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Indian Tourism Industry

At present in India travel and tourism is the largest service industry growing at a rate of 7-8 % per annum

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Definition / Scope

In the ancient times travel used to be for recreation and education mainly. Later on the privileged class traveled for pleasure.During the early 1920s tourism was also known as Fremdenverkehr- a term that emerged in Germany, dealing mainly with business and economic problems.

For example Herodot during 485-424 B.C was a writer who loved to travel across continents and initiated the first type of knowledge travel. Around 300 A.D Romans traveled for pleasure more so due to good road network. The medieval times saw travel mainly due to business or craft. European educational institutions like in England, France and Italy became famous. The foundations of modern tourism were laid in the late 19th and early 20th century when the socio economic factors of the developed world played a major role in leisure travel.

Though railways were not developed for the sole purpose of tourism, yet it became more popular among the rising middle class of the world especially among the travelling writers, journalists, artists etc. Various instruments came into existence that enhanced tourism among masses like guide books, Cook’s contribution to opening up of travel agencies. During the first world war the concept of providing the workers a break from their usual work came into being.

However the growth of tourism after the slump of World wars started slowly as the economies started developing and opening up to the world. Today tourism is a major  means of earning for many nations including India and has newer nuances to it like experience related holidays, club holidays, traveler groups breaking away from traditional holiday purposes.

Market Overview

In the last five to six decades many countries have opened their doors to tourism and hence it has become one of the main elements in the economic progress of the countries worldwide. Its one of the fastest growing economic sectors in the world.  

The tourism has continued to grow from 25 million tourist arrivals in 1950 to 1078 million in 2013 and is expected to grow at a pace of 3.3% per year from 2010 to 2030 as per UNWTO’s (United Nations World Tourism Organization) long term forecast.

The emerging economies are expected to increase tourism during this period twice the rate of developed economies. Asia and the Pacific have shown stronger growth ( 6%) in 2013 than Europe and Africa.

This is followed by the Americas while the Middle East recorded the least growth. China has spent $129 billion USD on tourism and has emerged at the topmost tourism source market in the world. As per the data of UNWTO 2013, more than half of travelers traveled by air while 40% or so by rail, 2% by rail and 5% over water. Air transport is growing at a much faster pace than the other means.

Key Metrics

Metrics Value Explanation
Base Year 2017 Researched through internet


Market Risks

India needs to work on multiple factors that pose threat to India as a lucrative tourist destination.

  • Safety and security:  As per World economic Forum T&Ts competitive report India ranks 74 among the top 140 global economies of the world in terms of safety and security. One of the main initiatives to counter this problem has been the introduction of police for the tourists. Kochi in Kerala has the first tourist police station in the country set up in 2010. With the rise of women travellers India needs to counter its problems on women safety as soon as possible especially in the metros.
  • Lack of proper transportation facilities in the interiors: Though India boasts of an extensive road and railways connections yet there are many roadblocks in the development of those.To start with the poor road network in the interiors of the nation makes it difficult for an enthusiastic heritage tourist to tour the place at ease. Compared to the international standards the travel becomes more time consuming in India. The traffic laws are frequently violated and there is a lack of regulation leading to accidents and delays. Indian railways have to revamp the facilities in order to counter overcrowding. The conditions of the roads in many places are pathetic inspite of the funds being allocated towards their development. The vicious circle of corruption has a major role to play in these roadblocks.
  • Proper accommodation facilities: Good quality accommodation has to support the cost effectiveness or else the price would lose its edge over the competitors. Many five star hotels have the issues of water scarcity and electricity even today. 
  • Hygiene: Adequate sanitation, toilets at frequent spots on the highways, maintenance and cleanliness are still factors that pose hindrance to the growth of tourism in India especially for foreign tourists. The behavior of locals need to change towards keeping the surroundings clean. The food habits of Indians need to incorporate hygiene and health as priority apart from taste. For example the easy availability of mineral water seen in remote areas would boost the influx of tourists.
  • Secondary entertainment and man made facilities: The world has opened up to an era of experience tourism where family vacations form a major part of the make believe world like Disney Worlds across various countries. India needs to have more amusement parks apart from the already available forms of tourism. This would boost tourism as well as increase employment.
  • Environmental risks: Environmental pollution is high in India as per international standards. There are seldom checks on the emission standards of public transport. Respiratory infections are common in metros due to air pollution. There is water pollution of rivers as waste is dumped in them. Toxic air in recent years has caused even the marble of Taj Mahal to get polluted and damaged. The destruction of the forests in order to cope up with the rising population and demand for housing has caused the destruction of fauna and loss of wildlife like depleting numbers of Tigers in national parks or loss of habitat for the wild animals.
  • Other factors: Other major factors that have hampered tourism are rampant begging and cheating of the tourists especially when the international western tourists reach the remote areas. Poverty is still an unsolved issue in these places. There is high level of corruption in various departments besides the general behavior of many locals that includes the uncleanliness of the surroundings,hassling the women travelers and theft. Apart from these the diversity also leads to unwanted riots and communal clashes that have to be prevented.

