Goa tourism faces high demand- short supply conundrum

She intently listened to the speaker on the stage, who spoke eruditely to his audience, but the refreshing coffee smell was distracting her. Like a sniffer dog, she followed the smell to the beverage stall in the lobby outside the conference hall.  

Oblivious of the queue, she headed straight to the counter and asked for an Americano. Realising she was jumping the queue, she tried to join in the line for coffee, but the middle-aged man in a dark beige suit, grey hair and gold-rimmed glasses at the counter, chivalrously, allowed her to take her order out of turn.

He joked she could pay a bribe of Rs 500 to him for the “special privilege”. This underhanded deal from him, offered on a lighter note, may have come from subliminal messaging drummed into him by the Indian bureaucratic and governance institutions. 

It came out in their conversation that he was a supplier to domestic hotels. He supplied furniture and other interior materials for hotels rooms, sourced locally and globally. He lamented, due to rampant corruption and commission cuts in India’s tourism ecosystem, prices shoot up “five times” of the actual market price.

What supply shortage does is it hands over the pricing power to players in the tourism industry, keeping their products and services out of the reach of many aspirational consumers.

To solidify this with a numerical example, one can say a hotel room bed that could be bought at Rs 20,000 gets sold at Rs 1 lakh because of bribes and commission cuts in the market.  

The man in beige suit said this was not just squeezing suppliers’ margins but also escalating project costs of hoteliers as the greed of every operator in the ecosystem runs amok. Like a termite, it has lodged itself into the woodworks of the tourism structure, whose performance has always stayed way below its immense potential.

For a vast country like with immeasurable tourism opportunities, the tourism sector contributes only 5.04 per cent to its GDP compared to smaller countries like Thailand (over 20 per cent), Maldives (25 per cent), Turkey (15 per cent) and others.

Goa, on that count, has done better than the national average with tourism contributing 16.4 per cent to its GDP and generating 35 per cent of the employment in the State. Still, its tourism potential remains under-tapped due to widespread red tapism that breeds delays and, ultimately, corruption.

All this has led to the supply falling behind demand in the tourism market. What supply shortage does is it hands over the pricing power to players in the tourism industry, keeping their products and services out of the reach of many aspirational consumers.

In recent years, there has been a huge surge in the domestic demand for travel, but the supply has not kept pace with it. This has kept the room rentals of hotel properties at stratospheric levels.

Another reason for exorbitant room rentals or steep prices of tourism services could be because huge investment potential remains dormant due to bureaucratic red tape and graft. Ironically, every single-window clearance has several invisible windows behind it that have to be passed through for doing business.

Such a system offers entry only to a few privileged individuals, who are ready to insert the corruption costs into prices. This engine of corruption is kept oiled by bloated room rates and the short supply of inventories in the market.

Therefore, the tourism industry lobby consistently keeps knocking on the doors of bureaucracy and the political ecosystem with the demands for subsidies, incentives, infrastructure status and rationalisation of taxes and levies to make themselves competitive in the market or just to further boost their profits.

This has been playing out forever in the cycle of the tourism industry. Now that Goa, as a tourism destination, is nearing its saturation point, players allege the wheeling and dealing in the political and bureaucratic corridors has gotten even more aggressive.

There’s no doubt Goa has a great tourism story to be told, but its narrative is being marred with unimaginative and irresponsible story writers, whose sight is solely fixed on revenues. Their blinkered vision cannot see environmental and social elements, which are left out of the plain sight of today’s architects and planners of the tourism sector.