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Vol.05 Issue-07, (July, 2017) ISSN: 2321-1784 International Journal in Management and Social Science (Impact Factor- 6.178) IMPACT OF DEMONETIZATION IN INDIAN HOSPITALITY AND TOURISM INDUSTRY

Mr. Sourabh Dev Tiwari Junior Assistant (H) Division of Student Affairs Indian Institute of Technology Guwahati Abstract th

On the 9 of November 2016, the Government of India, delivered a masterstroke, by declaring, as illegal tender, the Rs. 500/- and Rs. 1000/- denominations in the currency system. National Restaurant Association of India had reported downfall of averaging upto 40% revenue in the sector in their initial weeks. Demonetization is the current biggest challenge in business of hospitality and tourism sector in India have described in this paper. After a tumultuous fortnight for the entire country ever since the government declare the partial demonetization of the higher value rupee notes. The service industry has definitely confront a short term effect of this, as spends are adjourn towards immediate needs. The most challenging period of demonetization sits fairly in the active season for the tourism industry. There was a flump in hotels and related services bookings in the initial week after the paper money withdrawal. Although, the premium hotel segment has not seen much effect as bookings are mainly done in advance and online. So the knock has mostly been confined to the unorganized sector. The paper draws facts from the existing articles and other reports. Also analyze the implementation of demonetization and its impact on hospitality and tourism sector which are based on the results collected through survey method from the owners of small to medium tour & travel and hotel business of various cities in India. This paper brings out key findings after interaction with industry professionals as to incorporate real-time, relevant and contemporary data. Demonization changes the working environment of the market. Organizations would also modify in their usage and utilization of the innovative tools and applications for the cashless payment. Tourist guide, home deliveries, QSR, KIOSK, Dhaba, etc. have bear the major impact, as there has been enormous loss of opportunity. Keywords: Demonetization, Hospitality and Tourism, Challenges, FTA’s &FEE, SWOT, GDP & Economy, Digitalization.

INTRODUCTION Demonetizingin the higher value currency notes of Rs. 500 and Rs. 1000 denomination Indian government has implemented a major change in the economic environment. These ceased to be legal tender from the 9th of November 2016. Individuals have been given time upto30 December, 2016 to exchange the notes held by them.9thNovemberis marked as the day when the largest democracy in the world declared 86% of its currency as dead.98% of all Indian financial exchange by volume is done by cash. This will engender a marked fall in the use of cash transactions in India and thus pave way for the transition to a cashless economy. The demonetization move causes too much of uncertainty and will disrupt transaction in general to common man and all sectors of business, but especially for smaller businesses such as provision stores, vegetable vendors, hotels, tour and travel, tourist guides, A Monthly Double-Blind Peer Reviewed Refereed Open Access International Journal - Included in the International Serial Directories

International Journal in Management and Social Science http://www.ijmr.net.in email id- [email protected] Page 496

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Vol.05 Issue-07, (July, 2017) ISSN: 2321-1784 International Journal in Management and Social Science (Impact Factor- 6.178)

restaurants and food and beverage operations etc. which run their business on the basis of cash transaction.India is rich in culture and heritage, rich and diverse culture and geography of India is becoming highly famous attraction amongst international tourists. There are beaches, historicalmonuments, hill resorts,places of religious interests, etc. that attract touristsfrom all over the world. India has various types of tourisms that includes cultural and heritage tourism along with religious, medical, business, spiritual and sports tourism. India will unquestionably get hold of most of the hearts and minds of travellers and tourists from all around the world through the beginning which gave pace to grow the hospitality, tourism and hotel industry. As per reports,Indian hospitality and tourism sectoraffected due to demonetization in upcoming 2 years, this step will have mixed effects on the hospitality and tourism industry in India. Demonetization will have a positive impact in long term restaurants businessbut this sector will experience a short term slowdown in growth. SCENARIO OF DEMONETIZATION IN DIFFERENT COUNTRIES IN WHICH DEMONETIZATION WAS IMPLEMENTED Sr. No.

