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By 2020, Tourism in India could contribute Rs 8,50,000 crores to the GDP. (Source- WTTC).


In other words, every man, woman and child could become richer by Rs 7,000. India has yet to realise its full potential from tourism. The Travel and Tourism industry holds tremendous potential for India’s economy. It can provide impetus to other industries, create millions of new jobs and generate enough wealth to help pay off the international debt. That is why we have included Tourism amongst the Core Sectors of the Indian Economy.

Incredible India !!

India is probably the only country that offers various categories of tourism. These include history tourism, adventure tourism, medical tourism (ayurveda and other forms of Indian medications), spiritual tourism, beach tourism (India has the longest coastline in the East) etc.

Explore India – choose the locales of your choice, and see what each state has to offer. Lose yourself in the wonder that is India. Meander through lands steeped in chivalry and pageantry that begin before recorded history. Explore modern cities that have grown organically from the roots of a multi-hued past. Make a pilgrimage to holy shrines that echo with tales of antiquity. Frolic on a vast array of golden beaches that dot an enviable coastline, washed by two seas and an ocean. Sport with adventure in style. Let the jungle lure you to a fascinating world at a diverse array of wildlife sanctuaries and national parks……. this is the wonder that is India.

India on the World Map

The Indian tourism industry has not had it so good since the early 1990s. With global recession seeming to have waned decisively, Indian economy growing at around 7% per annum and rise in disposable incomes of Indians, an increasing number of people are going on holiday trips within the country and abroad resulting in the tourism industry growing wings.

It is fast turning into a volume game where an ever-burgeoning number of participants are pushing up revenues of industry players (hotels, tour operators, airlines, shipping lines, etc). Thus, the tourism sector is expected to perform very well in future and the industry offers an interesting investment opportunity for long-term investors.

Despite the numerous problems, tourism industry was the second-largest foreign exchange earner for the country during the year ended March 2003. During 2002, 2.2 million foreigners visited India. Foreign tourist in-flow has risen 20% this year.

India : An Idea who’s time has come

Conde Nast ranked her amongst the top 10 tourist destinations. JBIC ranked her as the fifth most attractive investment destination. The World Social Forum, AdAsia, World Bamboo Congress, Commonwealth Games, Laureus World Sports Academy Global Submit, F1 alongwith some of the biggest expos and conferences of the world chose her to play host.

Presenting India to you Readers. The subcontinent to whose splendor, diversity and world-class facilities the world has finally woken up to. Away from threats, untouched by SARS and politically stable India is the flavor of the season. Take a fresh look at her flourishing economy (double digit growth in third quarter of 2003- 2004), geographically strategic location, faith fortified by major software firms to make it a global backup hub for software, the staggering figure of over 366 national/international level expos and about 100 congress already scheduled for leap year 2004 (of which over 50 in January alone), her forex reserves, her rising Sensex, rapidly growing consumer markets, presence of world’s finest and choicest brands and the exceptional growth in interest from FIIs, to understand why India offers a feel good factor. Truly, India is one of the most exciting emerging markets in the world.

The Scene Till Now

Some major international events like 9/11, US-led war against terror and SARS hit the tourism industry over the past few years. The adverse travel advisories by many countries to their citizens and riots in Gujarat too contributed to a significant slowdown in tourism in India.

There were other negatives too. Consider this- Expenses per night of stay for a tourist in India during the SE Asian currency crisis was $100 whereas it was around $35-40 in the SE Asian countries. This hurt Indian tourism. Though this discrepancy has come down, still there is some gap. Some of the reasons for this are high luxury and entertainment taxes and high landing charges applicable in Indian airports.

Costs are also high because tourism is a state subject. Each state separately spends on tourism and tourism related activities, whereas if these funds were spent in a cohesive manner by a nodal agency to showcase the entire country as one destination, the results would probably have been far more spectacular. Currently, the centre is only allocating finances for tourism projects. But the government is trying to convince states on the benefits of bringing tourism under the aegis of the Central government on to the concurrent subject on to the concurrent list.