Top Market Opportunities

India is filled with abundant land forms, historical monuments, cultures and traditions thus providing ample opportunities for both domestic and international tourism. While an abundance of temples and historical monuments in the North of India, wild life sanctuaries, Himalayas, the varied flora and fauna are a fertile ground for eco tourism, vacationing and the like.  

For example the Himalayan terrain like in Himachal Pradesh and Kashmir help promote the medical and health tourism, to spend an ideal Summer or a ground for Adventure sports in the mountains. 

Key Opportunities[1]

  • Infrastructure: The TTCI rankings of 2011 Indian Airport Infrastructure is at 39th and ground transport is at 43rd out of 139 nations across the globe. For example the recent developments of the new Airport terminals in IGI Airport New Delhi and Kolkata Airport are positive moves by the government. IG

Market Drivers

As per the expert reports the main drivers of tourism in India can be divided into domestic growth drivers and international growth drivers. The domestic market drivers are mainly the changing lifestyles of middle class, more disposble incomes and purchasing power and better route connectivity while the international ones are: a value for money destination that is India, variety of purposes that can be fulfilled starting from an open economy, business as well as pleasure, better connectivity of Indian air routes to other countries, Incredible India presented as a lucrative brand to invest in, government initiatives and policies that help inbound tourism, India being a host for major international events like sports.

65% of Indian population fall under a young age group of 18-55 and are more open to new destinations. Diverse product offerings of tourism industry are driving different sections of the society into the industry.The availability of credits and easy financing has enhanced the growth. In 2013 the FDI in tourism has been USD 3.2 billion hence boosting the same. Government has initiatives like 100% FDI in order to further boost this industry.

Market Restraints

There are many constraints that in spite of the initiative taken by the investors and govrnment of India might hamper the growth of tourism in India, especially the domestic and inbound tourism. For example:

  • Safety of tourists: This is one of the major issues of tourism in India today. Two major issues that have to be tackled are security of women travelers and security against terrorist attacks. The country owing to its recent incidents especially in the northern parts of the country has created a negative image of the country in terms of security. As per TTCI index of 2011, India was ranked 78th among 139 countries in terms of security.
  • General cleanliness: The general cleanliness is at an all time low among the world, many cities and towns especially the pilgrimage areas need a face lift. Ludhiana and Kanpur are amongst the top ten most polluted cities of the world.
  • Information and communication: Although in India Hindi and English are official languages yet our constitution considers 22 different Indian languages as official. This becomes a difficulty for international tourists as well as domestic tourists travelling to states speaking a different language.
  • Behavioral issues of the locals:  Many issues have to be dealt within the country like widespread begging, corruption at ground levels affecting tourists because of  which they end up feeling cheated, lack of transparency in areas of local transport, restaurants, hotels in terms of prices etc.

Other Key Market Trends

  • Type of visitors: Two categories are rising in India that would constitute the major chunk of tourists in future: Women and Senior citizens. Owing to more working women, the business women travelers are on the rise and the nation needs to work a lot on their safety, health and security. Secondly post retirement the senior citizens mostly are caught in an empty nest syndrome and hence constantly feel the need to travel in and out of the country. The senior citizens who travel were around 1.3 million in 2011 and are expected to rise in number to around 7.3 million by 2030. 
  • Purpose of Tourism: The highest contributors are the travelers travelling for family or social reasons and for religious purpose. The second category belongs to people who holiday for leisure and social visitors abroad.
  • Different products offered:  Today the tourism industry is offering various products like eco tourism, medical tourism, cruises, rural tourism and the like that caters to different mindsets of the tourists. Apart from these there are customised tour packages coming up to suit individual tourists.
  • Geographical trends in India: The following graph clearly shows the comparative status of various states in India in terms of market share of respective states as found in 2012. Andhra Pradesh and Tamil Nadu are clearly the highest among the states because of being a domestic pilgrimage destination. However the northern states like Himachal Pradesh, Rajasthan, West Bengal and even the southern state of Kerala witnessed decline inspite of huge spends on tourism. This might be because of poor allocation of funds and promotional activities. The infrastructure in these states need imporvement. Though Kerala has highest literacy yet due to lower levels of urbanization, tourism is not taking off as expected. Marketing and promotions involved with better infrastructure can help improve the situation like in Gujarat the promotional campaigns on mass media by celebrity Amitabh Bacchan has given its tourism a face lift.[2]
  • Growth Trend of North India: As per 2012 report during the period of 2008-2012 the market share of northern states of India including Punjab, Delhi, Himachal Pradesh, Uttar Pradesh, Jammu and Kashmir, Uttarakhand, Haryana and Rajasthan grew by 10.5 % domestic and 3.2 % in terms of international tourists. While the national average growth during this period was 16.3%, the total number of tourists in northern states grew by 10.2%. Out of these Punjab showed the highest increase i.e. of 1.7 % which was domestic while the biggest decline has been in UP by almost 6%. 