Countries

Year

Economic Effect

Reasons for Failure

1

Ghana

1982

Weaker economy

2

Nigeria

1984

Collapsed economy, unsuccessful

Blackmarket was supported by the people and their invested in Physical assets. More debt, financial Difficulty and inflation.

3

Myanmar

1987

Unsuccessful

Many people were Killed due to Mass protest.

4

Soviet Union

1991

Unsuccessful

Poor harvest.

5

Australia

1996

No side effects

Try to introduce Plastic money.

6

North Korea

2010

Weak Unsuccessful

No food and Shelter.

7

Zimbabwe

2015

Weak Unsuccessful

Face value of one hundred trillion dollars dropped To $0.5 dollar.

8

Pakistan

2016

Can’t be predicted

People had sufficient time to exchange Their money.

Sources: NehaBorkar, indiatimes, November 18, 2016. A Monthly Double-Blind Peer Reviewed Refereed Open Access International Journal - Included in the International Serial Directories


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PERCENTAGE OF CASHLESS TRANSACTIONS IN MAJOR ECONOMIES 70% 60%

61% 60% 59% 59% 57% 56%

52% 45%

50%

35% 33%

40% 30%

29% 16% 15% 14%

20% 10%

10% 2%

0%

Source: Business Today, December 29, 2016. REVIEW OF LITERATURE BalamuruganS. and HemalathaB.K. (2016), the study focused on highlighting the long term & short term effect of demonetization on the various organized and unorganized sectors depending upon the extent of cash availability,credit availability, spending & government finances. They stated that medium and large scale businesses are unaffected by such ban where as small scale establishments were deeply affected by demonetization. AmbalikaSinha and DivyaRai (2016), Stated in their article that informal sectors were suffering mostly where minimal cashless transactions are used in Indian economy. They have indicated the microeconomic effects and macroeconomic effects of demonetization. The microeconomic effects are beneficial i.e. uncollected revenue increased & political move on terror financing was restrained, whereas the macroeconomic effect was not beneficial i.e. due to the problems faced by the people. SandeepKaur (2016),mention in their article about the effects of demonetization on Indian economy and system. This move would be positive for sectors like banking and infrastructure in the medium to long term and negative for sectors like consumer durables, luxury items, gems and jewellery, real estate and allied sectors. This move also aims at lower corruption, lower inflation, better fiscal balance, complete elimination of fake currency and economic growth in the longer term. Sujatha (2016), quoted in her article that the this step given too much pain to the common man and so many sectors in the country have been affected by the failure to replace the old currencies in adequate measures. The fallout of the Demonetization now looks to have spilled over into the tourism and hospitality business as well. AnumehaChaturvedi (2016),quoted that the Government decision is aimed at reducing corruption, terrorism, black money and counterfeit notes. The move will create problems for the travel and hospitality sector, luxury brands, already reeling under slowing sales and tighter income tax regulations, may face more problems. Prabhurajan. B. S (2016), stated in his article that the number of people going to restaurants has declined largely & the hotel industry here feels to improve at least mid-December. The hospitality sector’s earning had seen a continual fall since September and it is drastically declining. Despite the fall in revenue the costs-involved in running hotels & restaurants has remained the same. A Monthly Double-Blind Peer Reviewed Refereed Open Access International Journal - Included in the International Serial Directories


