Travel agents and tour operators across India have battled several roadblocks and come out winners when it comes to attracting, and consequently serving, the international clientele. Lack of infrastructure, cleanliness and hygiene issues, safety worries, absence of tourist facilities at popular sites and so on are just some of the challenges India faces as a destination. In the face of these adversities, the country has been improving its tourist services as well as inbound numbers over the years.
EM Najeeb, Chairman and Managing Director, ATE Group of Companies, opined that the FTA to India is definitely growing as it has shown a spike of 10.6 per cent in 2014 over the previous year. “India is already waking up for a vibrant tourism activity as this comes under the special priority list of the Prime Minister. Kerala is also going strong with a growing tourism industry and a growth of 7.6 per cent in 2014 over the previous years’ numbers. Kerala Tourism is concentrating on wide promotion, reaching out to all the potential markets of the world. It also embarks on the most modern online promotions for the state,” he said.
Narayan stated that the inbound business saw a very positive growth in excess of 12 per cent in 2014. However, he added, it was impacted by the Russian Rouble fluctuations v/s the US$ at the year end and certain economic weaknesses of the European countries. However, he remains optimistic about the Government’s measures, crediting their moves so far with the boost given to tourism in India.
“2014 has seen manifestation of the Government’s pro tourism focus via key initiatives announced in the Budget- Rs. 500 crores for developing five tourist circuits around specific themes; Metro PPP initiatives with Rs. 100 crores set aside for the metro projects in Ahmedabad and Lucknow, Rs. 100 crores towards National Mission on Pilgrimage Rejuvenation and Spiritual Augmentation Drive (PRASAD); Rs. 200 crores provided for National Heritage City Development and Augmentation Yojana (HRIDAY); Rs. 100 crores provided for Archaeological sites preservation; Sarnath-Gaya-Varanasi Buddhist circuit to be developed with world class tourist amenities and development of new airports in tier I and tier II cities. Safety of women, a mission critical element, has been afforded prime importance and much needed delivery via Budget 2014 initiatives such as the Crisis Management Center for women,” said Narayan.
Numbers on the rise
With our eye on the prize - the 1 per cent share in global tourism - India has seen the travel industry grow by leaps and bounds, creating a place for itself in two areas the sector had started to give up hope on – the ruling party’s manifesto and the Union Budget for two consecutive financial years. And we don’t just mean a passing mention with a small allocation to placate an industry hungry for well deserved attention; we mean long awaited focus on the necessary steps to improve inbound numbers.
The tourism industry has long lamented that an inbound footfall of a six or seven million is too small for a country as large and diverse as India. There have been endless discussions, debates and brainstorming sessions on the parts of both public and private sectors to come up with ways to attract more international travellers.
With its heart and head in the right place, the Ministry of Tourism finally opened its Visa on Arrival scheme to 43 countries, and the nation now waits in hope that they will make good on their promise to extend this to 150 countries moving forward.
“The government’s unerring focus on modernisation and technology is music to our ears, and we have seen the National Rural Internet and Technology Mission as an impactful boost to leveraging the powerhouse of emerging regional tier II and III markets. We are very certain that such developments will go a long way to benefit both inbound tourism,” said Prashant Narayan, COO and Head Leisure Travel Inbound Business, Thomas Cook India.
Hope on arrival
An unanimous response from the fraternity was the advantages of the TVoA scheme. Every industry personnel echoes the opinion that TVoA enabled by ETA will propel tourism in India. According to Ajay Bakaya, Executive Director, Sarovar Hotels, the move means that People from these countries need not plan their travel well in advance as such, increasing the number of people who will choose India for short getaways.
Narayan agreed that it will add to Destination India’s favoured nation status, creating an immediate window of opportunity for the upcoming inbound season. Thomas Cook India expects that new e-Visa facility will result in a clear up gradation of inbound traffic by a minimum of 12- 15 per cent.
EM Najeeb, Chairman and Managing Director, ATE Group of Companies explained that the main hurdle the tourists and tour operators abroad had been facing was the Visa formalities to travel to India. The new arrangement, he opined, will surely increase the number of inbound tourists, and in due course it will help to even double the existing numbers. “We definitely expect to do growing business with the countries which are given the TVoA by ETA. These facilities offered by the Government of India will prove to be a major break-through for tourism in the country,” he added.
While the traditional source markets remain strong for India, it is encouraging that there are new markets out there that have recognised India’s value as a destination and are turning their focus towards us, According to Najeeb, while it is evident that the strongest market for India are still the traditional markets such as US, UK, Russian Federation, Canada, Germany, France, Malaysia, Japan, among others, there are also other destinations showing increased interest in the tours to India. European countries, though slowed down, are still sources of tourist traffic.
“A number of countries, including the gulf countries, show an interest in medical tourism in India. MICE tourism is also growing like the business tours segment. Many countries have investments and business relationships with India now. A number of international conferences are taking place which draw delegates from various countries travelling to India,” he explained.
Sunil Gupta, Chairman and Managing Director, Travel Bureau India, listed China and Korea as growing source markets for Travel Bureau India, adding that there is a growth in cruise tourism as well.
