tourism in india(full permission)

7/30/2019 Tourism in India(Full Permission)

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A

BRIEF REPORT

ON

TOURISM IN INDIA

August 2012


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A brief report on Tourism in India

Private & Confidential Page 2 of 10

1. INDUSTRY OVERVIEW1.1 Background

Tourism has been a major social phenomenon of societies all over the world. It is driven by

the natural urge of every human being for new experiences, and the desire to be both

educated and entertained. The motivations for tourism also include religious and business

interests; the spread of education has fostered a desire to know more about different parts of

the globe. The basic human thirst for new experience and knowledge has become stronger,

as communication barriers are getting overcome by technological advances. Expenditure on

tourism induces a chain of transactions requiring supply of goods and services from the

related sectors. The consumption demand, emanating from tourist expenditure also induces

more employment and generates a multiplier effect on the economy.

Tourism in India broadly classified in North Indian Tourism, East Indian Tourism, West

Indian Tourism, and South Indian Tourism. Each part of India offers identifiable differences

from the rest of the nation. Tourism in India has come into its own as a brand India

Tourism. The creation of niche tourism products like heliport tourism, medical tourism,

wellness tourism, adventure tourism, cruise tourism and caravan tourism has served to widen

the net of this sector. Inbound tourism is booming and the country is going all out to lure

more travelers from around the world. Contrary to perceptions across the world that tourism

in India is still confined to traditions, the country is opening up with trendy tour packages

and affordable air travel deals to woo inbound visitors from every segment.

1.2

Present Scenario of Tourism in India

The Indian Tourism sector is one of the largest service industries in the country in terms of

its contribution to the Gross Domestic Product (GDP) and Foreign Exchange Earnings, as

well as for providing employment to millions. The sector in fact is expected to generate

around US$ 42.8 billion (INR 1,897.7 billion) by 2017, according to an industry research.

Significantly, the Tourism and the Hospitality sector generated a total of US$ 2,468.39 billion

(INR 1,094, 48.4 billion) in Foreign Direct Investment (FDI) during April 2000-April 2011,

according to the Department of Industrial Policy and Promotion. Further, Foreign Tourist

Arrivals are expected to grow to 10 million by 2010-12 and the domestic tourism is expected

to increase by 15 per cent to 20 per cent over the next five years.

Tourism in India is witnessing widespread growth on the back of increasing inbound

tourism by the burgeoning Indian middle class, rising inflow of foreign tourists and

successful government campaigns for promoting Incredible India. Infrastructure

development holds the key to Indias sustained growth in the Tourism sector. Further the

government has also allowed 100 per cent foreign investment under the automatic route in


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the Hotel and Tourism related industry. Significantly, the country has the potential to

become a major global tourist destination, with the Tourism sector expected to contribute

around INR 3,414.8 billion (US$ 77.0 billion*) by 2021. India is currently ranked 12th in the

Asia Pacific region and 68th overall in the list of the world's attractive destinations.

Foreign tourist arrivals in the country have increased substantially during the past decademotivated by both, business and leisure needs and are further expected to grow at a

compound annual growth rate (CAGR) of around 8 per cent during 2010-2014. Visitor

exports are a key component of the direct contribution of the sector. India had attracted

6,179,000 international tourist (overnight visitor) arrivals in 2011, generated INR 678.6

billion (US$ 15.3 billion) in visitor exports (foreign visitor spending, including spending on

transportation). By 2021, international tourist arrivals are forecast to total 11,149,000, an

increase of 6.1 per cent pa generating expenditure of INR 1,344.7 billion (US$ 30.3 billion*).

Drivers behind increase in Tourist Traffic

The main driver for increase in tourist traffic to India has been the following factors:

Domestic Tourist Traffic

Rapidly increasing purchasing power of the middle classBetter road connectivityEvolving lifestyle

International Tourist Traffic

Value for money/economical holiday destinationBusiness cum pleasure destinationDevelopment of Kerala and Rajasthan as the most popular tourist destinations in India with

their distinctive brand image

Opening of the sectors of the economy to private sector/foreign investmentReform in the aviation sector such as Open Skies Policy has led to better connectivity with

many countries with India

Success of Incredible India campaign and other tourism promotion measures1.3 Forms of Tourism in India

India offers various tourism options due to its vastness and diversity, attracting tourists from

all over the world. The country boasts of natural treasures like mountains, ocean, seas,

deserts, rainforests, valleys etc. on one hand, while world-class healthcare infrastructure on

the other, which provides varied kinds of tourism options such as adventure and rural


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tourism, sustainable tourism/eco-tourism, cruise tourism, golf tourism and medical tourism

to the travelers.

1.3.1 Rural TourismThe Ministry of Tourism started the scheme of rural tourism in 2002-03 with the aim to

showcase art, rural life, and culture and heritage to the tourists at various rural locations andvillages. The Ministry intends to help the local community economically and socially,

together with facilitating interaction between the local population and tourists, through this

scheme. On 28 February 2011, 169 rural tourism sites in 28 States/Union Territories have

been sanctioned by the Ministry of Tourism. This segment has also been winning accolades

in the international circuits as well. For instance, the Rural Tourism Project at Hodka village

in Kutch District of Gujarat won the Pacific Asia Travel Association (PATA) award for the

year 2010 under the Heritage category.