In terms of profile of the tourists in northern India, mostly they are domestic and only 2% amount to foreign tourists. The highest number of tourists visitng from outside the country in the northern states are from USA and UK followed by Germany, UAE and Japan. Thus multiple language information other than just English might boost the numbers.[3]

Purpose of Visit 

Haryana (2012)

Himachal Pradesh (2012)

Delhi (2010)

Punjab (2010)

Business

31%

12%

38%

16%

Holidays, leisure & recreation

13%

48%

18%

47%

Social activity

20%

7%

20%

10%

Pilgrimage

13%

13%

6%

5%

Education

3%

3%

6%

7%

Medical

1%

1%

3%

3%

Others

23%

15%

8%

11%

[4]

Himachal Pradesh and Punjab are destinations for leisure and vacation while Delhi and Haryana are mostly visited for business. The business and work related travel are generally shorter hence the state governments need to work on the infrastructure to increase the leisure stays especially during the peak as well as off-peak seasons.

Market Size and Forecast

At present in India travel and tourism is the largest service industry growing at a rate of 7-8 % per annum Growing disposable incomes, better airfares and connectivity has boosted the industry.

The international tourist arrivals are expected to increase from 7.3 million in the year 2014 to 13.5 million approximately in the year 2023 and the expenditure by foreign tourists is expected to rise at 4.3% every year till 2024 amounting to 1740 billion USD.

Types of tourism prevalent in India

India is a land of diversities including geographical diversity, regional and cultural diversity. Thus there are different purposes that every traveler can choose from while visiting this nation.

  • Rural Tourism: The Ministry of Tourism is working towards opening up rural India to foreign tourists where they can cherish the culture and heritage while helping the local community economically and socially. The Rural Tourism Project at Hodka Village in Gujarat won Pacific Asia Travel Association award in 2010.
  • Cruise Tourism: Ministry of Shipping in India has approved The Cruise Shipping Policy in 2008 in order to position India as a lucrative cruising destination to attract foreign tourists.
  • Adventure Tourism: Adventure tourism is on the rise in India owing to the thrills its various land forms exhibit to the tourists.
  • Eco Tourism: The travel and tourism industry of India has been creating a draft Sustainable Tourism Criteria that would eventually be adopted by various sectors of tourism industry.
  • Wellness Tourism: India is a land of ancient culture deeply rooted in spirituality both in terms of emotional and physical well being. Ayurveda, Yoga and the likes are a rage among the foreigners today and hence provide a tourism subsection for rejuvenation.
  • Medical Tourism:  India is one of the top destinations for medical tourism due to its low cost medication and highly qualified medical professinals.
  • Pilgrimage Tourism: India is famous for its temples and it's why among the different kinds of tourism in India, pilgrimage tourism is increasing most rapidly.Mathura vrindavan has become a great place to visit for foreigners in 5 to 10 years. The various places for tourists to visit in India for pilgrimage are Mathura Veins a van, Vaishno Devi, Golden temple, and Char Dham.

References

  1. www.ijaiem.org/volume2issue12/IJAIEM-2013-12-09-014.pdf
  2. India tourism Statistics(ref: www.kpmg.com/IN/en/.../KPMG-CII-Travel-Tourism-sector-Report.pdf)
  3. www.kpmg.com/IN/en/.../KPMG-CII-Travel-Tourism-sector-Report.pdf
  4. Source: Ministry of Tourism, Statistical Surveys forStates(ref: www.kpmg.com/IN/en/.../KPMG-CII-Travel-Tourism-sector-Report.pdf)

Further Reading

http://www.asa.in/pdfs/surveys-reports/tourism-in-india.pdf

http://dtxtq4w60xqpw.cloudfront.net/sites/all/files/pdf/unwto_highlights14_en.pdf

The History of Tourism: Structures on the Path to Modernity

http://www.asa.in/pdfs/surveys-reports/tourism-in-india.pdf

http://www.asa.in/pdfs/surveys-reports/tourism-in-india.pdf

www.kpmg.com/IN/en/.../KPMG-CII-Travel-Tourism-sector-Report.pdf

www.kpmg.com/IN/en/.../KPMG-CII-Travel-Tourism-sector-Report.pdf


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