Winning Bizness Desk

Mumbai – Following the terrorist attack in Pahalgam on April 22 that claimed 26 lives, the region witnessed a dramatic collapse in tourist presence. Within 24 hours, over 90% of the nearly 20,000 hotel rooms in Pahalgam were vacated, according to the Pahalgam Hotels and Owners Association. Tourists are rushing to Srinagar to catch flights out of the valley, fearing further violence. The association’s president, Javed Burza, confirmed a surge in cancellations, stating that despite efforts to reassure tourists, most are determined to leave immediately.

Immediate Blow to Tourism at Peak Season

The attack has come at a critical time for Jammu & Kashmir’s tourism industry, with the April-July period marking the peak tourist season. In 2024, over 65,000 foreign tourists had already visited J&K — a sharp rise from 37,000 in 2023. The sector was showing signs of robust recovery post-pandemic and after years of unrest. But industry insiders now fear a steep drop in tourist arrivals, both domestic and international, especially as the US State Department has reiterated its “Do Not Travel” advisory for Jammu and Kashmir, citing terror threats. Similar advisories from other countries may follow.

Government Issues Cancellation Fee Waivers Amid Losses

The Union Tourism Ministry has urged airlines, hotels, and tour operators to waive cancellation charges. Airlines have begun operating additional flights to facilitate the outbound rush. The advisory underscores the extent of the financial hit anticipated across the tourism sector. While fee waivers may reduce financial stress on tourists, they will not offset the losses incurred by local service providers — including hoteliers, transport operators, and tour guides.

Economic Impact on Local Businesses and GDP

Tourism accounts for nearly 8% of Jammu & Kashmir’s Gross Domestic Product (GDP). In 2023-24, the region’s estimated GDP stood at ₹2.3 lakh crore, with the tourism sector contributing between ₹16,100 and ₹18,400 crore. The hotel segment alone was worth ₹6,900–₹9,200 crore. Analysts fear a 30-50% slump in tourism revenues, akin to the decline seen after the 2019 Pulwama attack. Taxi services, restaurants, and pony operators are among those likely to suffer immediate income losses.

Long-Term Risks to Employment and Investments

Tourism directly or indirectly supports a large section of Kashmir’s workforce. With mass cancellations and no clarity on when normalcy will return, hotel operators may be forced to lay off staff. Hotelier Suhail Ahmad warned that the attack could "cripple" the local economy. Approximately 5,500 hotels are listed across online booking platforms in J&K, including 55 five-star, 150 four-star, and about 1,500 houseboats. Projects by major investors like Abu Dhabi’s LuLu Group and luxury hotel expansions such as Taj Vivanta may also face delays or re-evaluation due to growing security concerns.

Recovery at Risk Despite Growth Indicators

Despite the crisis, Jammu & Kashmir’s economy has shown resilience in recent years, with GDP growth outperforming the national average. The state posted a growth rate of 7.08% in 2023-24 and is projected to grow at 9.5% in the current fiscal year. Between 2019-20 and 2024-25, its compound annual growth rate (CAGR) was 4.89%. Per capita income has risen by 148% over the last decade. However, repeated terror incidents pose a significant threat to the region’s economic revival, especially in sectors like tourism that are sensitive to perceptions of safety and stability.

Summary:

1. Mass cancellations: Over 90% of hotel rooms in Pahalgam vacated within 24 hours after the April 22 terror attack that killed 26 people.

2. Tourist exodus: Tourists are rushing to Srinagar to catch flights out; exodus reported from Gulmarg and Sonamarg as well.

3. Booking collapse: Nearly 90% of travel bookings to Kashmir have been cancelled following the attack.

4. Peak season disrupted: The attack hits during the crucial April–July tourist season, affecting growing foreign tourist inflow.

5. US travel advisory: US reissues “Do Not Travel” warning for Jammu & Kashmir; other nations may follow, denting tourist confidence.

6. Economic hit: Tourism forms around 8% of J&K’s GDP; projected revenue loss is 30-50% in hotel and travel sectors.

7. Local businesses suffer: Hotel owners, taxi operators, eateries, and pony service providers face sharp income drops.

8. Job losses feared: Large-scale layoffs expected in tourism-related sectors as cancellations surge.

9. Investor concerns: Projects by big players like LuLu Group and Taj may be delayed or scrapped due to security risks.

10. Recovery setback: J&K’s growing economy and rising per capita income now face threats due to revived terror concerns.