INDIA: Tourism and hospitality

Tourism and hospitality

As per the Travel and Tourism Competitiveness Report 2009 by the World Economic Forum, India is ranked 11th in the Asia Pacific region and 62nd overall, moving up three places on the list of the world's attractive destinations. It is ranked the 14th best tourist destination for its natural resources and 24th for its cultural resources, with many World Heritage sites, both natural and cultural, rich fauna, and strong creative industries in the country. India also bagged 37th rank for its air transport network. The India travel and tourism industry ranked 5th in the long-term (10-year) growth and is expected to be the second largest employer in the world by 2019.

Contribution to the economy

Combining unparalleled growth prospects and unlimited business potential, the industry is certainly on the foyer towards being a key player in the nation's changing face. Furthermore, banking on the government’s initiative of upgrading and expanding the country’s infrastructure like airports, national highways etc, the tourism and hospitality industry is bound to get a bounce in its growth.

The hotel and tourism industry’s contribution to the Indian economy by way of foreign direct investments (FDI) inflows were pegged at US$ 2.24 billion from April 2000 to November 2010, according to the Department of Industrial Policy and Promotion (DIPP).

India’s hotel pipeline is the second largest in the Asia-Pacific region according to Jan Smits, Regional Managing Director, InterContinental Hotels Group (IHG) Asia Australasia. He added that the Indian hospitality industry is projected to grow at a rate of 8.8 per cent during 2007-16, placing India as the second-fastest growing tourism market in the world. Initiatives like massive investment in hotel infrastructure and open-sky policies made by the government are all aimed at propelling growth in the hospitality sector.

Foreign Tourist Arrivals

Ministry of Tourism compiles monthly estimates of Foreign Tourist Arrivals (FTAs) in India and Foreign Exchange Earnings (FEE) from tourism on the basis of data received from major airports. Following are the important highlights, as regards these two important indicators of tourism sector for 2010 and December 2010.

• FTAs in India during 2010 were 5.58 million with a growth rate of 9.3 per cent as compared to the FTAs of 5.11 million during 2009.
• FTAs during the December 2010 was 6,55,000 as compared to FTAs of 6,46,000 in December 2009 and 5,34,000 in December 2008.
• FEE from tourism during 2010 were US$ 14,193 million as compared to US$ 11.39 billion during 2009 and US$ 11.74 billion during 2008. The growth rate in FEE in US$ terms during 2010 was 24.6 per cent.
• FEE from tourism during the month of December during 2010 were US$ 1.55 billion.

Government Initiatives/policy

According to the Consolidated FDI Policy, released by DIPP, Ministry of Commerce and Industry, Government of India, the government has allowed 100 per cent foreign investment under the automatic route in the hotel and tourism related industry. The terms hotel includes restaurants, beach resorts and other tourism complexes providing accommodation and /or catering and food facilities to tourists.

The term tourism related industry includes:

• Travel agencies, tour operating agencies and tourist transport operating agencies
• Units providing facilities for cultural, adventure and wildlife experience to tourists
• Surface, air and water transport facilities for tourists
• Convention/seminar units and organisations

T

he Government of India has announced a scheme of granting Tourist Visa on Arrival (T-VoA) for the citizens of Finland, Japan, Luxembourg, New Zealand and Singapore. The scheme is valid for citizens of the above mentioned countries planning to visit India on single entry strictly for the purpose of tourism and for a short period of up to a maximum of 30 days. During 2010, a total number of 6549 Visa on Arrivals (VoA) were issued under VoA Scheme.

The tourism master plan, the first for Karnataka, envisages initiatives to attract private investment ranging from US$ 2.2 billion to US$ 4.4 billion in the next three to five years. The plan is prepared based on the Vision 2020 document prepared and adopted by the Karnataka State Planning Board. The state government aims to generate 200,000 jobs in the tourism sector in the next five years. The master plan is aimed at making Karnataka the number one destination for tourism in the country by 2020.

