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The Association of Domestic Tour Operators of India (ADTOI) recently added feathers to its cap with the launch of its fifth chapter. The Maharashtra chapter was officially launched in Mumbai recently with Abhijeet Patil, Chairman, Raja Rani Travels inducted as the Chapter Chairman. Parvez Dewan, Secretary Tourism, Govt. of India, graced the function as the chief guest. Industry stalwarts including heads of other travel trade associations and major travel trade companies were present at the launch event.
Commenting on the launch of the Maharashtra Chapter, Subhash Verma, President, ADTOI, said, “We have taken up the initiative to establish two to three chapters and Maharashtra was the top priority. We will also look at establishing chapters in Rajasthan, Tamil Nadu, Madhya Pradesh and Uttar Pradesh. The Maharashtra Chapter will help to promote tourism in the state and will support the cause of tourism in the country.”
As chapter Chairman, Patil plans to address the problems faced by the travel agents, tour operators and transporters at the grass root level to a macro level. In addition, the Maharashtra Chapter will play an integral part to promote tourism in the state. He stated, “We will work towards establishing unity in the industry to ensure unprecedented growth in domestic tourism in coming years.”
India has witnessed a steady and encouraging increase in arrivals for the past five years and this has encouraged German National Tourist office (GNTO) to promote the destination more vigorously in India. Commenting on India as a outbound market, Romit Theophilus, Director - Marketing and Sales, GNTO, India stated, “India along with China are today among the fastest growing economies with a dynamic business environment. Moreover, India has the fastest growth in terms of number of millionaire added every year. Any country ignoring the Indian market is definitely at a disadvantage.”
GNTO strongly believes in the India growth story and is looking at a significant market share out of this potential 50 million outbound travellers coming out of India by 2020. Our growth in terms of Indian arrivals over the past five years has been consistently good. “Our 2012 figures stood at 584,508 overnights which was about 6 per cent higher than 2011. India is one of the most important source markets for Germany. Currently, Germany ranks No. 2 in terms of visitor arrivals to Europe from India,” said Theophilus adding that their Jan – April 2013 Indian visitor arrival figures recorded 174,128 overnights which is an increase from the 172,746 overnights recorded during the same period last year. “The ratio of leisure v/s business tourist is about 40 : 60.”
Talking about their 2013 promotional strategy, Theophilus revealed, “Our promotional budget for 2013 is half a million Euros. Our theme for 2013 ‘Germany for Young People’ is promoting youth hotspots in all German cities and towns. We have already conducted six India Pool roadshows in 2012 in Delhi, Mumbai, Chennai, Bengaluru, Ahmedabad and Chandigarh and two India Pool roadshows happened in Delhi, Chennai in the month of February 2013. We will continue to organise activities for the travel trade to promote our new theme and new tourist attractions in Germany.” GNTO has always been working closely with the travel trade and believe that it is the most important aspect of their promotional activities. “We conduct regular workshops for trade to update them on the product and make office calls to agents to get feedback and suggestions. Regular study tours for agents enable the trade to have a destination experience to sell better. Joint promotions with prominent agents is also part of our marketing plan for the trade.”
Elaborating more on the new tourism products, Theophilus said the German fairytale route which follows the life and tales of the bother’s Grimm, the Garmisch Partenkirchen with the Bavarian Berchtesgaden National Park and Europa Park will be promoted.
Despite the rupee depreciation and rising airfares impacting outbound travel from India, Theophilus believes Germany has an advantage over other destinations in Europe as it’s a value for money proposition.
In a bid to boost the tourism growth in Maharashtra and Andhra Pradesh, both States recently agreed to sign a Memorandum of Understanding (MoU) for promotion of tourism in their respective states. Leveraging on this, the Andhra Pradesh Tourism Development Corporation (APTDC) recently launched a special campaign to attract tourists from Maharashtra to various destinations in the state. Chandana Khan, Special Chief Secretary, Tourism & Culture, Archaeology & Museums, Archives & Youth Services & Sports, NCC, Government of Andhra Pradesh, said, “We want to endorse the untouched destination in the state. Both Maharashtra and AP have a lot of similarities, and Mumbai and Hyderabad are like sister cities. There is so much in common in terms of heritage, culture, cuisine, history, shopping and as a MICE destination.” She is also hopeful that the joint tourism promotion initiatives announced by Maharashtra and Andhra Pradesh will also help to further boost tourism exchange.
V Madhusudan, Executive Director, Andhra Pradesh Tourism Department Corporation (APTDC), informed that AP recorded highest number of domestic tourist arrivals. “Domestic tourist arrivals into the state has increased by about 5 per cent to 159 million in 2012, while revenues of APTDC rose to Rs. 225 crores. Our aim is to increase the tourist inflows by around 10 per cent and set Rs. 300 crores turnover for the corporation,” he said. APTDC is also inviting investments in tourism projects through the PPP mode. “APTDC will take up projects worth Rs 1,000 crores through the PPP mode in Hyderabad, Visakhapatnam and Guntur,” he shared.
Elaborating on this, Khan added that, of these projects, five are coming up at Vizag. The APTDC is also developing Tirupati Convention Centre at a cost of Rs. 70 crores.
Commenting on AP’s off beat destinations, Khan said that there are quite a few unexplored holiday options that one can opt for. “We have a coastline of almost 1,000 kms and no two beaches are alike. Furthermore, we will be promoting locations such as Dindi, Horsley Hills, Bhavani Island, Suryalanka, Vikarabad, Nagarjuna Sagar and Bhadrachalam which are lesser known locations in AP.” AP is now also promoting ecotourism resorts in Laknavaram, Tyda and Konaseema.
Stressing on Film tourism, Khan informed that a Film Tourism Cell within the Tourism Department has been created to make the course of obtaining permissions for shooting easier for filmmakers. “We have made a single window system to make the process of obtaining permissions easier,” Khan concluded.