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MandeepLamba (2016),said that the organized banqueting business will witness growth. The weddings business will also return to Indian hotels from their overseas counterparts. Over the short and medium terms, the demonetization drive will have varied effects on the many sections of the tourism and hospitality sector in India, but in the long term there will be positive impact in the growth of the tourism and hospitality sectors. CD Equisearch Pvt. ltd(2017),in this article, they have concentrated on effects of demonetization on various sectors. The move shed a dark shadow on the increasing of tourism and hospitality sector in India. These sectors are facing a tough time. November to January months generally witness the maximum number of international tourists inflow in India, due to ban there has been a 65% drop in Christmas & New Year bookings. Cash crunch has adversely affected the liquidity of currency exchanges in India. Ela Group (2017) article has concentrated on demonetization impact of Mysuru tourism sectors. For the next two years, this step will have a mixed effect on the tourism and hospitality sectors in India. Most of the tourism and hospitality business in the country are unorganized sector, tourists are forced to post pone or cancel their travel and accommodation due to less availability of cash. The Mysuru tourism department has a direct impact. A ChitraBalasubramaniam(2017),state in her article that India is switching to cashless economy and electronic transactions has caused a negative impact initially on some hotels. These measures include cancelling legal tender money & placing restrictions on cash transactions to put an end to black money. Jai Bansal(2017),state in his article that demonetization is a surgical strike on fake currency, black money, unorganized trading,terrorism,share market,real estate, etc. The Indian industry is divided into three categories i.e. agriculture sector,manufacturing sector and service sector. After demonetization, only agricultural sector shows positive impact while other two sectors – manufacturing and service sectors were crashed down. He also focuses on demonetization impact on Indian economy’s different sectors. RamphulOhlan (2017), state in his research note that the resilience of Indian tourism industry to India's sudden demonetization is confirmed by investigating the stationary status of internationaltourist arrivals series using newly developed break-point unit root tests on monthly data over the period of 2003 to 2017. The most significant finding of the study is that the series of tourist arrivals to India is stationary and no structural brake is presented correspondent to recent demonetization. NEED FOR THE STUDY The above review of literature reveals that many studies have been conducted based on the secondary data to understand the impact of demonetization on public, banking sector, black economy, corruption, stock market, service sector and so on. Many newspaper sources and TV shows spoke about the negative impact of demonetization on many sectors and small business. Therefore the present study has been conducted to know the opinion of owners of small to medium tour & travel and hotel business about the demonetization and problems faced by them during the present demonetization period. OBJECTIVES OF THE STUDY 1. To analyze whether demonetization has affected foreignexchange earnings and foreign tourist arrivals in India. 2. To know the perception of owners of small to medium tour & travel and hotel business about present demonetization. 3. To understand problems and challenges faced by the tourist, guest and hospitality and tourism service providers during demonetization.

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METHODOLOGY The present study has been conducted based on both primary and secondary data. Secondary data used to understand the concept of demonetization and to analyze the existing review of literature about demonetization. 60 small to medium tour & travel and hotel business owners have been selected from various cities (Delhi, Jhansi, Gwalior, Orchha, Khajurajo, Ludhiana, Jalandhar, Indore, Bhopal, Lucknow, Bangalore, Hyderabad, Chennai, Guwahati, and Shillong) of India. The present study based on survey method. A structured questionnaire has been served to the owners of 60 small to medium tour & travel and hotel business to collect the opinion about the present demonetization and the problems and challenges faced by them. Descriptive statistics have been used to analyze the opinion collected from the respondents. FOREIGN EXCHANGE EARNINGS (FEES) FROM TOURISM IN INDIA DURING 2015, 2016 AND JAN-APR 2017 Month

FEE’s (in Rs. crore)

Percentage Change

2015 # 2

2016 # 2

2017 # 1

2016/15

2017/16

January

12,100

13,671

16,135

13.0%

18.0%

February

11,642

13,661

15,790

17.3%

15.6%

March

11,133

12,985

14,988

16.6%

15.4%

April

10,091

11,495

14,692

13.9%

27.8%

May

9,505

10,260

7.9%

June

9,564

10,677

11.6%

July

11,982

14,285

19.2%

August

11,411

12,553

10.0%

September

10,415

11,642

11.8%

October

10,549

12,100

14.7%

November

12,649

14,259

12.7%

December

14,152

16,558

17.0%

Total

1,35,193

1,54,146

61,605

14.0%

18.9 @

'@: Growth Rate over Jan-Apr 2016 #1: Provisional Estimate (based on provisional FTAs of 2017 and final FTAs of 2016). #2: Revised Estimates (based on final FTA received from BOI).