1.3.2 Cruise TourismCruise tourism is emerging as one of the most dynamic segments of the leisure industryglobally. India with its vast and beautiful coastline, forests and undisturbed idyllic islands,

rich historical and cultural heritage, can be a fabulous tourist destination for cruise tourists.

The Cruise Shipping Policy of the Ministry of Shipping was approved by the Government of

India on June 28, 2008. The objectives of the policy are to make India an attractive cruise

tourism destination with the state-of-the-art infrastructural and other facilities at various

parts in the country; to attract the right segment of the foreign tourists to cruise shipping in

India; to popularize cruise shipping with Indian tourists.

1.3.3 Adventure TourismAdventure travel involves exploration or travel to remote, exotic areas. Adventure tourism israpidly growing in popularity as a tourist seeks different kinds of vacations.

1.3.4 Sustainable Tourism/Eco TourismSustainable Tourism growth is in the process of evolving the Sustainable Tourism Criteria

for India. In recent years tourism industry in India has registered a considerable growth. A

Steering Committee with representatives from all the sectors of the tourism and hospitality

industry of India has been constituted to develop draft Sustainable Tourism Criteria which

would eventually be adopted by the different sectors of the industry.

1.3.5 Wellness TourismWellness tourism is about travelling for the primary purpose of achieving, promoting or

maintaining maximum health and a sense of well-being. Health Tourism holds immense

potential for India. The Indian systems of medicine that is Ayurveda, Yoga, Panchakarma,

Rejuvenation Therapy etc. are among the most ancient systems of medical treatment of the

world.


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1.3.6 Medical TourismIndia is one of the most lucrative medical tourism markets in the world. The sector is

witnessing remarkable growth on the back of Government support through policies and

initiatives, low cost, less waiting time and healthcare infrastructure. The growth in Indias

medical tourism market will be a boon for several associated industries, including hospital

industry, medical equipments industry and pharmaceutical industry.

1.4 Sub-segments of tourism industryThe tourism industry in India can be categorized under three major sub segments as

depicted below:

1.4.1 Hotels and RestaurantsThe Hotel & Restaurants Industry has contributed between 1.2% and 1.5% of the GDP

over the last seven to eight years. The Ministry of Tourism estimates that there are more

than 8,700 hotels at 54 key locations across the country with a total room supply of about

174,000 including hotels in the classified, approved but not classified, and licensed by the

state governments but not approved categories.

Major Players

In the large/luxury hotels segment there are about 11 long-standing players such as ITC

Hotels, Asian Hotels, The Oberoi Group of Hotels, Hotel Leela Ventures, ITDC, Indian

Hotels, The Park Hotels and international players like Hilton Hotels, Marriott International,

Le Meridien Hotels & Resorts, and Radisson Hotels & Resorts. There are about 16 listedhotel groups in the mid-segment including Bharat Hotels, Oriental Hotels, Nehru Place

Hotels, Jaypee Hotels, Piem Hotels and Taj GVK Hotels.

In addition, there are more than 90 listed hotels and resorts in the small/mid-sized segment

including Country Club, EIH Associate Hotels, Kamat Hotels and Mahindra Holidays and

Resorts. Apart from these, as mentioned earlier, there are a number of guest houses and

TourismIndustry

TravelIndustry

HotelsandRestaurants

TourOperators


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hotels, particularly in the budget and small hotel segments, which are primarily run by

localized players.

1.4.2 Tour OperatorsTour operators, tourist operators and adventure tour operators in the country follows strict

guidelines. As per the estimate of Ministry of Tourism, there are nearly 6,000 travel tradecompanies and firms comprising of tour operators, travel agents and tourist transporters

Major Players

Thomas Cook India Pvt Ltd Cox & King India Pvt Ltd Kuoni India Ltd Raj Travels & Tour Limited


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2. GOVERNMENT POLICY2.1 Government Initiatives

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 organizations

As a facilitative measure to make Tourism sector in India more attractive the following

initiatives are taken by Government:

The Government has launched a Scheme of Visa on Arrival (VoA) from January 2010for citizens of five countries, viz. Finland, Japan, Luxembourg, New Zealand and

Singapore, visiting India for tourism purposes. The Government has now extended this

Scheme for the citizens of six more countries, namely Cambodia, Indonesia, Vietnam,

Philippines, Laos and Myanmar from January 2011. During the period January-June

2011, a cumulative figure of 5774 VoAs were issued, with a total of 865 & 770 VoAs

issued in the months of May & June respectively.

The Ministry of Tourism has launched a scheme for development of nationally andinternationally important destinations and circuits through Mega Projects. As on4.2.2011, 38 mega projects have been identified, out of which 26 projects have already

been sanctioned.