This year, Thomas Cook India see countries such as US, UK, Canada, Australia, France, Russia and Latin America continuing to be the driving sources for the inbound markets. Spain is coming back into play after a long hiatus, while Germany is expected to be flat, Narayan said. China, South Korea and Far East and Eastern Europe are adding to the numbers of the traditional source markets, he added.
“USA is our top source market with a share of 15 per cent FTAs. The provision of long term tourist visas and visa on arrival in India is expected to create a huge impact on Indian inbound tourism from USA. Apart from the surge in pre-planned leisure travel, we are also expecting a new segment of last minute travellers and an increase in Indian tourism from the NRI Segment. Chinese outbound tourists today have touched an extraordinary mark of 100 million, revealing a year-on-year growth rate of 18-20 per cent. This figure is expected to touch 200 million by the year 2020. Our research and analysis teams have indicated that India witnesses about 0.17 per cent share of this market. Till September 2014, India has seen around 80,000 travellers from China. For the coming inbound season our internal research and analysis teams, has revealed that the number of tourists from China to India can be anticipated to increase by approximately 20 per cent,” revealed Narayan.
Despite new source markets, the popular Indian destinations have held their place as the inbound travellers’ favourites over the years. The agents unanimously agreed that destinations such as the Golden Triangle, Kerala and Goa remain most frequented by international travellers.
Optimism checks in
Service standards make a country. Especially one that is well known for it’s hospitality; which means the hotel industry in India always has large shoes to fill. Be it domestic hotels chains or international hospitality brands; the hotel sector in India also looks forward to benefiting from improved inbound numbers.
According to Manav Thadani, Chairman, HVS Asia Pacific, the Indian hospitality scenario has seen several changes over the last few years. The introduction of branded economy, budget and mid scale hotels has been a welcome sign. He further added that, other encouraging steps include the rise of hotel investments from private equity players and pension funds. The Securities and Exchange Board of India (SEBI) has also firmed up regulations to facilitate the establishment of real estate investment trusts (REITs) and infrastructure investment trusts (InvITs), a step that will enable easier access of funds for developers. Another positive development that has taken place is the emergence of a strong leisure market, he stated.
“Technology, as well, is becoming an important aspect in the Indian hospitality scenario. Today, hotels spend considerable time and effort in planning mobile-friendly websites, in-room technologies, social media presence, and on-line booking channels,” opined Thadani.
Bakaya believes that 2014 will go down as a challenging year for the Indian hotel industry as ARRs were under pressure despite occupancy being stable. However, he informed that positive sentiment, strong political dispensations and an economy promising to do some magic came together and resulted in a great 2014 November. “We believe this was the turning point for Indian hotels and better days lie ahead,” he said.
The year ahead
Listing the challenges the industry is facing currently, Thadani said, “As new hotels continue to get added, we see a rising gap between available and required skilled manpower. Focus on training and setting up of hotel management schools would be vital to support the growing industry. Another change is the proliferation of free-standing restaurants and F&B districts. Hotels in India need to take cognisance of this development and incorporate suitable changes to their design and facilities to continue to increase revenues and profitability. Also, while our industry is evolving, we believe that is important for the government to continue to provide its support for the growth and marketing of the tourism sector and facilitate investment for destination development and setting up of supporting infrastructure. Extending infrastructure status to the hotel industry as a whole and reducing the cost of borrowing, reforming the license procurement process, creating a safe and secure travel environment, and streamlining of taxation are some additional steps that will facilitate growth of the industry.”
According to Gupta, the year 2015 is also off to a good start, with sales up by over 12 per cent in February and March. “The years 2012 and 2013 were depressed and finally we saw upward trend in 2014 in our numbers. For the year 2014, our company finally reached the revenue figures expected and are higher over last year,” he added.
Thomas Cook’s internal research and analysis teams reveal that 2015 is expected to witness immense scope of growth across MICE, inbound, outbound as well domestic travel thus fuelling the entire tourism market. India as a destination has timelessly been a favorite among foreign as well as Indian travellers, following the fluctuation of the Indian rupee and the comparable advantage that India has over many other countries in terms, cultural diversity, exotic locations, enigmatic heritage and culture, Narayan opined.
“With the various steps being taken by the Govt., including the imminent announcement of e-visa on arrival for 150 countries, the growth for inbound business is expected in excess of 12 per cent pa. However, it can be impacted by external economic weaknesses of the source countries,” he added.
Thadani feels that the future appears to be buoyant and the industry is certain that good days will shine upon it with 2015-16 promising to be the first good year post the slowdown. “There are several factors pointing in this direction. The decisive victory of the BJP-led NDA has reinvigorated business sentiment and is expected to enhance the performance of the economy. Moreover, the government is taking several initiatives to boost tourism in the country. On the demand-supply front, India had a little over 100,000 branded rooms as of March 2014. Supply is expected to grow at about 12 per cent in 2015-16 and by approximately 11 per cent in 2016-17. With the likelihood of overall economic growth coupled with the slowdown in new supply, we are quite confident of predicting a strong and sustainable upswing in industry performance over the next few years. Overall we are positive for the sector in the near future,” said Thadani.
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