Mumbai: The terror attacks that struck at the heart of Mumbai, the financial capital of the country, will most likely impact sectors like travel, tourism and hotels.

While the confrontation between terrorists and the National Security Guards raged in the corridors of the luxurious Taj Mahal Hotel at Gateway of India, for the third day, travel agents in the city reported a deluge of calls by tourists and travellers wanting to cancel their bookings.

Now they are worried that if foreign countries begin to issue travel advisories against India, tourism could be severely hurt.

Travel agents say the real impact that the terror attacks would be felt on the Christmas and New Year tourists and would be ascertained only over a period of next few days.

Madhavan Menon, managing director, Thomas Cook India, said, ''If the countries begin issuing travel advisories against India, travel insurance premium to India will go up across the world and hit travel to the country. Secondly, multinational corporations with operations in India might also restrict travel of their employees, if not for long then at least next few days.''

As it is the economic slowdown had led to reduced bookings for Indian destinations. According to official figures foreign tourist arrivals grew by merely 1.5 to 2 per cent in the last two months, compared to 10-11 per cent growth in August 2008.

The terror attacks also led to a number of meetings, conferences and exhibitions being cancelled as a result of which travellers kept ringing the hotels to cancel their bookings.

Industry insiders say with the Trident and Taj hotel out of the market on account of the damage, there will be around 600 rooms less in the Mumbai market.
A number of airlines have already cancelled flights to and from Mumbai after the terrorist attacks, operators said.

Air France cancelled a flight from Mumbai to Paris, scheduled to leave at 2:15 am local time (2045 GMT Wednesday), and one from the French capital to the Indian city timed for 10:30 am (0930 GMT), the company said.RR

Also Italy's flag-carrier Alitalia cancelled all its flights to Mumbai until further notice, a spokeswoman said.

German airline Lufthansa scrapped two flights to Mumbai due to leave Frankfurt and Munich today.

The two planes had also been due to return from Mumbai with 600 passengers on board, a company spokesman said. The airline was trying to ensure that they can fly home via other Indian cities such as New Delhi.

US Delta airlines also cancelled one flight from Mumbai to Seattle via Amsterdam.NNSouth African Airways delayed the departure of its daily flight to Mumbai by two hours, while British Airways said its services in both directions were normal.

International rating agency Standard & Poor's (S&P) says that the tourism and hotel industry are expected to have the most impact in the near-term and foreign tourist inflows are likely to slow down. ''Western countries have either issued travel advisories or cautions. Media has reported about 15 per cent cancellations in airline bookings at present. Overseas clients, such as those of Indian IT companies, may postpone their visits but this may not have much impact since business travel to outsourcing destinations is anyway low due to holidays in the Western world,'' said the S&P statement.

Although economists and analysts say that the terrorist attacks on Mumbai will have a short-term impact on India's economy, business men say business confidence, which has been falling over the past few months in the wake of the global credit crisis, could decline even more.

Mumbai, which houses Asia's oldest stock exchange, the Reserve Bank of India, the Securities and Exchange Board of India and the largest corporate houses of the country-Reliance, Tata and Birla groups-accounts for 5 per cent of the country's $1 trillion (Rs49.9 trillion) economy and contributes one-third of its direct taxes.

According to Deepak Parekh, chairman of Housing Development Finance Corp. Ltd, the attack was intended ''destabilize and slowdown economic growth.'' He added that the travel, tourism, hospitality industry will be severely hurt in the peak season which starts in December.