To overcome the bottlenecks of multiple inter state road transport barriers, Ministry ofTourism has been advocating implementation of seamless travel for commercial tourist

vehicles. This would facilitate smooth movement of tourist traffic and avoid delays and

inconvenience to tourists.

Mega Destinations/Circuits Identifies in different States

S. No States Name of the Mega Projects

1 Andhra Pradesh Charminar area of Hyderabad, Tirupati Heritage Circuit,Kadapa Heritage Tourist Circuit

2 Assam National Park Mega circuit covering Manas, Orang, Nameri,Kaziranga, Jorhat, Sibsagar and Majouli

3 Bihar Bodhgaya-Rajgir-Nalanda Circuit

4 Chhattisgarh Jagdalpur-Tirathgarh-Chitrakoot-Barsur Dantewada-Tirathgarh Circuit

5 Delhi Illumination of Monuments Circuit


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6 Goa Churches of Goa

7 Gujarat Dwarka-Nageshwar-Bet Dwarka CircuitShuklatirth-Kabirvad Mangleshwar Angareshwar

8 Haryana Panipat-Kurukshetra-Pinjore

9 Himachal Pradesh Eco and Adventure Circuit (Kullu-Katrain-Manali)

10Haryana &Himachal Pradesh

Panchkula-Yamunanagar (Haryana)-Paonta Sahib (HimachalPradesh) Circuit

11 Jammu & Kashmir Mubarak Mandi Heritage ComplexNaagar Nagar Circuit (Watlab via Hazratbal, Tulmullah,Mansbal and Wullar Lake), Srinagar Spiritual and WellnessDestination Leh Ladakh

12 Karnataka Hampi

13 Kerala Muziris Heritage Circuit connecting historically andarchaeologically important places of Kodungalloor

14 Madhya Pradesh Spiritual and Wellness Destination of Chitrakoot

15 Maharashtra Vidarbha Heritage CircuitAurangabad

16 Manipur INA Memorial

17 Orissa Bhubaneswar- Puri-Chilka

18 Punjab Amritsar

19 Rajasthan Ajmer- Pushkar, Jodhpur- Bikaner-Jaisalmer

20 Sikkim Gangtok

21 Tamilnadu Mahabalipuram, Pilgrimage Heritage, Madurai-Rameshwaram-Kanyakumari), Thanjavaur

22 Uttarakhand Haridwar-Rishikesh-Muni-Ki-Reti Circuit

23 Uttar Pradesh Agra Circuit, Varanasi-Sarnath-Ramnagar

24 West Bengal Ganga Heritage River Cruise Circuit

25 Tripura Mega Lake Circuit including Mata Bari


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3. FUTURE POTENTIALThe Tourism sector is expected to perform very well in future and the industry offers an

interesting investment opportunity for long-term investors. The sector is expected to attract

capital investment of INR 1,233.0 billion (US$ 27.8 billion), rising by 8.7 per cent pa to INR

2,827.5 billion (US$ 63.7 billion). This means that the sectors share of total nationalinvestment will increase from 4.7 per cent in 2011 to 4.8 per cent in 2021.

Capital Investment in Travel and Tourism

The hospitality consultancy HVS India and World Travel and Tourism Council (WTTC) haspointed out that in next 10 years, the Indian hospitality sector will need an additional supply

of 180,000 rooms, a capital investment of $25.5 billion for constructing them and manpower

of 211,000 to operate these additional hotels. From the current 810 million travelers, both

domestic and international, India is slated to host 1,747 million travelers in 2021. Some of

the key policy changes mentioned in the white paper include grant of infrastructure status to

the industry, hotel sector to be included within the interest subvention schemes and

rationalization of taxes which includes service tax, luxury tax, VAT/sales tax, tax on

transportation etc. Also, the public-private partnerships (PPP) for the conservation of

heritage sites, setting up of single nodal agency for all hotel project approvals and higher

budgetary allocation for tourism by the state governments.


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The Tourism industry in

India provides opportunities

in diverse fields such as

tours and travel circuit,hospitality and hotel sector

and development of

specialized tourisms such as

medical tourism, rural

tourism, golf tourism, cruise

tourism, adventure tourism, eco tourism and wellness tourism.

The WTTC predicts that by 2021, global travel would reach 1,362 million travelers.

India, according to WTTC, is expected to account for 0.8% of those travelers or 11.1

million international travelers. The Tourism sector is witnessing fast growth due to theever-growing number of participants in allied businesses such as hotels, tour operators,

airlines, shipping lines, among others. Therefore, the sector is expected to witness high

growth in the near future and offer varied opportunities to the investors in all these areas

of businesses. In fact, the hotel industry is one of the major areas wherein investors can

look for long-term opportunities. Foreign tourist arrivals in the country have increased

substantially during the past decade motivated by both, business and leisure needs and

are further expected to grow at a compound annual growth rate (CAGR) of around 8 per

cent during 2010-2014

Travellers in 2011 810 Million

Hotel rooms available 1,63,038

Ratio of travelers to hotelrooms

4,969

Expected travelers by 2012 1,747 million

Total rooms required by2012

3,51,540

Additional rooms required 1,88,502

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