According to UNWTO reports, the number of Indians travelling overseas is set to rise to 50 million by 2020. Industry experts believe that this is due to India’s evolving and burgeoning middle class from smaller cities who are opting for overseas travel as a result of higher disposable income. Recent times have seen foreign tourism boards gearing up to welcome the emergent and increasing number of Indians who are travelling abroad and splurging. NTO’s such as Switzerland, Thailand, Malaysia, Dubai, etc are aggressively promoting their tourism offerings in unexplored tier II & III markets.
The outbound segment in India is growing rapidly and with an increasing disposal income and increasing standards of living. Contrary to common belief, travellers from tier II and III cities are equally attracted to an over the top and luxurious lifestyle as in metro cities. “People from smaller cities like Ahmedabad, Bhatinda, Lucknow etc see outbound travel as a status symbol. They love the ‘show-off’ factor and this works very well for travel agents and tour operators. The middle class and upper middle class in the metro cities are already well travelled and are looking to travel for adventure and relaxation, not for the tailor made site seeing. Travel agents and tour operators need to realise that this particular emerging market in India has a lot of potential to evolve as it is still at ground level,” opined Guldeep Singh Sahni, President, OTOAI (Outbound Tour Operators Association of India).
Sharing similar sentiments Iqbal Mulla, President, TAAI (Travel Agents Association of India), commented, “It is a must for the travel agents to reach out to tier II & II cities. A large chunk of middle class with disposable income hail from non metro cities, the buying capacity is very similar to people from metros. In the recent past people from cities such as Indore, Surat, Nagpur, Lucknow, Pune, Amritsar have started changing the way they live their life. The standard of living is much higher now days. They want to do more, they want to travel, explore and experience a whole new side to life. Travellers from tier II & II cities are usually first time travellers they prefer to go in large groups with their entire family and tailor made holidays.”
SATTE sees tier II& III cities having a great potential for tourism growth. Hence, SATTE 2014 will focus on tapping tour operators and travel agents from tier cities such as Pune, Ranchi, Bhuwaneshwar, Guwahati, Siliguri, Amritsar, Ludhiana, and many more. SATTE has evolved into a one of the biggest travel trade events globally and has witnessed buyers from over 43 countries and 74 cities in 2013. SATTE received buyers from cities like Indore, Patiala, Pune, Nagpur, Coimbatore, Vishakapatnam, Ahmedabad, Surat, Vadodara and Nashik among others. To be held between January 29 -31, 2014 and February 3-4, 2014 in New Delhi and Mumbai respectively, the event aims to bring together industry stakeholders under one roof.
Foreign tourism boards are gearing up to welcome the emergent and increasing number of Indians who are travelling abroad and splurging. Even though India is stressed by the sluggish economy and the depreciating value of rupee this hasn’t stopped Indian’s from travelling abroad. India has emerged as the world’s fastest-growing outbound market and is second only to China.
According to UNWTO reports, the number of Indians travelling overseas is set to rise to 50 million by 2020. Industry experts believe that this is due to India’s evolving and burgeoning middle class. Indians belonging to the four major metro cities have been known to travel abroad for the longest time but lately people from smaller cities of India are taking longer holidays and want to explore new destinations.
Contrary to common belief, Indians from tier II and III cities are equally attracted to an over the top and luxurious lifestyle as in metro cities.
“People from smaller cities like Ahmedabad, Bhatinda, Lucknow etc see outbound travel as a status symbol. They love the ‘show-off’ factor and this works very well for travel agents and tour operators. The middle class and upper middle class in the metro cities are already well travelled and are looking to travel for adventure and relaxation, not for the tailor made site seeing. Travel agents and tour operators need to realise that this particular emerging market in India has a lot of potential to evolve as it is still at ground level,” opined Guldeep Singh Sahni, President, Outbound Tour Operators Association of India (OTOAI).
“It is a must for the travel agents to reach out to tier II & III cities. A large chunk of middle class with disposable income hail from non metro cities, the buying capacity is very similar to people from metros. In the recent past people from cities such as Indore, Surat, Nagpur, Lucknow, Pune, Amritsar have started changing the way they live their life. The standard of living is much higher now days. They want to do more, they want to travel, explore and experience a whole new side to life. Travellers from tier II & III cities are usually first time travellers they prefer to go in large groups with their entire family and tailor made holidays,” said Iqbal Mulla, President, TAAI (Travel Agents Association of India).
Sharing the same sentiments, Pradip Lulla, National General Secretary, Travel Agents Federation of India , (TAFI) commented that it is all about the status and the feel good factor, “These cities are yet to evolve as major source markets for outbound travel but they are picking up at a very fast pace. People want to travel so that they can come and boast about their experience to their peers, click pictures, go sightseeing and do all the major tourist activities. They are the quintessential traveller and want to do a lot in a limited period. Travellers from metros are experienced travellers and are looking at travel from a whole new point of view. Indians travelling to Asia-Pacific alone spent US$13.3 billion in 2011. This figure is set to zoom to US$91 billion by 2030, making Indians the second-biggest spenders, after China, in the world on overseas travel. Tier II & III cities will also fuel this trend further.”
Holidays for middle-class Indians from smaller cities is about visiting friends and families coupled with a dash of sightseeing. It is a trend that is picking up among this particular market as a sizeable number of students from small towns study abroad.
“The outbound segment in India is growing rapidly and with an increasing disposal income and increasing standards of living, travel is steadily becoming a necessity. We get a lot of big families who want to travel overseas so that they can visit their relative who study/work there. These travellers usually behave differently than standard vacation travellers. They travel for longer periods, and take short breaks within the country itself,” said, Zakir Ahmed, President, TAFI.
