, said that he is unaware of such packages. He feels that tourism in India will bounce back this Diwali. “We are getting inquiries. Bookings will start opening. We have two months ahead of us. It seems Diwali will be a very good season,” he said.

However, they suggest a uniform tax rate would be better as multiple slabs are creating complications. “Buyers have a price advantage in this situation. In most cases, prices have dropped. It is an opportunity. However, the tourism sector is likely to buck the trend,” said Sanjiv Agarwal, who organised a three-day Travel and Tourism Fair (TTF) that concluded in the city on Sunday. Citing the example of Sri Lanka, he said that promotional packages for this destination are available at Rs 25,000-30,000 per head. Agarwal, however, drew attention to the fact that the highest slab of 28% in Goods and Services Tax (GST) is hurting the industry.

Multiple slabs on various services associated with tourism are also creating complications. “Rooms that cost over Rs 7,500 bear a 28% GST. And those that cost Rs 7,000 attract an 18% GST. But clients may avail additional services, which may raise the tariff to above Rs 7,500, thus raising the tax slab to 28%. This causes resentment among the clients,” said a tour operator. Sanat Relia, vice president of the Southern Gujarat Hotels and Restaurants Association pointed towards multiple tariffs in hotels and restaurants. “If the peak room tariff in a hotel is up to Rs 7,500, all food services in the hotel will bear a 5% GST. But if the room’s tariff is higher than Rs 7,500, GST will become 18%. All banquet and transport services have 18% GST. Restaurants have 5% and 18% slabs and those under Composition Scheme (lumpsum tax) have 5% tax but cannot charge the customer for that. There should be a uniform 12% tax,” said Relia.

Agarwal informed that India attracts close to eight million inbound foreign tourists, against which 20 million Indians go for foreign tours. MahendraVakharia, president of Outbound Tour Operators Association of India (OTOAI) said that simplification of tax regime and development of dedicated circuits will draw foreign tourists to India. “We also need expert guides. India is full of archaeological sites. If these are developed well, India can not only decrease outbound travel but also increase the volume of foreign tourists,” said Vakharia.

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