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EDITORIAL

Wednesday, 25 January, 2017, 15 : 10 PM [IST]

FIFTY DAYS OF GREY

As 2017 dawns, it also closes the first phase of one of the most unique times in Indian financial history. The first fifty days of demonetisation have concluded and the next fifty will reflect the after of such a cataclysmic change.

An industry that contributes approximately 6% of India’s total GDP witnessed a clear impact a steep fall of 60% drop in domestic bookings. The industry that was singing hosannas for booming online transactions a few days earlier started bemoaning the fall in offline and often, cash transactions post November 8.

The cash crunch strained offline travel operators with many cancelling or rescheduling the bookings. Last minute bookings, which are quite the norm in domestic travel, did hit a bump. International bookings were not disturbed to that extent, but the confusion at airports as travellers struggled to change currency notes did create a turmoil of sorts which, some estimate, turned into a 15-20% dip. At the same time online bookings, on the contrary, registered a clear spike.

The biggest trouble still remains for the foreign exchange businesses as the drive directly hit the product they sell.

The industry is not unused to upheavals, hiccups and speed breakers even in the best of times. For the travel industry this is a sneeze or common cold. It is the hospitality business that is feeling the real heat.

India’s hospitality industry has been severely affected as the hotels have lost a large number of pay-in-cash-only clientele due to demonetisation. While room bookings are not that shaken, hotel banquets and high-end restaurants are feeling the heat as weddings and pre-wedding bookings are being called off or cancelled since this was quite a cash scene. And many pre-bookings for different wedding ceremonies are also being cancelled.

While the larger groups and professional chains are adapting fast, the trouble for smaller properties, single unit hotels is acute. The biggest hurt comes to banquet hall owners and others in the business.

Let’s face it. The hospitality business had developed its ways to smoothen and balance cash inflows and payments in various ways. That has definitely taken a hit. The birth pangs of more transparent dealings will probably recur for a few more months. However, the clarity and the larger good coming from transparent transaction is a part of the bigger picture.

There is no shying away from the fact as in real estate industry, hotel business at certain levels was also being used to park funds that will now be perforce pushed into the mainstream circuit.

The black and white finances narrative might be the overarching detail, but between the lines there is a grey. It is a call for a leap into transparency and of entering the digital era with a bang.

Anurag Yadav
Industry Expert

The views expressed within this column are the opinion of the author, and may not necessarily be endorsed by the publication.
 
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