Government Policy Initiatives

Keenly aware of the unfolding boom in the tourism industry, the government is lending a hand to the growth of the industry. In the Union Budget for 2003-04, government has extended infrastructure status to tourism, thus opening the doors to cheap, long-term funds to help finance tourism infrastructure.

Outlay for tourism for the Tenth Five Year Plan is Rs. 2900 Crore. For the financial year 2003-04 the outlay is Rs 325 crore. This is up sharply from Rs 150 crore allocated in the previous financial year. State governments such as Kerala lay a lot of stress on boosting tourism. The state has an outlay of Rs. 74.25 crore for the financial year 2003-04.

The Government of India has extended the benefits of Section 10(23G) of the Income Tax Act, 1961 to institutions financing hotels of three-star category and above. A top level executive of Travel Finance Corporation of India (TFCI) is all smiles as he says, “This has benefited TFCI as the company has a major part of its portfolio in the exempted category.” And this smile is now strongly percolating down to all tourism industry players in the country.

The divestment of government’s stake in government run hotels is another step in the right direction. Professionals are increasingly stepping in to take over this service-oriented industry. Global best practices, cost cuts and service with a smile are fast turning a norm.

Going Forward- Destination India

India is now chalking up one of its strongest growth charts in a long time. As the Indian economy continues to open up in an effort to integrate with the world economy, benefits of doing business with and in India are increasing. With the results, hundreds of thousands of jobs are moving to the Indian shores from the West. This brings in its wake transit travelers, business travelers, business meets and holiday seekers.

This is resulting in greater room occupancies and average room revenues (ARRs) in the country. ARRs have moved up from Rs. 3200-3400 last year to Rs 4000-4200 this year. Room occupancy rates have shot up from 75-80% in 2002 to over 90% now. Infact, in Bangalore it is now estimated at 100%.

Expert Opinions

According to one travel expert, “India is a country that is either loved or hated by foreign travelers; there is no middle path. Though there is lack of hotel accommodation, air travel, space and sanitation, it still is a great destination.”

Says Mr M Narayanan, Managing Director, Tourism Finance Corp of India (TFCI) “Tourism is no more being seen as the rich man’s past time. An increasing number of ordinary people are now going on holiday tours giving a fillip to the industry’s growth.”

Says Mr. Kavi Ghei, Director, TRAC Representations, “The government is concentrating on developing domestic tourism as disposable incomes in the hands of Indians are on the rise. There is a variety of options available for different strata of tourists- right from the affluent to those with on a shoestring budget. What has been lacking is an effort to market this spectrum of possibilities in the right way to potential foreign tourists. The government is now setting this wrong right by putting across these positives in the international marketplaces with the help of professionals. The ‘Incredible India’ campaign is a step in this direction.”

Says a gleeful Dr Ramesh Kapur, MD, Radisson Hotels, Delhi, “We have achieved an average room occupancy rate of 101.7% in November 2003″. However, Dr. Kapur is far from satisfied. He says, “India should be aiming at getting the kind of tourist inflows that countries like Singapore are attracting”.

According to Mr. L. Prithviraj Singh, Chief Operating Officer-Leisure, Cox & Kings (India), “Around 2.5 million tourists are coming in while outbound is still a nascent market. The potential for growth in the latter segment is much more than for incoming tourists.” In fact, the recent rise in airline seating capacity to India and increase in hotel rooms have spelt greater affordability for the foreign traveller.

“Unfortunately, foreign agents look upon India as a troublesome country – in terms of operations not in terms of safety. We have also got into this trap of India becoming an expensive destination – added to an expensive air fare – as there is `no open sky’ policy. The entry points are the metros where hotel tariffs are very high. Basic infrastructure too is a problem.”