Tourism boards are also set to woo first time Indian travellers from smaller cities and towns by offering value for money packages. “Owing to the beautifully packaged itineraries sales in tier-II and III are going very strong, a good sign for yet another great travel season for India’s tourism industry. Countries such as Switzerland, Spain, Thailand, Malaysia etc are tapping the tier II and III cities aggressively. Based on study of market research data, tier-II and III cities will be on be on every tourism board’s agenda. NTO’s offer different kinds of packages depending on tourist profiles and this works great for first time travellers. NTO’s have also started organising road shows and training sessions for travel agents and tour operators in tier II & III cities making it easier for them to sell the destination,” Subhash Goyal, President, Indian Association of Tour Operators (IATO).
The recently concluded 11th annual Carrefour GoMedia Canada Marketplace organised by Canadian Tourism Commission (CTC) generated exceptional media exposure for Canada’s tourism industry. The event was well attended by over 300 delegates which included members of the Canadian tourism industry, Canadian media and international travel journalists from across their 12 markets. The event enabled the local tourism industry groups, especially the host organisations - Travel Manitoba and Tourism Winnipeg, to be under a spotlight with expectations of garnering positive media exposure and drawing more visitors.
“In addition to showcasing Winnipeg to travel media and their extended audience, over the duration of the GoMedia Marketplace, we further expect that local businesses will benefit with an estimated $307,000 in direct spending on hotels, restaurants, shopping, attractions and more,” said Chantal Sturk-Nadeau, Senior Vice-President, Tourism Winnipeg.
“There couldn’t be a better time to showcase Manitoba to the world. Our province is filled with awe-inspiring attractions that are sure to appeal to visitors from around the world. This platform provided us with an amazing opportunity to promote all we have to offer and continue to foster tourism growth in our province,” opined Colin Ferguson, President and CEO, Travel Manitoba.
The five-day event was designed to generate media exposure through media tours and three days of speed-dating-style meetings between journalists and Canadian tour operators and media-relations specialists for various Canadian tourist attractions. Jon Mamela, Chief Marketing Officer, CTC shared that this is a great platform for Canadian stake holders to come together and have a one on one interaction with the media from across it’s 12 markets. “This will not only provide them with exposure but also help them understand how each market is different,” he added.
Speaking about the India market Mamela opined that India is an attractive key market for Canada, thanks to sharing a common language (English), positive trade relationship and improving visa services, as well as India’s economic prosperity, rising income levels and affluent middle class. “We hold this market at the very top and will continue to work harder on the market as we believe it has great potential,” he said.
In Jan -May 2014 Canada received 56,842 Indians, which is a 12.9 per cent increase compared to the previous year.
Québec City Tourism
Nancy Dacres, Representative, Québec City Tourism
“We are pleased to see that the Government of Québec is recognising the tourism industry's major contribution to the provincial economy. We have always believed in the importance of strengthening the competitiveness of our destination and our offering to international tourists. As such, it is imperative that we establish an overall strategy that will enable us to act quickly. Our main USP is that we are the only French speaking province in Canada. We are famous for our honeymoon and culinary based itineraries. Apart from this we are also going to promote our cruises in India.”
Michele L Simpson, Tourism Toronto
“Niagara Falls still is the most popular destination in the country closely followed by the city of Toronto. But even within these regions, there are new itineraries and combinations which are being experimented with to keep offer something new to the platter. For instance, the network link between Toronto, Ottawa, Montreal and Quebec is a package that these destinations are keen on promoting. Toronto is also looking forward to a good influx of Indian travellers this year.”
Destination British Columbia
Josie Heisig, Destination British Columbia (BC)
“We are at a very infant stage with regards to the Indian market. We have just begun scratching the surface of the Indian market to promote our summer market. A brand new convention centre is expected to open early next year which will encourage a lot of MICE traffic. We are also promoting cruise tourism in Vancouver with the launch of the new princess ship and the NCI ship. In addition, we are promoting Whistler as a popular ski resort but apart from skiing tourists can indulge in soft adventure activities such as peak to peak gondola, sea planes and many more. This year 30 per cent of their total marketing budget has been allocated to the Indian market. India may not provide big numbers but the revenue the stay generates makes it worthwhile for us to focus on the market.”
CAN+ Visa programme a huge hit!
Canada recently launched the CAN+ Visa programme for Indian passport holders, which enabled those who have travelled to either Canada or USA in the last ten years to get a Canada Visa within five days of submitting the application. Launched in India, China and Mexico on a pilot basis a few months ago, CAN+ Visa has now become a permanent feature in all three countries.
“In 2013, more than 130,000 visitor visas were issued to Indians, and nearly 14,000 Indian students were issued study permits. We are committed to surpass the growth by making visa processing more efficient. CAN+ is the latest among the various programmes that make travel easier and to facilitate economic growth. In Jan -May 2014 Canada received 56,842 Indians which is a 12.9 per cent increase compared to the previous year,” shared, Jon Mamela, Chief Marketing Officer, Canadian Tourism Commission.
Lack of direct air capacity continues to be the biggest concern. Mamela expressed hope that the direct air connectivity between India and Canada would improve in the days to come.
Business travel in India has been on a steady growth path over the last decade. However, it has now become mandatory to look for solutions to administer increased traffic, optimise results as well as protract and increase the growth of the industry in the wake of ongoing recession in some markets, said industry experts at the recently concluded ATPI Business Travel Forum in Mumbai. The Forum also offered and excellent opportunity for networking, relationship building and interactive educational sessions with Corporate Travel Managers.
The keynote address was delivered by Anna Singh, Assistant Managing Director, the ATPI Group, India. The Forum featured panel discussions on Changing Trends: Rise of Budget Airlines (Europe, India & United States of America); Transparency in TMC operations – Myth or Reality?; Traveler Security & Tracking – Risks, Reality & Need and Payment solutions – Legacy versus credit card – Risks / Reality & Opportunities.