Source: FEE Press Note April 2017, Market Research and Statistics, Ministry of Tourism, GOI. (http://tourism.gov.in/market-research-and-statistics) A Monthly Double-Blind Peer Reviewed Refereed Open Access International Journal - Included in the International Serial Directories


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MONTHLY FTA'S IN INDIA FROM 2008-2017 Months

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Jan

511781

481308

568719

623885

681002

720321

759000

791000

844000

983000

Feb

611493

489787

552152

635527

681193

688569

758000

761000

847000

956000

March

479765

442062

512152

550051

606456

639530

693000

729000

817000

906000

April

361101

347544

371956

437792

447581

540580

535000

542000

599000

740000

May

304361

305183

332087

355333

374476

417453

456000

510000

529000

630000

June

341539

352353

384642

412336

433390

451223

502000

512000

550000

July

431933

432900

466715

513853

485808

506427

569000

628000

736000

Aug

383337

369707

422173

444548

445632

486338

576000

599000

670000

Sept

341693

330707

369821

401995

411562

453561

509000

542000

615000

Oct

450013

458849

507093

562873

556488

598095

668000

683000

754000

Nov

531683

541524

608178

636762

701185

733923

765000

816000

891000

Dec

533904

615775

680004

715364

752972

821581

885000

913000

1037000

Monthly FTA's in India from 2008-2017 1200000 1000000 800000 600000 400000 200000 0 Jan

Feb

March April

May

June

July

Aug

Sept

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Oct

Nov

Dec

Source: The Statistics Portal and Market Research and Statistics, Ministry of Tourism, GOI. (https://www.statista.com/statistics/206889/number-of-foreign-tourist-arrivals-in-india-by-month/and http://tourism.gov.in/market-research-and-statistics) A Monthly Double-Blind Peer Reviewed Refereed Open Access International Journal - Included in the International Serial Directories


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RISING CONTRIBUTION TO INDIA’S GDP

Notes: CAGR – Compound Annual Growth Rate, E - Estimates, GDP stands for Gross Domestic Product Source: India Brand Equity Foundation, June 3, 2017. (https://www.ibef.org/industry/indian-tourism-and-hospitality-industry-analysis-presentation) A SWOT ANALYSIS ON DEMONETIZATION STRENGTHS WEAKNESSES  Put an end to Black money economy of India.  Stringent IT Department monitoring into    

individual bank accounts. Encourage cashless transactions. New security features in the newly introduced currency which makes it difficult to replicate. Too much of downfall in the crime rate and terror activities in the country. Avoid Counterfeits through new currency.

      

 

 



Re-calibration of ATM Machines on time. Insufficient available infrastructure with the current banking system. Sudden shortage of cash due to improper availability of cash. Improper channelization and distribution of cash across various cities. Rural area needs are completely ignored. Huge communication gaps in the promised deadlines. Supply chain, Retail and Procurement sectors hampered drastically due to the cash mode payment gaps within their process cycle. Small to medium tour & travel and hotel business are facing huge loss of revenue. Healthcare and Pharmaceutical sector hampered drastically due to improper instruction on channelizing the demonetized currency. Wedding Planners business put to halt for undecided time. Inflation may see a steep and steady hype due to delay in transportation of needful groceries on time to the market. Travel and tourism sector is running low



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Vol.05 Issue-07, (July, 2017) ISSN: 2321-1784 International Journal in Management and Social Science (Impact Factor- 6.178) business due to sudden shortage of cash. OPPORTUNITIES

 Sudden pickup of online wallets economy.  POS and Merchant payment gateways terminal economy boosted immensely.  Higher visibility of the transactions at individual level to the government.  More accurate taxation starting this financial year.  Real-estate business to be more transparent.  Gold and other commodities investment to be more accurate and transparent.  More online marketplaces spanning different sectors to be welcomed.  High level of online transaction on restaurant, hotel and tourism services outlets.

