Challenges of Tourism MSMEs
Post COVID
Tourism
sector majorly comprises of micro and small enterprises was badly hit by the
pandemic. In India, the employment generation fell from 12.75% in 2019 to
8.0% in 2020 (Ministry of Tourism, 2020). It is essential for the sector to
chalk out a recovery plan taking into account perspectives of rural
communities, tour operators, travel agents and the upcoming responsible
tourism startups.
The latest revision of MSMEs definition has
provided some relief to the tourism sector by declaring it as a ‘Service
Sector’, through which the stakeholders will be able to avail “Atma Nirbhar”
package benefits. However, the sector still faces several challenges:
-
Lack of authenticity and certification: Tourism MSMEs, especially those focusing on unconventional experiences such as eco/ rural/ heritage tourism, have often indulged and also faced competition from others that engage in green-washing, which dilutes its purpose of serving sustainable growth in rural India. It is crucial to have a formal accreditation system for scrutiny and authentication of the ‘better’ tourism enterprises which would enable them to succeed and provide quality assurance to customers as well.
-
Lack of fiscal incentives: Majority of the tourism initiatives cater to public infrastructural development and providing subsidy to rural homestays, however there is a need to go beyond the current schemes and initiatives for development of a better, diverse tourism ecosystem in the country. The incentives must include tax reduction for ecologically and culturally responsible businesses.
-
Inadequate sectoral understanding and SOPs in financial institutions: From our experience in Sikkim and Uttarakhand (major tourism destinations in the Himalayan belt), it has been noted that the understanding of operations in this sector is inadequate at the end of financial and government institutions. The subsidies for homestays are misused by small guesthouse and hotel operators in Uttarakhand which do not offer any experience characteristic of homestays, while similarly in Sikkim, banks have simpler and faster loaning processes for tourist cab operators than local homestays. While the flow of government investment and subsidy has definitely benefitted the tourism sector and local population, it is yet to develop a focus on promotion of local culture and heritage.
-
Inadequate branding and promotion of diverse tourism options to benefit rural/remote communities beyond major tourist destinations: Ecotourism for decades has been much talked about subject in seminars and conferences and always been referred as “Niche Tourism” which hampered its growth. The concept of Ecotourism needs to be revamped starting right from supplier (rural community) to customers and must involve “Responsible Tourism”. It is important to include the local community while developing packages, price list of products and various activities etc.
-
Lack of financing knowledge: Due to ambiguity of the definition of Ecotourism, there is a lack of clarity, financial education and exposure, which results in unfeasible financial decisions and lower utilisation of the current schemes by the intended audience. Awareness and capacity building of the local population of tourist areas are crucial for growth of tourism MSMEs.
Way Forward
Going digital is the way forward and as mobile technology has become affordable, it will be easier for local communities to connect with the world. Joining hands with digital and upcoming responsible startups like AirBnB and NotOnMap, video tours and e-commerce sites for rural products should be widely used.
As mentioned in the challenges, government schemes must move beyond incentives for homestay construction and should include schemes for private individual investment into homestays through personal tax benefits. It has been observed on ground that people are motivated to join the unconventional tourism bandwagon but structural constraints and vulnerability to failure restricts the enterprise spirit. Currently, financial footprint of government schemes is very low in micro and small tourism enterprises and needs to be more inclusive, thus garnering benefit for the local communities and the tourism sector. ■
Reference:
Ministry of Tourism. (2020). Annual Report 2019-2020. New Delhi: Government
of india.
Tanya Issar
tissar@devalt.org