“Over the short and medium terms, the demonetisation drive will have varied effects on the many sections of the hospitality industry in the country, but in the long-term will positively impact the growth of the hospitality sector,” said Mandeep Lamba, Managing Director - Hotels, JLL India.
“Often, the strong season for the hospitality sector in the country extends from October to March which, to a large extent, defines the success for the industry in any given year. The lack of available currency will force some hospitality customers to either postpone / cancel their travel and accommodation or to use hospitality products that easily allow the use of the other modes of payments,” he explained.
The demonetisation drive will benefit the organised hospitality sector in India the most. Combined with the general uptake in the sector, the movement of customers to the organised sector due to ease of alternate modes of payment will positively impact the market.
However, given the larger base of hotel rooms in the country is in the unorganised sector, we anticipate the general performance of the industry to witness some stress in the short term.
The hospitality and the tourism markets are renowned for their ability to create a large number of direct and indirect jobs in the country. With the inability of customers / tourists to easily spend on frills due to lack of available currency, the unorganised industry will suffer the most in its ability to create new jobs.
The impact of demonetisation will also be felt by the suppliers of consumable goods, who often work on cash transactions with their wholesale counterparts.