THREATS  Illegal exchange of Demonetized cash.  Gray market of fraud account holders to

accumulate demonetized cash as much as possible in multiple accounts.  Poor people to come under IT Department scanner for their prolonged savings.  Proposals to reintroduce some high value currency may bring back the black money market into business.

LONG TERM & SHORT TERM IMPACT DUE TO DEMONETIZATION Debate by economists has expressed varied opinions on demonetization in the country. Here is the long term and short term impact of government's move to make India a cashless economy. Key Point GDP Growth

Short-term impact GDP growth to be negatively impacted by 0.5-1% due to drop in consumption

Long-term Impact With a tax net widening after restriction on cash economy, GDP in the long-term likely to get a boost.

Inflation

Inflation likely to come down due to low demand owing to liquidity problem

Since effect of lower demand can have a lagging impact on inflation, prices may remain flat or fall in the long term.

Interest rates

With Banks flush with cash, interest rates may come down in the short-term

If demonetization boots formal banking and more cash continues to come in the system, interest rates may fall further.

Fiscal Deficit

Unlikely to have much impact as most of the gains (RBI surplus, higher tax collections, penalties) will accrue after FY2017.

With likely increase in the size of tax collections and formal economy would improve the country's fiscal situation.



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DISCUSSION The following data has been classified into two A and B categories that is:(A) Analysis of an effect on small to medium tour & travel and hotel business such as year of establishment, average monthly income before and during demonetization period and accepting plastic money. (B) Analysis of general opinion of owners of small to medium tour & travel and hotel businesses about present demonetization and opinion about the problems faced by them during demonetization. (A) The following information has been collected from owners of various small to medium tour & travel and hotel business in India and analysed based on descriptive statistics. YEAR OF ESTABLISHMENT OF HOTEL Year of Tour & Travel Establishment

Hotel

Total Frequency

Percentage

Established before 7 14 21 35.0 2000 Established during 9 18 27 45.0 2000 - 2010 Established after 6 6 12 20.0 2010 Total 22 38 60 100.0 Source: Field survey The above table reveals the year of establishment of small to medium tour & travel and hotel business in India. 21 were established before 2010 constituting 35%, 27 were established during 2000-2010 constituting 45% and 12 were established after 2010 constituting 20%. AVERAGE MONTHLY INCOME BEFORE DEMONETIZATION Average Income Tour & Hotel Total Frequency Percentage Travel 10,000-20,000 9 18 27 45 20,001-40,000 7 8 15 25 40,001-60,000 4 7 11 18.33 60,001-80,000 1 3 4 6.67 80,001-1,00,000 1 1 2 3.33 1,00,001-1,20,000 0 1 1 1.67 Total 22 38 60 100.00 Source: Field survey The above table presents the average monthly income of small to medium tour & travel and hotel business before demonetization. Maximum 27 were earning between 10,000 to 20,000 constituting 45%, 15 were earning between 20,001 to 40,000 constituting 25%, 11 were earningbetween 40,001 to 60,000 contributing 18.33%, 4were earning between 60,001 to 80,000 contributing 6.67%,2were earning between 80,001 to 1,00,000 contributing 3.33% and 1 was earning between 1,00,001 to 1,20,000 contributing 1.67% as an average monthly income.



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AVERAGE MONTHLY INCOME DURING DEMONETIZATION Average income Tour & Travel Hotel

Total Frequency

Percentage

5,000-25,000 15 23 38 63.33 25,001-50,000 6 9 15 25 50,001-75,000 1 5 6 10 75,001-1,00,000 0 1 1 1.67 Total 22 38 60 100.00 Source: Field survey The above table reveals the average monthly income earned during demonetization by small to medium tour & travel and hotel business. Maximum 38 were earned between 5,000 to 25,000 constituting about 63.33%, 15 were earned between 25,001 to 50,000 constituting about 25%, 6 were earned between 50,001-75,000 constituting about 10% and 1was earned between 75,001 to 1,00,000 constituting about 1.67% as an average monthly income. ACCEPTING PLASTIC MONEY Accepting Tour & Travel plastic money

Hotel

Total Frequency

Percentage

Yes 5 9 14 23.33 No 17 29 46 76.67 Total 22 38 60 100.00 Source: Field survey The above table reveals the usage of plastic money for their routine business transactions. Maximum of 76.67 small to medium tour & travel and hotel business did not practice accepting plastic money constituting 76.67% whereas only 14 were having the habit of accepting plastic money constituting around 23.33%.