Speakers at the Forum focused on three main strategies to sustain and trap the growing business travel: adopting technology, transparency and consolidation. Sanjay Pai, Head-Travel & Aviation, Larson & Toubro said, “India is yet to have a transparent, competitive model. Technology translation has not still happened here. A meta search engine is necessary to do this.”
According to statistics provided by the GBTA, business travellers worldwide are expected to spend $1.16 trillion on airfare and accommodations in 2013. This is up by over 8 per cent from US$1.07 trillion in 2012. Current growth in business travel is majorly driven by developing nations such as China, India, and Brazil.
“Post the 2008 financial crisis, corporate houses are viewing travel more as a necessity and are adopting a conservative travel policy. They are focusing on RoI. The low-cost carriers are seriously looking at this segment for their growth,” opined Gaurav Sundaram, Country Director, Egencia India, Expedia’s corporate travel organisation, adding that young corporate workforce is going virtual and expects choice and flexibility. “Mobile technology is the future. Travel Policies have gone more conservative. Travel is more of a necessity now and the customer is looking for value in cost and service.”
Elaborating more on the rise of budget airlines, Singh stated, “Low cost airlines have gained 54 per cent market share in India and are growing fast due to the huge middle class and the growing penetration in this segment. The Indian business sector too has caught on to the fancy of the low-cost carriers, driven by the need to reduce costs and also because these carriers have improved their on-time performance.”
During the forum Subhash Kelkar, Chief Information Officer, Mahindra Holidays & Resorts India, stated that there’s huge demand for data, analysis and logical answers. “Savings, reporting and technology are paramount alongside corporate governance, risk management and management of corporate social responsibility. Security and tracking has become a necessity due to rise in natural calamities and terrorist strikes. We need to address these issues to increase business travel to India,” he said.
Peter Muller, Chief Operating Officer, ATPI believes that these are challenging times for world economy. “Cost minimisation, raising standards for higher benchmarks and stringent compliance are a necessity. Travel Management Company relationship with corporate companies is changing for long term contracts rather than being just a vendor, he said further adding that partnering with a global TMC will help in supplier negotiation, quality control and give access to databases for lowest logical global fare.
The ATPI Business Travel Forum was organised by Bloomberg TV India’s Conferences and Summits’ division – Pulse.
As Indian airlines make their way steadily out of the turmoil that embroiled them the last one year, foreign carriers continue to see India as a strong market. Henry Moses, Country Manager, India, Qatar Airways, for instance, called India one of the airline’s most important markets, stating that there is significant traffic in various categories, especially in the VFR traffic, followed by business and leisure travellers. Rakesh Raicar, Regional Sales & Marketing Manager - South Asia, Cathay Pacific Airways revealed that the airline’s load factors from India have consistently been between 80-85 per cent and confident that Cathay will be able to maintain the same or even see an increase.
There is, undoubtedly, a continued sense of optimism as far as the growth out of India is concerned. Evidence of this is the airlines’ continuous expansion plans and additions to their products to better cater to the Indian market in particular. Cathay Pacific already increased frequencies between Chennai and Hong Kong from four flights a week to daily and commenced its new four-times-weekly service to Hyderabad in December. Dragonair has commenced its new four-times-weekly service to Kolkata in November. In addition, new products and the Premium Economy cabin have made an appearance on Cathay Pacific flights from Delhi, Chennai, Mumbai and Hyderabad and will soon be introduced in other routes as well. “We have recently announced an extra flight service from Kolkata effective October,” Raicar added.
Virgin Atlantic recently launched domestic within the UK to Manchester, Edinburgh and Aberdeen. ‘Little Red’ is the name of the new operation. “The new schedule has been tailor-made to suit Indian passengers travelling from Delhi and Mumbai as they can now connect seamlessly to our UK destinations on their preferred airline. The 26 domestic flights a day will strengthen connectivity to our existing long haul network flights,” said Stephen King, General Manager-India, Virgin Atlantic, adding that the strategic alliance with Delta Airlines will create an expanded trans-Atlantic network and enhance competition between the UK and North America, offering greater benefits for customers travelling on those routes.
Malaysia Airlines is also very confident about the Indian market and has recently increased its frequency from Kuala Lumpur to Mumbai to 12 times, revealed Azahar Bin Hamid, Regional Senior Vice President, South Asia & Middle East, Malaysia Airlines.
Having achieved all their targets set for 2012, Turkish Airlines has a very positive outlook for the Indian market. Mehmet Akay, General Manager, Western & Southern India, Turkish Airlines said, “We are investing money in India and that just proves how significant the market is to us. 2012 has been a very successful year for Turkish Airlines. We have achieved all our set targets for the year. Moving ahead, we would like to add new routes and new gateways in India to expand our footprint depending on the bilateral agreements provision.” According to him, there is a pressing need to increase frequency on Mumbai and Delhi routes as the demand is really high. “Turkish Airlines currently operates daily flights from Mumbai and New Delhi to Istanbul, and we have recently deployed B777-300ER aircraft on the Mumbai-Istanbul route with effect from July. We observed an increase in demand on Mumbai-Istanbul route and hence decided to deploy a bigger aircraft for a trial period of three months. Depending upon the performance, we will decide on whether to continue the same or no,” said Akay.
Trends in travel
As the skies open up to make the world smaller and destinations more easily accessible, the global traveller has evolved to become more adventurous, more selective and more quality conscious. Chris Fordyce, Regional Commercial Manager - South Asia, British Airways believes that as a market India is evolving rapidly, travel is becoming more aspirational for Indians and they want to explore new destinations and collect experiences. Raicar opined that an increasing ease and availability of travel options is fuelling tourism. The biggest trend, however, remains the increased dependence on technology, with airlines feeling the increased need to provide wider web and mobile solutions for travel planning. According to Moses, the industry is investing in business intelligence solutions and collaborating more to increase operational efficiency and improve customer service and loyalty.
