Tourism And Hospitality Industry in India

The Indian tourism and hospitality industry is on a roll, driven by a huge surge in both business and leisure
travel by domestic and foreign tourists. The year 2006 was not only a record year for India's inbound
tourism but was the fourth consecutive year showing a double-digit increase in foreign tourist arrivals.
Moreover, the growth of tourist inflows into India was well above world average, leading to a rise in India's
share in world arrivals from 0.37 per cent in 2001 to 0.53 per cent in 2006. Also, as noted by UN World
Tourism Organisation (UNWTO), the growth of the Indian tourism industry was instrumental in the
'emergence' of South Asia as a tourist destination.
Further, tourism is an important industry in the Indian economy contributing around 5.9 per cent of the
Gross Domestic Product (GDP) and providing employment to about 41.8 million.
Inbound Tourists
The flow of foreign tourist arrivals continues to grow in the current year. On the back of 14.3 per cent growth
in tourist arrivals in 2006 over 2005, foreign tourist arrivals grew by 12.4 per cent during the first ten months
of 2007 to reach 3.89 million as against 3.46 million during the corresponding period last year.
Along with the rise in foreign tourist arrivals, foreign exchange earnings showed a robust growth of 25.6 per
cent during January-October 2007 to touch US$ 6.32 billion as against US$ 5.03 billion during
January-October 2006. On the other hand, in the whole of 2006, earnings grew by 14.6 per cent over 2005
to total US$ 6.56 billion as against US$ 5.73 billion in 2005.
Outbound Tourists
With the economy growing consistently at over 9 per cent, increasing disposable incomes, a change in the
spending habits, liberalisation of exchange controls, increasing affordability due to numerous holiday
packages and cheaper air fares, outbound tourist traffic has been growing at a rapid pace.
The outbound travel market has been growing at an annual average growth rate of 25 per cent, with an
estimated 7 million people travelling abroad in 2006-07. Further, the United Nations World Tourism
Organisation (UNWTO) estimates this figure to reach 50 million by 2020.
Along with the rise in the number of Indians travelling abroad, both the total and per capita expenditure
spent abroad has been increasing. For example, according to the European Travel Commission, average
spend per trip of Indian outbound tourists has increased from US$ 611 in 2000 to US$ 822 in 2006.
Similarly, Euromonitor International estimates the outgoing tourism expenditure from India to grow to US$
21 million by 2011, representing a growth rate of over 25.7 per cent between 2006 and 2011.
Hospitality
The booming tourism industry has had a cascading effect on the hospitality sector with an increase in the
occupancy ratios and average room rates. While occupancy ratio is around 75-80 per cent, the average
increase in room rates hovered around 22-25 per cent (July-September 2007).
And with the continuing surge in demand, many global hospitality majors have evinced a keen interest in
the Indian hospitality sector. For example, over a dozen global hotel chains like the Hilton, Accor, Marriott
International, Berggruen Hotels, Cabana Hotels, Premier Travel Inn (PTI) and InterContinental Hotels group
have announced major investment plans that would translate in to 65,000 additional rooms.
It is estimated that the hospitality sector is likely to see US$ 11.41 billion in the next two years. Also, India is
likely to have around 40 international hotel brands by 2011. Along with these large scale expansion plans,
international hotel asset management companies are also likely to enter India. Already, US-based HVS
International has firmed up plans to enter India, and industry players believe others like Ashford Hospitality
Trust and IFA Hotels & Resorts among others are likely to follow suit.
Online bookings
Travel portals are cashing in on the booming demand for hotel rooms. There has been a surge in hotel
booking on travel portals in the past 12 months. The online travel industry is a US$ 800-million industry in
India, that is, about 14 per cent of the entire travel industry.
According to Travel and Tourism research firm PhocusWright, the online travel market in India that is worth
US$ 1.3 billion in 2007, is likely to grow to US$ 2 billion by 2008.
Medical tourism
India is likely to become a major hub for medical tourism, with revenues from the industry estimated to grow
from US$ 333 million in 2007 to US$ 2.2 billion by 2012, says, a study by the Confederation of Indian
Industry (CII) and McKinsey.
The key "selling points" of the medical tourism industry are its "cost effectiveness" combined with the
attractions of tourism. Medical care, packaged with traditional therapies like yoga, meditation, ayurveda,
allopathy and other traditional systems of medicines, attract high-end tourists especially from European
countries and the Middle East.
Not only Medical Tourism, the scope for theme travel is vast in India with Adventure tourism, Heritage
tourism, Wellness tourism, Pilgrimage tourism, Golf tourism, Eco-tourism, Wildlife tourism all having
tremendous potential.
Government initiatives
To unlock the huge potential in this sector, the Government has taken various initiatives for the
development of this sector.
Launch of Incredible India campaign to promote tourism both in domestic and international markets.
Recognition of spare rooms available with various house owners by classifying these facilities as
"Incredible India Bed and Breakfast Establishments"', under 'Gold' or 'Silver' category.
A new category of visa, "Medical Visa" ('M'-Visa), has been introduced which can be given for
specific purpose to foreign tourists coming into India.
Guidelines have been formulated by Department of AYUSH prescribing minimum requirements for
Ayurveda and Panchkarma Centres.
The Ministry of Tourism has tied up with the United Nations Development Programme (UNDP) to
promote rural tourism.
International Recognition
With the growth of this industry, international accolades have been flowing thick and fast.
India has been elected to represent South Asia on the Executive Council of UN World Tourism
Organisation (UNWTO), the highest policy making world tourism body represented by 150
countries. It is also set to head UNWTO.
The Association of British Travel Agents (ABTA) has ranked India as No.1 amongst the top 50
places for 2006.
The Incredible India campaign has been ranked as the Highest Recall Advertisement worldwide by
Travel and Leisure. It has also bagged the coveted PATA (Pacific Asia Travel Association) Grand
Award for Marketing. India also bagged two PATA Gold Awards for Cultural Tourism (Aranmula)
and Marketing Brochure (Kumarkom) awarded to Kerala Tourism.
The world's leading travel and tourism journal, "Conde Nast Traveller", ranked India as the numero
uno travel destination in the world for 2007, from fourth position in 2006.
India was adjudged Asia's leading destination at the regional World Travel Awards (WTA).
Bangalore-based Leela Palace Kempinski has been rated as the favourite business hotel in the
world in a Readers' Choice Awards by Conde Nast Traveller.