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(B) The opinion of owners of small to medium tour & travel and hotel businessabout the demonetization, the problems and challenges faced by them has been analyzed through descriptive statistics. OPINION ON PRESENT DEMONETIZATION AND PROBLEMS FACED DUE TO DEMONETIZATION BY THE OWNERS OF SMALL TO MEDIUM TOUR & TRAVEL BUSINESS Strongly Sr. No.

Statements

1

The Government move towards demonetization is appreciated

Agree

Agree

Neutral

Disagree

Strongly Disagree

Total

T&T

%

T&T

%

T&T

%

T&T

%

T&T

%

TF

%

2

9.09

9

40.91

4

18.18

4

18.18

3

13.64

22

100



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2

Demonetization step is required to eliminate corruption, black money and terrorism

3

13.64

10

45.45

5

22.73

2

9.09

2

9.09

22

100

3

Cashless economy will help in economic growth

3

13.64

9

40.91

6

27.27

3

13.64

1

4.55

22

100

4

Demonetization may bring cash crunch in short term but will help in long run

3

13.64

8

36.36

7

31.82

3

13.64

1

4.55

22

100

5

Demonetization has been success

2

9.09

6

27.27

7

31.82

5

22.73

2

9.09

22

100

6

This step will bring great change in tourism industry

3

13.64

9

40.91

6

27.27

3

13.64

1

4.55

22

100

6

27.27

8

36.36

4

18.18

3

13.64

1

4.55

22

100

Exchange of currency disturbed 7

the tourism business

The sudden announcement of

8

demonetization led to problem in currency exchange

12

54.55

7

31.82

2

9.09

1

4.55

0

0.00

22

100

9

Created problem in paying salary to workers

12

54.55

8

36.36

2

9.09

0

0.00

0

0.00

22

100

10

Faced problem of price crash

12

54.55

7

31.82

3

13.64

0

0.00

0

0.00

11

During demonetization income was less

13

59.09

8

36.36

1

4.55

0

0.00

0

0.00

100

Source: Field survey A Monthly Double-Blind Peer Reviewed Refereed Open Access International Journal - Included in the International Serial Directories


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22

100

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OPINION ON PRESENT DEMONETIZATION AND PROBLEMS FACED DUE TO DEMONETIZATION BY THE OWNERS OF SMALL TO MEDIUM HOTEL BUSINESS Sr. No.

Strongly Agree

Statements H

%

Agree H

%

Neutral H

%

Disagree H

%

Strongly Disagree H

%

Total TF

%

1

The Government move towards demonetization is appreciated

7

18.42

14

36.84

9

23.68

5

13.16

3

7.89

38

100

2

The step of demonetization is required to eliminate corruption, black money and terrorism

