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FAITH fears massive unemployment & dent on India’s tourism prospects due to liquor ban in Hotels

Wednesday, April 5, 2017, 16:10 Hrs  [IST]
By HBI Staff | New Delhi

The Federation of Associations in Indian Tourism and Hospitality (FAITH) has raised serious apprehensions of massive employment loss and irretrievable image loss to India as a tourism destination if the Supreme Court order banning liquor in hotels and restaurants located on the state and national highways in the country is not revoked. The collective body of Indian travel, tourism and hospitality associations has said that there will be one million job loss in the industry and loss of foreign exchange earnings as foreign tourists will give India a slip from their travel itineraries.

“India’s Tourism, Travel & hospitality industry is estimated to contribute USD200 Billion, 9.5% of Indian GDP, around 5 crore employment, I.e. 9% of Indian employment, USD$ 30 billion+ investment at 5.5% of total capital investment in India. This capital investment is immobile and cannot be relocated or picked up and moved driven by decisions which challenge their business models on a retrospective basis,” an official release by FAITH said.

Quoting the famous Kashmir speech of the Prime Minister, Narendra Modi, asking the Kashmiri youth to embrace tourism or terrorism, FAITH said that, “displacing such a larger population from tourism jobs will run the risk of a nationwide unemployment roughly estimated at a million plus with the consequent risk of pushing this working population towards undesirable activities to earn their and their dependants' livelihoods.”

The federation also warned about large scale cancellation of foreign inbound trips to India in the wake of this ban. Even domestic tourists will start looking for alternate destinations abroad for their meetings, conferences, etc. “A major reason for meetings, conferences, corporate events, weddings and exhibitions to be held at hotels in India is to combine them with social get together which includes food, beverage and entertainment experiences. India has less than an estimated 0.5% of the world share of this sub-sector of tourism which will see large scale cancellations. That has already started happening. Tourists who bring in $20bn + forex earnings will reduce their coming to India and a large number of Indians will increasingly prefer travelling out of India for such events leading to a major outflow of foreign exchange,” their official statement said.

The loss of business to hospitality establishments on highways will push many hotel investors into financial stress resulting in assets become NPAs. “Most of the entrepreneurs who bid as part of Government PPP tourism projects along national and state main roads and highways had modelled their cash inflows on these experiences considering room conferencing, food, beverages revenues over their concession periods. But a lot of these establishments' with reduced business will result in distressed financial assets and may lead to a large scale NPA situation for our banking and financial system and may severely impact the investment climate in tourism and hospitality and overall business environment in India,” added FAITH.

However, FAITH said that the tourism and hospitality industry value human life and assured support to stricter enforcement of law to contain the menace of drunken driving. “However, the tourism industry requests that on a retrospective basis any damaging impact on investments in fixed capital assets and on large scale employment should be re-considered while strictly ensuring enforcing through effective policing for the very noble social cause and goal of preventing 'drunken driving with zero tolerance.”

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