Raicar agreed, stating that passengers globally are frequently looking for exceptional locations to travel and most bookings are being done online. “Passengers in India are gradually moving to e-commerce and making air travel and hotel bookings online. Also, passengers now have more number of vacations planned in the year as opposed to one vacation a year which used to be the trend. Due to easy access to information, the types of holidays are also changing and passengers are willing to explore new places,” he added.
Moses opined that, today, travellers are seeking more value for money, which includes value as a combination of cost, experience, service and convenience. By this measure, low cost carriers are a strong trend. “With the world facing economic uncertainty, travel on LCCs is on a rise. Corporate travel is also now gradually shifting to it,” Raicar said.
India as a market
Undeterred by the turbulence faced by Indian carriers the last couple of years, foreign airlines continue to laud India as one of their fastest growing and strongest source markets. Moses opined that India is growing as a main economic hub and shows enormous potential, both as a competitive tourist passenger market and also a centre for passengers travelling on business. Raicar revealed that, in India, Cathay Pacific is constantly reviewing new routes that could be profitable in the future, and is continuously monitoring market demand and exploring new opportunities.
Operating in India, however, does have its challenges. According to Raicar, aviation is a very complex cyclical business that is very sensitive to changes in demand and costs. Many major costs such as fuel are outside the airlines control but can have a devastating effect if they rise too high. All these costs and charges impact the profitability and sustainability of the airlines and will of course add to the cost to the customer. Agreeing with Raicar, King added. “Airport charges have been increasing sadly across the world and that makes life more difficult in an already challenging environment for all airlines. This hike has made Delhi a less attractive airport and India could lose out on potential business.”
Akay agrees that working in India is a bit challenging. “India is a very competitive market and the aviation industry is under constant scrutiny. The biggest challenge I would say are the limitations with regards to bilateral. We have also noticed that Indian travellers book late and it is very difficult to accommodate increasing demands with gateway and frequency limitations.”
Being optimistic about the Indian market, King said, “According to the new regulations, foreign airlines have been allowed to invest 49 per cent in an Indian carrier so we are keeping our options open. The Indian aviation space is facing turmoil now, but India is still a market that has so much potential and I believe that soon the situation will pick up and there will be a time when the Indian aviation space is right at the top.” Commenting on how India has performed in the last year King said, “We have experienced strong growth out of Delhi and our entry into the Mumbai market is a strong reflection of our commitment to grow our Indian business. From the Indian point of sale, we have witnessed an increase of 21 per cent for the London route and 40 per cent for our New York route over last year with a positive growth in market share.”
India, Raicar added, is showing positive changes with the improvements in the airports to make travel more convenient. “However there are massive increases in charges being proposed for many of the airports in India. This increase in charges affects and greatly concerns all airlines as the airlines are already being squeezed by high fuel costs. These high charges also make travelling more expensive which in turn affects the demand. If the stated aim is to make India an aviation hub then customers and airlines should be encouraged rather than discouraged from flying to and from India,” he said.
The opinion all international carriers seem to have in common is the continued growth in Indian air travel. According to Moses, as the Indian aviation sector prepares for its next phase, it will witness increasing demand from the upcoming metro cities, thus increasing demand from tier-II markets will be a key growth driver for the sector.
Speaking about the growth of Qatar Airways in India, however, Moses added, “We have exhausted all the traffic routes allotted by the Government of India. We hope Indian Civil Aviation authorities will give additional access to Gulf carriers in India and if that happens we would like to operate more flights to cater to the demands of global traffic.”
After witnessing encouraging results and marginal growth in the first quarter of 2013, the Indian tourism and hospitality industry has experienced a slower first half of 2013. Indian tourist outflow has registered a significant decline of 15-20 per cent in the last two months due to falling rupees, says industry body, Associated Chamber of Commerce and Industry’s (ASSOCHAM) findings.
Latest statistics reveal that around 15 million Indians travelled abroad on business and leisure in 2012, recording an increase of 10 per cent over 2011. However, travel costs and accommodation for vacationing abroad has gone up by around 20 to 25 per cent over the last three months due to the depreciating value of the Rupee. Indian tourists are not just shortening their vacation, but opting for holidays within the country rather than going abroad. Tour operators and travel agents are also reworking their itineraries and packages by reducing the number of days, activities and offering budget accommodation to make it more cost effective for Indians determined to travel abroad in the second half of the year.
While outbound has taken a hit, industry experts believe that India has become an attractive destination for inbound travellers due to weakening currency. This has compelled travellers to shift focus towards India viewing the country as an emerging and practical travel option. In addition, travel professionals opine that, even though Indians may refrain from outbound travel, they are likely to opt for holidays within India. ASSOCHAM states that the tourism industry is already experiencing an impressive growth of 35 per cent in domestic tourists compared to the 20 per cent decrease in H1’CY 2013 during the same period in 2011.
However, keeping the overall developments in tourism sector in mind, players in the industry perceive the year to be challenging. Among the industry, the hospitality industry seems to be coping better than tour and travel agencies. Although the year is not notching tremendous profits when compared to the same period last year, the first half of 2013 seems to be treating the hotel industry better than other tourism segment. Hotels are benefiting from business and domestic footfall.
While some expect outbound travel to decline, others feel that Indians will not cancel their travel plans but reconsider the choice of destination. T3 speaks to industry experts to measure the impact of the weakening rupee and what is in store for the tourism industry for the rest of the calendar year.
Outbound travel experiences a slump
The devaluation of the rupee against the dollar, touching an all time low has not only affected the Indian economy but is likely to have a big impact on the outbound tourism segment, opine travel agents and tour operators. The industry expects a negative impact of the depreciating rupee on the second half of the calendar year.
Subhash Goyal, Founder & Chairman, STIC Travel, agrees that the decline in the value of the Rupee is consequential in the fall in tourists outflow from India. “The depreciation in the Indian currency has definitely impacted the tourism industry as we’re seeing a 15 – 20 per cent drop in outbound travel to dollar destinations, which are usually full during the holiday season. If the economy further sees a negative instability between rupee and the dollar, the rest of the year might see outbound travel hitting an all time low with about 30 – 35 per cent drop.”
