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HTML clipboardIt is boom time for India's Tourism and Hospitality sector. Driven by a surge in business traveller arrivals and a soaring interest in the country, India has emerged as a leading tourist destination. The world's leading travel and tourism journal, "Conde Nast Traveller", ranked India amongst top 4 preferred holiday destinations in the world.
There has been a significant increase in the number of foreign tourist arrivals during 2006. Foreign tourist arrivals which were 3.92 million in 2005 rose to 4.43 million in 2006 showing an increase of 13 per cent. Foreign exchange earnings from tourism also showed a phenomenal growth from US$ 5.73 billion in 2005 to US$ 6.56 billion in 2006, achieving an increase of 14.6 per cent.
During the first five months of 2007, the number of foreign tourist arrivals was 2.02 million, representing a growth rate of 12 per cent over the corresponding period last year. Foreign exchange earnings showed a growth rate of 17.4 per cent over the same period, earning US$ 3.07 billion as against US$ 2.61 billion last year.
Due to this surge of foreign tourists, India's share in world arrivals which was just 0.37 per cent in 2001 rose to be 0.53 per cent in 2006.
Even Tier-II cities like Jaipur, Gurgaon, Hyderabad, Pune, Bangalore are seeing growth both in occupancy and room rates. While occupancy is around 75-80 per cent, room rates are up by 15-20 per cent in these markets.
The importance of tourism for the Indian economy is evident from the fact that it contributed to 5.9 per cent of the Gross Domestic Product and provided employment to 41.8 million people.
Also, the cumulative FDI into the hotel and tourism sector from 1991 to March 2007 has been US$ 517.83 million, representing 1.18 per cent of the total FDI in to the country.
The year 2006 was not only a record year for India's inbound tourism but was the fourth year showing a double-digit increase in arrivals. Moreover, arrivals recorded a double-digit growth in all 12 months of last year.
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.
- 102 rural tourism infrastructure projects have been sanctioned to spread tourism and socio economic benefits to identified rural sites having tourism potential.
- The Ministry of Tourism brought out guidelines for classification of apartment hotels, time share resorts and guest houses. It also sanctioned capital subsidy for 43 budget category hotels and interest subsidy for 86 budget category hotels.
- Recognition of spare rooms available with various house owners by classifying these facilities as "Incredible India Bed and Break fast 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 Government is planning to infuse equity capital of over US$ 55.5 million for reviving Ashok Hotel, Samrat Hotel and Hotel Janpath in New Delhi.
The Government has also proposed to declare a conditional 10-year tax holiday for all tourism projects in the country. While companies would enjoy full tax exemption up to 50 per cent of the profit, for enjoying tax benefits for balance amount they would be required to re-invest that part of the profit in tourism projects.
Hospitality Sector
With the tourism sector revealing immense potential, global hospitality majors are exploring plans of entering India. These include Dawnay Day, Whitbread, Jumeirah, Golden Tulip, Istithmar and Mandarin Oriental, Best Western International, Ritz-Carlton Hotel, Intercontinental, Starwood, Hilton, Accor, Carlson.
While hotel companies like Golden Tulip are looking to launch budget hotels, others like UK's financial and real estate major, Dawnay Day and Whitbread's Premier Travel Inn, are launching cookie-cutter business models. The Jumeirah and the Mandarin Oriental are the hi-end luxury hotel brands looking to set base in the country. Dubai's leading alternative investment house, Istithmar, is looking to invest in luxury hotels in key gateway cities around the world and emerging markets.
Hospitality majors from India and abroad are likely to pump in close to US$ 11.11 billion in new projects and expansion over the next two years on the back of a massive growth in business and leisure travel. Indian Hotels (Taj brand), Leela Venture, EIH (Oberoi Group), Kamat Hotels, Royal Orchid and other leading chains are likely to see room inventory go up by around 6,500.
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. 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
With India becoming a major hub for medical tourism, leading corporate hospitals like Apollo, Fortis and Wockhardt are eyeing alliances with foreign airlines to reach out to prospective markets. The alliances provide a win-win situation, as foreign carriers are also believed to be exploring similar opportunities in India.
The medical tourism industry in India is presently earning revenues of US$ 333 million. Encouraged by the incredible pace of growth exhibited by the industry, the Confederation of Indian Industry (CII) and McKinsey have predicted that the industry will grow to earn additional revenues of US$ 2.2 billion by 2012.
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.
The scope
Medical tourism, Adventure tourism, Heritage tourism, Wellness tourism, Pilgrimage tourism, Golf tourism, Eco-tourism, Wildlife tourism -- the scope for theme travel is vast in India. Significantly, the 100 per cent foreign direct investment regime in tourism permitted through the automatic route will help boost the country's tourism. With the country hosting the 2010 Commonwealth Games, this share will only increase to about 1.5 per cent in 2010, from a mere 0.52 per cent in 2006. India's tourism industry is poised to grow to about US$ 90 billion--from the current US$ 39 billion--in the coming decade.
International Recognition
Reflecting the importance of India in the tourism sector, India was 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. Also, 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".
The UNWTO, in January 2007, has noted the 'emergence' of South Asia as a tourist destination, with remarkable growth of 10 per cent in tourist arrivals in 2006 which was more than double the global growth. Furthermore, it noted that growth of tourism in South Asia was "boosted by India, the destination responsible for half the arrivals to the sub-region". |