6

15.79

14

36.84

12

31.58

4

10.53

2

5.26

38

100

3

Cashless economy will help in economic growth

5

13.16

15

39.47

11

28.95

5

13.16

2

5.26

38

100

4

Demonetization may bring cash crunch in short term but will help in long run

5

13.16

16

42.11

11

28.95

4

10.53

2

5.26

38

100

5

Demonetization has been success

4

10.53

13

34.21

14

36.84

5

13.16

2

5.26

6

This step will bring great change in hospitality industry

5

13.16

17

44.74

10

26.32

4

10.53

2

5.26

7

Exchange of currency disturbed the hospitality business

9

23.68

17

44.74

7

18.42

4

10.53

1

2.63

8

The sudden announcement of demonetization led to problem in currency exchange

22

57.89

11

28.95

5

13.16

0

0.00

0

0.00

38

100

9

Created problem in paying salary to workers

22

57.89

10

26.32

6

15.79

0

0.00

0

0.00

38

100

10

Faced problem of price crash

23

60.53

11

28.95

4

10.53

0

0.00

0

0.00

38

100

11

During demonetization income was less

24

63.16

10

26.32

4

10.53

0

0.00

0

0.00

38

100

Source: Field survey A Monthly Double-Blind Peer Reviewed Refereed Open Access International Journal - Included in the International Serial Directories


38

38 38

100

100

100

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The above tables disclose the opinion of owners of small to medium tour & travel and hotel business. 9 (T&T) and 14(H) appreciate the demonetization move constituting around 40.91% and 36.84% respectively, 10 (T&T) and 14(H)agree that the demonetization step help to eradicate corruption, black money and terrorism constituting around 45.45% and 36.84%% respectively, 9 (T&T) and 15(H)agree that cashless economy leads to the economic growth constituting about 40.91% and 39.47% respectively, 8 (T&T) and 16(H) agree on cash crunch caused by the demonetization in short term and may help in the long run constituting around 36.36% and 42.11% respectively, 7 (T&T) and 14 (H) neutral on the success of demonetization in Indian economy constituting around 31.82 % and 36.84% respectively, 9 (T&T) and 17 (H) agree in change brought by demonetization in hotel industry constituting around 40.91 % and 44.74% respectively, 8 (T&T) and 17 (H) agree that the exchange of currency has disturbed the business of tour &travel and hotel industry constituting around 36.36 % and 44.74% respectively, 12 (T&T) and 22 (H) strongly agree that the sudden move of the Government towards the demonetization has led to the problem of currency exchange and in paying salary to his workers constituting around 36.36 % and 57.89% respectively, 12 (T&T) and 23 (H) strongly agree that they faced the problem of price crash constituting around 54.55% and 60.53% respectively and 13 (T&T) and 24 (H) strongly agree that during demonetization income was less constituting about 59.09% and 63.16% respectively. Note: T&T= Tour & Travel; H= Hotel; T%= Total Percentage; TF= Total Frequency

PROBLEMS AND CHALLENGES DUE TO DEMONETIZATION 1. Foreign tourists faced too much of problems to buy tickets in various monuments and other tourist places as they are not accepting the old Rs.500/- and Rs.1000/- denominations and they have few numbers of machines in few places only to accept the plastic money from the tourists. 2. Tourist both domestic and International are struggle to pay their hotel and travelling expenses to the service providers due to lack availability of new currency in banks & ATM’s as well as cashless transaction facilities in the small to medium service provider in India. 3. Most of the businesses in India, restaurants, especially budget guesthouses, tourist sights,hotels, buses and taxis do not have facilities to accept card payments and that creating problems to the travellers. 4. The accommodation section of hotels is much affected, but leisure segments like hotel banquets and high-end restaurants are feeling the pinch as weddings are being called off and many prebookings for different wedding ceremonies are also being cancelled. 5. The high-end restaurants are also facing drastic change as people are replacing fine-dining with pocket-friendly eateries. 6. Luxury items will have a drastic negative impact. Majority of the people spend their undeclared income on such products. After the decision, it is likely that all luxury segments like clothing, electronics, luxury car, furnishing and allied business will take a hit. Media and hospitality industries are also get affected. 7. The effect on food & beverages business as well as cabs has been severe. Restaurant owners complained that nearly 25% business has dropped as people are facing problems with paying lower denominations to avail the services. 8. Time consuming for Office goers, business people have shelled out their time for exchange & deposits.