“One has to really bring tourism to its potential. We have not even scratched the surface. The need is to evolve a long term policy. Disinvestment of Government stake in Indian Airlines, Air India and ITDC in the long term will be a good thing and the privatised hotels will open up a new level of affordable hotels.” says Mr. Singh, adding, “The problem in India is the absence of `open sky’ policy. If there is one, prices will drop, capacities will improve and once that happens, all the other problems will be sorted out.”

Mr. Sunil Gupta, Head- Leisure Travel, Thomas Cook (India) says, “Inbound tourism is growing at a consistent CAGR of 6 per cent annually while outbound tourism is growing at 15 per cent year-on-year”.

Mr. Ranjit Malkani, Chairman & Managing Director, Kuoni Travel India (KTIL)- “Growth in inbound travel so far has been due to tourists from West Asia, Latin America and Japan. The trend in European arrivals has been flat, though a 5-6 per cent growth is expected courtesy the rise in airline seat capacity.”

Industry Structure

The tourism industry is classified into outbound, inbound & domestic and there are different opinions about the size of the industry.

Inbound Tourism

Inbound tourism is concentrated largely in the North and Rajasthan. Industry sources say that even today, the South accounts for only about 25 per cent of inbound tourism. “The first time traveller will invariably go to Agra and Rajasthan and not venture to other locales.” However, “With the thrust given by Kerala, it is an exotic option and Gujarat too is a destination of the future.”

Domestic Tourism

Domestic tourism needs to be buoyed up. “Domestic tourists are looking at 3-4 holidays in a year in India and the concept of booking through a hotel directly is moving away and customers are increasingly coming to travel and tour agencies” avers an industry insider. The most favoured destinations continue to be the hill stations, Rajasthan and now, with the marketing thrust, Kerala is the largest destination for people in the West and South.

Outbound Tourism

India as a MICE destination

India is in a continual process of upgrading its MICE (Meetings, Incentives, Conferences & Exhibitions) facilities. There are multiple plans on the anvil for more world-class convention centers, airports that contest with the best in the world and efforts to team the famous Indian hospitality with customization as per a visitor’s requirement. You could also offer the credit to the world class incentive programs, her ability to heal spiritually, her unmatched offering as a health destination or continually improved infrastructure facilities that over 3 million foreign tourists thronged her this year generating over US $30 billion as revenue, even as most other preferred hotspots marked a decline in their tourism graphs.

Take a close look at INDIA as your next MICE destination. India CAN deliver !!! For details feel free to contact us.

Industry Players

Among the leading players, Kuoni Travel (India) (KTIL) is the country’s biggest, fully owned by the Zurich-based Kuoni Travel Holding. The company acquired Tour Club which caters to the outbound segment from West Asia to India. Inbound travel from West Asia has been growing at 15 per cent, among the highest growth rates in the segment. KTIL had already spent Rs. 200 crores in earlier acquisitions, which included travel majors SOTC (Kuoni’s route to an Indian presence) and SITA World Travel.

Cox & Kings India too has an open mind on acquisitions both in the domestic and overseas markets. “We will look at niche companies overseas as well which we feel we can develop.” The company claims the second largest share of the domestic pie after Kuoni in inbound and outbound travel. “What separates us is the charter segment which, for example, comes into Goa. We set up a subsidiary- Far Pavilions – to cater to this segment and that has made a fair amount of progress.”

Thomas Cook (India) Limited (TCIL) says increased investment in marketing leisure travel and expansion of distribution network is expected to yield significant benefits in the peak travelling period between May and July. There has also been continued investment in building businesses in Sri Lanka and Mauritius along with completion of back-office implementation of SAP, call centre infrastructure and telecommunication network. Earlier, TCIL was mainly in the business of forex dealing and travel and tours. “The domestic sector needs more focus and we realise that the customer wants quality service. Reliability is a major issue. A focus area for us is A/C rail charters where we book and pay for an A/C railway coach and tourists can visit different cities/ locations.”