Ajay Prakash, Chief Executive, Nomad Travels stated that the year started off well, but is now slowing down. “The adverse exchange rate will not make it any better. The second half looks like a difficult one fraught with challenges, especially in the light of challenges tour operators are facing such as the weekly settlement. The economy is slow, the funds are slow moving. However, the Indian is an eternal optimist and the industry hopes that the remainder of the year looks up,” he said, adding that the future outlook is grim.
“The first half of 2013 was average for us compared to the same period last year. Travel is going to face a slump in H2 as a result of the Rupee depreciation. This is especially considering the fact that it is the season during which Indians travel to UK and Europe. I see cancellations and postponement of travellers plans to these two countries,” revealed Pradip Lulla, Chairman & Managing Director, Cupid Travels and Tours. He further anticipates that the Rupee weakening will directly impact all segments of travel and tourism.
“I can already see a dip in incentive travel as industries are taking a hit with the currency. Business travel will also dip owing to rising air fares. Air fares are surprisingly lower this year than earlier when quoted in US$. Unfortunately, the weakening Rupee is keeping it expensive for Indian travellers,” he said stating that the Indian, South African and Brazilian travellers are most impacted as these currencies continue to depreciate.
Rupen Vikamsey, Managing Director, Orbitz Corporate and Leisure Travels, observed that outbound travel from India during the summer break decreased by 10 per cent. “The travel trade, especially medium and small enterprises, are facing the burden of it with slow business throughout the summer peak travel season. The Indian currency has fallen 10.8 per cent in 2013, and is currently the worst performing currency amongst major Asian countries. This has resulted in intensification of travel expenditure of overseas trips by seven- eight per cent and the outbound segment are likely to experience a major dip in the second half of 2013.”
Iqbal Mulla, President, Travel Agents Association of India, believes that Rupee depreciation has made air travel and hotel accommodation very expensive for Indians wanting to travel abroad. “Even though the middle class Indians are earning well, they are still very conscious about their budget and don’t often believe in over spending. The outbound market is an exceedingly competitive segment, and fluctuation in currency value has brought great financial loss to the industry. People are reducing duration of trips due to rise in expenditure. They are opting for fewer days, lesser activities and budget accommodation.”
Agreeing with him, Toral Vithalani, Executive Director, JTB Travels said that Indian travellers will continue to travel and will look into feasible holiday options within their budget. “Travellers are opting for breaks where price and expenditure can be controlled. The cost for outbound packages, after the depreciation, has increased by five to seven per cent. If the price does not correct by September, outbound tourism will be badly affected.” However, Shailesh Patil, Managing Director, Kesari Tours, is optimistic about the outlook and is positive that the Rupee value will see recovery. “As travel professionals, we need to learn to adapt to the various fluctuations in the economy as well as government regulations. We need to design cost effective packages and offer quality services which will attract vacationers in the current circumstances. Although, the value of Rupee has depreciated, those who have to travel will do so.”
Similar sentiments were echoed by Om Prakash, Director, InOrbit Tours. “The Indian outbound travel industry has been under the weight of mounting cost due to the unvarying depreciation of Rupee in the last few years. The current descend is another blow on outbound travel. The snowballing effect on the cost will range from eight to ten per cent. Outbound travel has witnessed a little decline due to advance planning and most travellers having paid advance amount to tour operators. However, this fall of the Rupee will show its brunt in the near future.”
Subhash Verma, Chairman, Travel Plus opined, “The depreciating rupee has come as a blow to the outbound leisure travel segment. A dollar, which was at Rs 45 a year ago, is now at Rs 60.31, reflecting a 20-25 per cent depreciation of the Rupee. Hotels, transportation, etc. becomes more expensive for Indians when they travel abroad. Some established agents have witnessed a loss in enquiries of 30 per cent compared to last year.”
Marzban Antia, Managing Director, Avesta Travels and Tours, stated that the industry experienced 30-35 per cent cancellations on bookings on an average between January-June 2012 due to the sinking Rupee. “To offset the soaring prices of holiday packages, travel operators and online travel portals are offering various deals and offer to add volume in the bookings.”
Rajat Sawhney, Managing Director, Rave Tours and Travels opined that everything bought abroad is now 18 per cent more expensive; hotels, food, transport, shopping. According to him, Indians are very price conscious and have started opting out of Dollar destinations. Clearly, this has hit the travel industry especially the outbound leisure travel.
Veena Patil, Founder & Managing Director, Veena World, believes that there is no stopping the Incredible Indian traveller. “With the rupee rate fluctuating, customers have begun weighing all options, but even the most price-sensitive travellers will continue to travel. Though, they may shift to short-haul destinations.”
Guldeep Singh Sahni, Managing Director, Weldon Tours and Travels, said, “The Rupee depreciation does infact have an impact on the outbound travel market. The cost difference in outbound travel is marginal – approximately between 7 and 10 percent. This will not stop Indians from travelling to overseas destinations.” He is also of the opinion that travellers will opt for short-haul destinations over long-haul.
Short-haul and domestic vacations gain
The depreciating Rupee has prompted travellers to look at cheaper options to cut down travel costs in the second half of the year. Travellers are comparing multiple suppliers to see which are offering the best fares and room rates. People are still travelling, but are switching destination and the hotel to downsize their travel costs. Travel to South East Asia and domestic destinations is at its peak as the weak rupee makes Indians choose them over dollar destinations for holidays. Experts say, luxury travellers are not tweaking their plans because of the recent currency fluctuation but the budget segment customer is rethinking the holiday plans.