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9. Need of real money, There are many places where you can't find an alternate to real money like parking charges, fruit / flower shop, pooja / prayer items, bus / auto fare, small provisions, temple, petty shop, cobler, etc… Meeting these needs was a challenge. 10. Leave work, Stand in Ques, People have to leave work and stand in queues for banking transaction, for exchanging only 4000 rupees at one chance. 11. No money for wedding that effect the hospitality service providers. 12. ATM’s couldn’t serve people anymore because Lack of Money in ATM’s. 13. Currency Change not Available, Many people who are getting Rs. 2000 note from banks or ATM are not able to get the change as none of the shopkeeper is ready to give change of Rs. 1800 on purchase of Rs. 200 so change is a big worry to common person. 14. Usage of E Wallets, Usage of E-Wallets is one of the best solution but challenge is that many people who are of old generation don't use smart phone and if they use then also big ratio among them is of people who don't feel secure on transferring the money through E-Wallets. 15. Banks unable to feed their Customers, You can still find long queues of people waiting outside banks for their number and some of the times it happens that after long hours of waiting they come to know that cash is finished and now they have to come again after some hours or need to be in queues tomorrow again. 16. Old and poor people losing lives - It's been in several news channels that some of the people who are not well or are very weak have lost their lives due to standing in queues for long hours. 17. Everyone in India, including tourists, is struggling to cope. The biggest problem is finding enough legal tender – cash – to pay for day-to-day things like food, restaurants, chai, taxis, tickets, entrance fees, souvenirs, hotels that don’t accept credit cards, etc. 18. Small to medium hotels, tour and travels, Restaurants are increasingly move towards accepting payment in cards to run their business and facilitate their guests in terms of money. 19. No clear concept of Indian money from Foreign Bank. 20. Highly affected by the savings economy. 21. To curb small business sectors. 22. Low transaction by poor, middle and neo middle class people. 23. No permanent and alternative solution of demonetization. 24. Lack of New Five hundred rupees currencies. 25. Tribal and hill area people were highly affected for transaction.

LIMITATIONS The study is limited by the geographical regions of India as the study is conducted on small to medium tour & travel and hotel Business in selected cities of India and there is time constraint to collect the data from all the cities of country. Demonetization implemented just few months back so thatTravellers and service sector still facing problems to adopt the change. It will take time to make the visitors and guest comfortable through availability of sufficient cash in the market as well as cashless transactions in the small and medium level businesses in hospitality and tourism industry in India. CONCLUSION The small to medium tour & travel and hotel business in various cities of India have been severely affected by the demonetization move. Most of the tour & travel and hotel owners think that the move is not beneficial at present but surely in the longer run it will benefit their business and most of them said that small to medium tour & travel and hotelfaced huge loss of revenue in the initial weeks but when we talk about the large scale service providers they are not much effected due to demonetization because A Monthly Double-Blind Peer Reviewed Refereed Open Access International Journal - Included in the International Serial Directories


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they are already using the online transactions and plastic money in their business run. They agree that the move of demonetization will help the Government to fight against black money, corruption, terrorism and counterfeit currency. Arms, smuggling, espionage and terrorist related activities will be choked due to lack of funding and loss to the common people because fake currency unintentional or earned by hard work is refused by the banks. The report of WTTC and IBEF shows that there is no effect of demonetization in the hospitality and tourism sector contribution in India’s GDP. Indiantourism and hospitality sector notjust contributing in India’s GDP but also giving the revenue through the growth of foreign exchange earnings and foreign-tourist-arrivals in India. Sectors with a sizeable magnitude of cash transactions are expected to affect adversely. With the banks being flushed with high liquidity, we can expect reduction in interest costs and softening of land rates. This move has positive impact on sectors like Banking, Financial markets, E-Commerce, Pharmaceuticals, etc. negative impact on sectors like Real estate, Tourism and Hospitality, Automobiles, NBFC’s and HFC’s, jewellery, etc. and neutral impact on Power, Telecom, Oil and Gas, etc. The historical step taken by Modi Government will fetch results in long run and it supported by most of them. Indian tourism and hospitality sector is growing as Money life advisory shows that Hotels gain 2% in their 24th June 2017 weekly stocks.



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