As per the press release by Press Information Bureau (PIB) dated November 15, 2010, the Union Ministry of Tourism has included Medical Tourism under the Marketing Development Assistance (MDA) Scheme. The Ministry of Tourism has sanctioned US$ 27,742 as MDA to 10 Medical Tourism Service Providers during current year.

The Ministry of Tourism has sanctioned 781 projects in 34 States/ Union Territories (UTs) in the country amounting to US$ 511.82 million during the last three years up to June 2010, as per a press release dated October 18, 2010.

The Ministry of Tourism has won a PATA Grand Award and two PATA Gold Awards during the Pacific Asia Travel Association (PATA) Travel Mart 2010 in Macau. The PATA Grand Award was given under the Heritage category for the Rural Tourism Project at Hodka village in Kutch District of Gujarat.

Medical Tourism

As per a market research report ‘Booming Medical Tourism in India’ by RNCOS, India’s share in the global medical tourism industry will reach around 3 per cent by the end of 2013. Moreover, medical tourism is expected to generate revenue worth US$ 3 Billion by 2013, growing at a CAGR of around 26% per cent during 2011–2013. The number of medical tourists is anticipated to grow at a CAGR of over 19 per cent during the forecast period to reach 1.3 Million by 2013.

Factors such as, low cost, scale and range of treatments provided by India differentiate it from other medical tourism destinations. The growth in India’s medical tourism market will be a boon for several associated industries, including hospital industry, medical equipments industry and pharmaceutical industry.

Domestic medical tourism in the country has also seen growth in the recent years. As per the report ‘Domestic Tourism in India, 2008-09’ released by the National Sample Survey Office (NSSO), trips for ‘health and medical’ purposes formed 7 per cent of overnight trips in the rural population and about 3.5 per cent in the urban population. ‘Health and medical’ purposes accounted for 17 per cent of same-day trips in rural India and 8 per cent in urban India. Expenditure on medical trips accounted for 30 per cent of all overnight trip expenditure for rural India and 15 per cent for urban.

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ecently, the Union Ministry of Tourism has included Medical Tourism under the Marketing Development Assistance (MDA) Scheme. The Ministry of Tourism has sanctioned US$ 27,400 as MDA to 10 Medical Tourism Service Providers during 2010.

Hospitality

The current count of hotel rooms is 130,000, and the country is expected to require an additional 50,000 rooms over the next two to three years, according to World Travel and Tourism Committee (WTCC) estimates

• US-based hotel chain, Marriott International, plans to expand its network in India to 100 hotels over the next five-years, stated Arnie Sorenson, Chief Operating Officer, Marriott International. At present, the group operates 11 properties across the country.
• Roots Corporation, a subsidiary of Indian Hotels Company (IHC), plans to open 60 to 70 budget hotels, known as Ginger Hotel, in 23 locations across the country.
• ITC, the Kolkata-based cigarette major, also projected its plan to open 25 new hotels under the Fortune brand over the course of next 12-18 months (or by 2011).

The Road Ahead

The Indian hospitality sector is certainly the most apt replication of the belief 'Atithi devo bhava'- touch of tenderness, a helping hand and a welcoming visage.

According to the Tourism Satellite Accounting (TSA) research, released by World Travel and Tourism Council (WTTC) and its strategic partner Oxford Economics in March 2010:

• The contribution of travel and tourism to Gross Domestic Product (GDP) is expected to increase from 8.6 per cent (US$ 117.9 billion) in 2010 to 9.0 per cent (US$ 330.1 billion) by 2020.
• Export earnings from international visitors and tourism goods are expected to increase from US$ 11.1 billion in 2010 to US$ 33.6 billion in 2020.
• Travel and tourism investment is estimated at US$ 34.7 billion or 7.2 per cent of total investment in 2010. By 2020, this should reach US$ 109.3 billion or 7.7 per cent of total investment.

Ministry of Tourism aims to create a comprehensive and coordinated framework for promoting golf tourism in India, capitalising on the existing work that is being carried out, and building upon the strength of India’s position as the fastest growing free market economy.

Exchange rate used: 1 USD = 45.46 INR (as on January 2011)

Disclaimer: This information has been collected through secondary research