“The weakening Rupee is likely to have some positive impact in the near term on the domestic tourism industry. If the currency continues to descend with no sign of improvements before the start of the next holiday season in September, chances are that many tourists will prefer travelling within the country instead of making a foreign trip,” said Veena Patil.
Verma observed that most travellers have a budget for their vacations and owing to the fluctuation of the Rupee, the cost of their vacation may increase, causing them to either postpone their travel plans or look at shorter international or domestic holidays. “With the sliding Rupee making overseas travel costlier, local hotspots have become favoured destinations for most Indian tourists this holiday season.” Sawhney opines that Indian travellers give importance to both - quality and value pricing.
Vikamsey informed that Asian countries such as Thailand, Singapore and Malaysia are evergreen. Vacations to Kerala, the Golden Triangle, the Buddhist sector, Tamilnadu and Ladakh are also gaining momentum as domestic travel is picking up. “For the past few days, we have been witnessing the impact of the rupee hitting an all-time low. Travellers are opting for South-East Asian destinations and even Europe, but destinations such as the USA and Canada have, all of a sudden, fallen out of favour with Indian travellers,” said Kapil Berera, Managing Director, Astral Travels.
Fred Divecha, COO and Director, T Plus Tours, also feels the same. “Travellers will prefer short-haul destinations instead of cancelling their trips. South East Asian destinations continue to be in high demand. Destinations like Bhutan and Sri Lanka have also made it to the itinerary of Indian travellers,” he said. Shagufta Mulla, Director – Business Development, Treasure India, states that outbound Indian travellers are left with no option but to make travel adjustments in these situations. “They are either shelving their foreign plans due to additional burden or preferring shorter trips to international destinations to make things fall under their budget. Travellers are also opting for destinations within India, which has given a boost to domestic tourism,” he said.
Prakash believes that the correction in the exchange rate may bring some relief for tourism industry. “Otherwise, holiday trends will see a change come H2 of 2013. Travellers will opt for shorter holidays to short haul destinations and lower quality accommodation which costs less and so on.” The depreciating rupee has given an unprecedented focus to domestic travel with India re-emerging as a viable option,” said Vithalani.
Inbound to India likely to pick up
With the depreciating rupee bringing down the overall package costs, India has become an attractive destination for inbound customer. Foreigners are cashing in on the low value of the rupee for their vacations. Since the buying power has increased due to the rupee depreciation, the same facilities - hotels, food, transport, shopping etc – have become more cost effective for foreigners. Industry experts state that enquires have been coming from neighboring countries in South-East Asia and England, suggestive of 2012/13 peak season witnessing foreign tourist arrivals go through the roof,
“June is normally the planning month for most tourists abroad and India could be a preferred destination now,” said one of the prominent inbound operators. This has definitely caused a surge in foreign tourist bookings for the winter season.
The inbound industry has already seen an approximately 20-25 per cent increase in the number of enquiries. “The declining might of the Indian Rupee is attracting an influx of tourists to India as an increasing number of holidaymakers look to stretch the value of their currency,” said Berera. According to Vithalani, India’s popularity as a holiday destination has reached an all time high since the rupee started to weaken which has made India the most widely searched for holiday destination online. Mulla revealed that tourist who had previously visited India in the cheaper off-season are now enquiring about the availability of more expensive rooms during the peak season, traditionally between October and February. The industry has witnessed a rise in enquiries, which includes religious tours and adventure tours, he added.
“The booking trends have been somewhat similar to the last year. The last year saw an increase of 4.5 per cent of annual tourist arrivals to India, a similar trend can be expected this year too. Though the booking numbers were higher in January-March period compared to corresponding period last year, the April-June period saw a slight fall,” said Arjun Sharma, MD, Le Passage to India.
The inbound arrivals during the period January to May 2013 were 28.63 lakhs with a growth of 2.1 per cent. It is clear that inbound arrivals will see only a marginal growth.
Outlook positive for Indian hotels
Citing the Federation of Hotels & Restaurant Associations of India’s (FHRAI) preliminary report, a financial daily reported that both occupancies and room rates softened during the first four months of this year. While in January occupancy was marginally up by three per cent, in February it dropped by 1.6 per cent and in March by as much as 6 per cent as compared to the same period last year, the report said.
According to Ajay Bakaya, Executive Director, Sarovar Hotels and Resorts, H1 of 2013 has been about 10 per cent below last year. “However, the Rupee depreciation has not affected Sarovar yet as we have kept our hotel rates in INR. What is going to happen now though is that hotels will go back to the old system of providing rates in US$. The exchange rate will then benefit them. We are, however, looking very strongly at business travel, a segment unaffected by exchange rate fluctuations. In terms of leisure, India is getting a bit cheaper, and that will have some impact, yes,” he added.
Partha Chatterjee, Advisor, Keys Hotels, however, feels that the sector that is most unaffected by the Rupee depreciation is the mid market hotel segment, which has its focus on domestic and corporate travellers. “The first half was not just better, it was fantastic. I think the industry is turning around, which is across the sector, not just Keys. If you look at RevPAR across the country, not just metro cities, you will see an increase,” he said and added that 90 per cent of our business is corporate, which is unaffected.
Param Kannampilly, Chairman & Managing Director, Concept Hospitality, also revealed that the first half of 2013 was good for his company. According to him, Concept Hospitality’s budget was increased by about 15-20 per cent, depending on the profit. The company has achieved up to 95 per cent. He stated that the rupee depreciation has not really affected Concept Hospitality that much yet.
Giving an opposing view to the positive side of the industry, Uttam Dave, President and CEO, Interglobe stated that the year is not going very well. “Rates are down. Occupancies are down. Market by market, it’s a selling situation because of too much supply. Demand is still growing at 11-12 per cent. But, there is too much supply. The competitive situation has got very intense,” he said.
