Toursim & Hospitality in India

  • The hospitality sector in India is witnessing stable occupancy levels and steady increase in demand from domestic travellers. A steady rise in domestic tourist spending has also brought cheer to the industry with a 13.7 per cent compound annual growth rate (CAGR) from 2010 to 2012, according to a report by World Travel and Tourism Council (WTTC).
    India had 740 million domestic travellers across segments in 2011 and the figure is expected to increase in the years to come. Younger demographics of the travellers and their changing preferences have also resulted in creating many opportunities for the hospitality sector.

    Growth Trends

    Tourism is not only a growth engine but also an export growth engine and employment generator. According to the Economic Survey 2011-12, the sector has capacity to create large-scale employment both direct and indirect, for diverse sections in society, from the most specialized to unskilled workforce. In India, the tourism sector has witnessed significant growth in recent years. During the period 2006 to 2011, the CAGRs of foreign tourist arrivals (FTA) and foreign exchange earnings (FEE) from tourism (in rupee terms) were 7.2 per cent and 14.7 per cent, respectively. FTAs in India during 2010 were 5.78 million compared to 5.17 million during 2009, posting a growth of 11.8 per cent, much higher than the growth of 6.5 per cent for the world in 2010. FEEs from tourism in rupee terms during 2010 were Rs 64,889 crore (US$ 12.08 billion) compared to Rs 54,960 crore (US$ 10.22 billion) during 2009 with a growth rate of 18.1 per cent.
    Ministry of Tourism compiles monthly estimates of FTAs and FEE from tourism on the basis of data received from major airports. Following are the important highlights regarding FTAs and FEE from tourism in India for the month of February 2012.

    Foreign Tourist Arrivals (FTAs):

    • FTAs during the month of February 2012 was 6,77,000 as compared to FTAs of 6,36,000 during the month of February 2011 and 5,52,000 in February 2010.
    • There has been a growth of 6.6 per cent in February 2012 over February 2011 as compared to a growth of 15.1 per cent registered in February 2011 over February 2010.
    • FTAs during the period January-February 2012 were 13,59,000 with a growth of 7.9 per cent as compared to the FTAs of 12,59,000 with a growth of 12.4 per cent during January-February 2011 over the corresponding period of 2010.
    • FEE during the month of February 2012 were Rs 8,502 crore (US$ 1.58 billion) as compared to Rs 7,653 crore (US$ 1.42 billion) in February 2011 and Rs 6,646 crore (US$ 1.23 billion) in February 2010.
    • The growth rate in FEE in rupee terms in February 2012 over February 2011 were 11.1 per cent as compared to 15.2 per cent in February 2011 over February 2010.
    • FEE in US$ terms during the month of February 2012 were US$ 1729 million as compared to FEE of US$ 1684 million during the month of February 2011 and US$ 1434 million in February 2010.

    Investment Trends

    Hotel and Tourism sector is declared as high priority sector and Foreign Direct Investment (FDI) upto 100 per cent, under the automatic route is permitted in 'Hotels Tourism Sector', subject to applicable laws/regulations, security and other conditionalties.

    • As per report received from Department of Industrial Policy Promotion (DIPP), the sector received Rs 11,110.98 crore (US$ 2.07 billion) FDI investments during April-January 2011-12.
    • India's growth story still seems very credible to global corporations looking to grow beyond their borders. The world's largest hotel chain Best Western International Inc, USA, has taken up new strategies to expand its presence in the country in the hospitality sector.
    • Following the success of religious and medical tourism in India, the domestic travel industry is seeing a surge in a new set of tourists: Executives who travel to upgrade their skills while on a holiday in the country.
    • Starwood Hotels Resorts plans to open 20 new Hotels across all its brands by 2015. The company which is the largest operator of four and five star hotels in India currently operates 33 hotels in the country under management contracts. The hotel chain also plans to launch its brands W and St. Regis in the country in the next three to four years. With the debut of the W and St. Regis brands, Starwood will fly eight of its nine brand flags in India including W, St. Regis, The Luxury Collection, Le Meridien, Westin, Sheraton, and Four Points by Sheraton and Aloft.
    • Taj group of hotels will be opening its doors in Yunnan Province of China. The Indian Hotels Company Ltd on Monday signed a memorandum of co-operation for a joint venture with Yunnan Tourism Co Ltd to engage in the development, construction, operation and management of two hotels in Kunming Expo Garden situated in Yunnan province. Taj already has management contracts in place for the Taj Temple of Heaven, Beijing. Besides, Taj will also manage a 300-room key luxury resort in Hainan Island.
  • Government Initiatives

    The Ministry of Tourism continued its efforts to develop quality tourism infrastructure at tourist destinations and circuits across the country.

    • The Ministry has sanctioned 160 tourism projects for an amount of Rs 710.02 crore (US$ 132.18 million) for tourism infrastructure augmentation to States/UTs upto December 31, 2011, according to the Annual Report of the Ministry of Tourism for the year 2011-12.
    • The Ministry has given special focus on development of important destinations/circuits through sanction of mega projects. Mega tourism projects are a judicious mix of culture, heritage, spiritual and eco tourism and aim to give tourists a holistic experience. As on February 29, 2012, the Ministry has identified 53 mega tourism projects in consultation with State Governments, out of which 35 have been sanctioned.
    • The outcome of the Visa on Arrival scheme introduced in January 2010 has been encouraging with 12,761 persons having availed of this facility in 2011. The Ministry is making efforts to extend this facility to nationals of more countries.

    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

    The 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 upto a maximum of 30 days. During the period January - October 2010, a total number of 5016 VoAs were issued under this Scheme 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. 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.

    Road Ahead

    Strong growth in the services industry in the past few years has led to increased corporate spending on business travel in the country. Also, the increasing rate of income and affordability has enhanced the domestic leisure travel in the country. Even, there has been an increment in the foreign tourist visiting India proving the country to be a favoured tourist destination for leisure, as well as business travel across the globe. With well-equipped infrastructure and the low cost, compared to developed countries has paved India's way to be a nation growing fast to gain the status of one of the most preferred tourist destinations in the world.