The tourism corporation is not only witnessing a decline in earnings in India, its foreign exchange earnings are falling too.
Plummeting profits may make the India Tourism Development Corporation (ITDC) the next Air India, a loss making government entity. According to the Ministry of Tourism’s annual report, in 2016-17, the ITDC had recorded profits of Rs 32.42 crore (Rs 22.55 crore after tax), which has been reduced to half in 2017-18 — just Rs 17.52 crore in profits (Rs 12.5 crore after tax).
The ITDC is not only witnessing a decline in its earnings in India, it has shown a decline in foreign exchange earnings too, according to the Ministry of Tourism’s data. In 2016-17 the ITDC had reported Rs 17.95 crore forex earnings that have come down to Rs 15.19 crore in 2017-18.
In an emailed response to The Sunday Guardian, Piyush Tiwari, Director (Commercial & Marketing), ITDC, said: “There was a drop in profits of ITDC during 2015-16 and 2016-17 compared to 2014-15, mainly on account of outgo towards a long pending court case. ITDC being a PSU has certain social obligations too along with its mandate to ensure profitability and all efforts are made to achieve this objective. Over a period of time, ITDC has played a pivotal role in developing tourism infrastructure in backward areas, thereby promoting regional balance and social development via the potential of tourism in generating employment and entrepreneurial opportunities. With the changing economic and business scenario, the corporation is in the process of realigning its business approach by strengthening all business verticals to increase turnover and profitability by positioning ITDC as a diversified organisation offering one-stop solution for all travel, tourism and hospitality needs.”
Tiwari added: “In the present dynamic and highly competitive environment, a need has been felt to broaden the horizon of the company from a hotel centric organisation to a multi-activity organisation offering one-stop solutions for all hospitality, travel and tourism related needs through its various verticals. The present management is conscious of various challenges and is striving hard towards product and service upgradation by focusing on each of the verticals of the company. Specific plans have been drawn up for verticals like Hotel & Catering Division (HC), Ashok Travels & Tours (ATT), Ashok International Trade Division (AITD), Ashok Events Division (AE), Ashok Institute of Hospitality & Tourism Management (AIHTM), Sound & Light Division (SEL) and Ashok Consultancy & Engineering Services Division (ACES). Intention is to leverage on the strength of being a trusted and reputed organisation in the tourism sector and to improve the bottom-line of the organisation. Specific attention is being paid to improve systems and processes through better control and increased automation as well as improving quality of manpower. Business plan is being worked out for the corporation taking into account the changed business scenario and strength of corporation to make use of available opportunities.”
ITDC was set up to blend public sector ownership with private sector standards of service, but ITDC’s 26 hotels/restaurants have together failed to generate even 10% earnings of its nearly Rs 500 crore turnover.
ITDC came into existence in October 1966 and has contributed much to the development, promotion and expansion of tourism in the country. The Corporation runs hotels and restaurants at various places for tourists, besides providing transport facilities. In addition, the Corporation is engaged in production, distribution and sale of tourist publicity literature and providing entertainment and duty free shopping facilities to tourists. The Ashok Institute of Hospitality & Tourism Management of the Corporation imparts training and education in the field of tourism and hospitality.
Presently, ITDC, with a turnover of Rs 495 crore, has a network of eight Ashok Group of Hotels, five Joint Venture Hotels, one restaurant, 11 Transport Units, nine Duty Free Shops at airports, seaports and two Sound and Light shows. Besides, ITDC is also managing a hotel at Bharatpur and a restaurant at Kosi on behalf of the Department of Tourism.
In addition, it is also managing catering services at Western Court, Vigyan Bhawan and Hyderabad House, New Delhi.
Sarita Bhasin, a Delhi-based business analyst who teaches at a private tourism school, said: “At a time when the country’s tourism sector is performing well, the ITDC’s earnings have declined and that is unfortunate.”
Bhasin, who was earlier associated with the Ashok Institute of Hospitality and Tourism Management, said: “Bureaucratic culture, rampant nepotism and VVIP exploitation have led to the destruction of the chain of public hotels and tourist spots spread across the country.”
A former ITDC official, who wished not to be named, said: “The ITDC’s hotels are being leased out to private entrepreneurs for almost nothing in return, whereas these private entrepreneurs are earning huge revenue out of the government’s capital. Successive governments and their officials have been benefiting from the slack work culture of ITDC.”
India’s travel and tourism sector ranks seventh in the world in terms of its total contribution to the country’s GDP, according to a new report of the World Travel and Tourism Council (WTTC). As per the WTTC report, the travel and tourism sector generated Rs 14.1 trillion ($208.9 billion) in 2016.