The hoteliers were more hopeful, albeit not confident, of the second half of 2013. Bakaya believes that the second half is always better than the first. “But I do not see a dramatic improvement until the elections are over, we have a new government and something steady and economic policies that make more sense,” he added. On the contrary, Dave stated that the second half will be tough. “Usually, the second half of a calendar year is better for hotels. But I think it will continue to be tough. A lot of the business comes out of the IT sector, and that is a bit slow. There is no clarity at a policy level and that is slowing things down. The whole approval process in India is slow so anyone wanting to set up a new project has to wait. So the slowdown is not surprising, it is self inflicted.” Chatterjee hopes that the rest of the year continues to be good. The trends, he said, are positive as far as bookings are concerned.
Discounted offers from airlines
Continuing to struggle in their efforts to escape the woes of last year, airlines have now resorted to charging lower air fares during the off season in an effort to woo flyers. The airlines have witnessed a downward spiral in bookings owing to the increased air fares that were being charged in a bid to recover losses and meet operational costs following the rough patch the Indian aviation industry hit recently. Special offers, early bird specials and off season round trip fares, which were successful strategies in the past when the industry was at its peak, are now being re-introduced in an effort to win back the lost customers.
And these offers are not just limited to the low cost carriers, from whom these tactics are expected. Even our full service carriers have taken to these sales gimmicks, much to the delight and advantage of the Indian traveller. The opening of the skies through the FDI opportunity and the possible entrance of the famously economical Air Asia into India may be a further reason for this move.
However, this is not a long-lived cause for celebration. Alongside the much appreciated slashing of prices, airlines have also warned of steep hikes in air fares as a result of the depreciation of the Indian Rupee. The airlines argued that the growing might of the US$ exchange rate has added to their operational costs. “The Rupee depreciation will significantly impact airlines as their dollar revenue is less while most of their expenses are in dollars. Low-fare carriers that have less international exposure in terms of flights will be adversely affected. Full service airlines will also be affected as they can’t stay out of maintenance and repairs,” an airline executive was quoted saying. Reports in the industry state that the reduction in air fares will be less than would usually be expected in the lean season. In fact, Air India, for the first time in the last five years that it has battled losses, plans to hedge jet fuel to curb the losses that come with the fall of the Rupee. It looks like a tough year again for Indian skies.
Today’s travel customers are very active and constantly on the move. They’re booking hotels online, using smartphones for flight check-ins, and turning to Facebook and Twitter to ask their time-sensitive questions. Digital marketing experts believe the trick here for the company is to be where their customers are, which could be anywhere and what best way to do that then by using the digital world.
Atul Hegde, CEO, Ignitee Digital Services said, “Digital marketing applies to every field of business and the travel industry is not an exception. In recent years, digital marketing has aided the travel industry in a huge way. In the recent phase, digitisation of marketing strategies and using the World Wide Web has become popular due to the large consumer base. Digitalisation is the future as the internet helps companies reach out to a larger audience. Digital marketing is fast as well as delivers information in hardly a matter of seconds. Today, customers do prefer companies that advertise online.”
According to Stephen King, General Manager - India, Virgin Atlantic, businesses in the travel and tourism sector in India aren’t maximising the value of social media despite an increasing number of customers showing their support for the medium. “People have to realise that several companies and agencies have achieved success due to the very reason of world wide success of digital marketing. Companies new to the digital world today have the option of outsourcing agencies and consultancies,” he opined adding that very recently Google has purchased the ITA software for $700 million. “ITA refers to a software that offers behind-the scene data on flight times along with available seats and price levels. It also helps not only travel agencies but also normal customers who just wish to lay their hands on information. The reason behind investing such a large sum of money is that Google wishes to expand in to each and every industry and travel industry seems to hold a lot of potential. This is a classic case of using the internet and the digital solutions to give your company an upper hand within the industry.”
Sharing similar sentiments, Ashok Lalla, Global Head – Digital Marketing, Infosys believes that the sheer amount of information available on the net remains the biggest obstacle for businesses embracing the platform. He, however, feels that agencies that have been quick to employ digital marketing for sales, or even research purposes, are the ones who have experienced positive results. “Marketers are starting to invest on the digital platform but usually digital marketing is not the focus of their marketing plan. But in case of industries such as travel, marketers have started realising the potential of digital marketing and take a more forward looking approach to the whole concept. I want to see travel agents, tour operators, stand alone hotels etc take their business online, which help them create a larger platform to showcase their product offerings.”
Arif Patel, Regional Director, Sales & Marketing, South Asia, Starwood Hotels & Resorts Worldwide, shared, “Currently more than half of holidaymakers consult social media prior to consulting travel agencies (52 per cent).But just 40 per cent of travel agencies actually have any online presence, this clearly shows a disconnect and disproportionate amount of medium for its customers’ inclination to seek out information in this way. In India, the digital world is largely an English medium channel that is concentrated among the top 30 urban cities which is a very small number. Hence, the real effective reach of digitisation in India is limited. This is a major challenge that the travel industry has to overcome.” Stating the positives, Patel further spoke about the ‘Age of Great Change’ in the travel industry, “Uploading videos on the web and via social media is a great way to use digital media and showcase services. The travel and hospitality industries are gradually being digitalised and all parties will benefit from this,” he said.
Subramanya Sharma, Chief Marketing Officer, Cleartrip added, “To survive in today’s competitive world, travel agencies have to be quick to identify the positives that come from using social media to engage with customers and generate new business. It has become a major trend of companies for using search engines as a mode of advertising of their products. It is an unbeaten technique as both advertisers and search engines benefit by this arrangement. This is very cost effective and not time consuming at all.”
Hegde believes that the travel industry can grow leaps and bounds through digital marketing. “There are two ways in which the industry can use digital marketing—one is through content development and the other is via mobile applications. How these two will be innovatively merged is going to be interesting to watch. In India, almost every company has a mobile presence. With the mobile and its network prices going down, there is only going to be an increase in mobile usage and the best way to tap this is through effective digital marketing techniques,” he concluded.
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