T3 site is part of the Informa Markets Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Log in Register

Login to your account

Don't have an account yet? Register now!
Username *
Password *
Remember Me

Create an account

Fields marked with an asterisk (*) are required.
Name *
Username *
Password *
Verify password *
Email *
Verify email *

Looking back, looking ahead!

2017 has been a roller-coaster year mainly due to GST for tourism in India. Industry awaits a better growth in 2018

The year 2017, has indeed been an eventful year for the tourism and hospitality industry. There have been lots of bullish movements with the Government implementing the Regional Connectivity Scheme (RCS), investment into development of circuits and tourism infrastructure under PRASAD scheme, and introduction of ‘Paryatan Parv’, to showcase tourism and culture of the country, have gone extremely well with the industry. Also this year the Government introduced the Medical and Wellness Tourism policy which was a very important move in promoting India as a medical and wellness hub. Even the cruising segment has witnessed a boost, with Ministry of Shipping now focusing to develop major ports in India and open it up for tourism. Meanwhile, the Government has also taken some steps which the industry sees as a growth deterrent, at least as of now but could emerge as a growth driver in the long run. The implementation of GST has been a historic move and was necessary for the nation, but for the tourism and hospitality industry it can lead to a stunted growth if not reworked upon.

Despite these policy measures, inbound arrivals witnessed a upward surge. According to the latest available statistics from the Ministry of Tourism, the Foreign Tourist Arrivals (FTAs) during the January - October 2017 were 7.9 million with a growth of 15.8 per cent over same period of the previous year. This growth trend is much higher than global average growth which stands at 4 -5 per cent. Moreover, the image of India as a tourism destination also got a shot as India jumped 12 places to 40th rank globally in travel and tourism competitiveness list by World Economic Forum. India has seen continued growth in international arrivals over the past 15 years, reaching the 8 million mark in 2015, WEF said, adding the country’s vast cultural and natural resources, and its price competitiveness advantage also attracted international tourists.

Also, the inclusion of NRIs among international tourists enabled India to jump 16 places in the revised World Tourism Organisation (UNWTO) rankings to settle at 24th for 2014 and 2015. Earlier, it was ranked 41st and 40th in 2014 and 2015, respectively, as per the global ranking. So far only the figures of foreign tourist arrivals (FTAs) were compiled in India. However, now India has started compiling the data arrivals of Non-Resident Indians (NRIs) also. “Due to this inclusion, India’s improved rank reflecting the true and comparable scenario has now been acknowledged by the UNWTO,” the release said. With this inclusion, the share of India in the ITAs has also increased from 0.68% (based on FTAs) to 1.12% in 2015.


The year that was

2017 can be termed as a melodramatic year where there were surprises for every segment. The hospitality industry has witnessed significant growth in terms of occupancy, steady ARR, and growth in MICE. The tour operators have seen a growth in outbound as well as the domestic travel market has boomed. Interestingly, this year has been a fruitful year for corporate travel and has also fuelled growth into the newly evolved Bleisure segment. On the contrary, some of the policies which may have a positive effect on the long run have hit the industry this year. The implementation of GST has majorly impacted the industry, for some segments negatively. GST for the tourism and hospitality segment is much higher as compared to neighbouring destination, which can seriously impact the inbound traffic.

Peter Kerkar, Group CEO, Cox & Kings said, “The domestic and outbound tourism has grown quite significantly. The inbound tourism could have done better. However, other arms such as the outbound MICE and Business Travel have grown in the higher double digits.”

Even the airline industry is on a growth trajectory. But, some airlines feel that the excess capacity in the market will lead to lower profits in 2018. Mark Sutch, Regional General Manager, South Asia, Middle East and Africa, Cathay Pacific Airways said, “The world of travel has evolved significantly, and it’s showing no signs of slowing down in the year to come. We expect to see a growth in “bleisure” with travellers merging business and leisure trips. Consumers continue to want greater choice, certainty, and value for money in all aspects of their travel, be it booking a hotel or choosing an airline. On the business side, the Indian aviation market holds tremendous potential for growth. From an airline perspective, excess capacity will place downward pressure on yields, pushing airlines towards lower profits and increased losses. Until the market catches up with capacity growth, we can continue to expect yield to remain under pressure.”

This year there has been a significant growth in the corporate travel segment. Event the SMEs are now booking through the organised segment. Rajesh Magow, Co-founder and CEO-India, MakeMyTrip said, “The travel and tourism industry is on a high growth path-all thanks to the industry effort and various policy initiatives to promote the sector. The growing demand is a clear consequence of the growing consumer income and the behavioural shift among consumers to make travel central to their lifestyle. Corporate travel is another reason why the travel sector is seeing a massive upswing. Self help corporate travel tools are adding to the ease and convenience for SMEs and start ups to take up travel more frequently to grow their business. Pilgrimage travel is another area where we have seen significant uptick.”


Favourable policies

In terms of economic policies, in the last fiscal year the lightning struck twice at the same place. First the form of demonetisation which was announced in November 2016 and next the historic implementation of GST. Both these policies have impacted the tourism and the hospitality segment, but the negative impact is just a temporary phase. These policies will in fact drastically reduce the unorganised sector. Also there was a liquor ban which was announced in this year which had a major impact for a few months before it was revoked. “These are transformational changes that have impacted the tourism industry. The demonetisation of 2016 and the implementation of the GST in 2017 will go a long way in lifting the fortunes for the organised players in the travel industry. In some states, there is a clamour to restrict alcohol consumption. However, the states should be prudent in their approach and ensure that it does not impact the travel and tourism industry,” Kerkar said.

To tackle the impact of demonetisation, some of the players have implemented various new online systems. Industry feels that demonetisation will only grow the digital payment space.

Ashish Dhruva, VP Marketing, Cleartrip, “At Cleartrip, we have been pioneering the comprehensiveness of online payment options. We offer one of the most exhaustive sets of payment options and have created benchmarks in the travel world with payment related innovations like stored card solution- Expressway. Consequently, our dependency on non-digital payments has been minimal. Within digital payments, the share of transactions through wallets has increased by post demonetisation. Overall we didn’t have any impact of demonetisation. We believe that progress with digitisation will only improve. Travellers today are looking at creating experiences out of the places they visit.”

Some of the industry experts feel that the liquor ban policies in a few states of India will disturb the inbound numbers. Hector D’souza, President, L'orient Travels said, “I personally feel liquor ban in many parts of India does not bode well for inbound tourism. More than the liquor, I feel it’s the word ‘ban’ that creates uneasiness among visitors. Taxation is an issue especially for first class hotels offering boarding & lodging. This has been generating debate, much before GST began. The net effect is neighbouring countries stand to benefit from this. As regards to demonetisation, a breed of travellers has been created, post the ban. This is the double income, nuclear family high earning segment in the range of 28 to 45 years with fair amount of disposable income, weighted towards spending for experiencing, will bargain hard for the best deal; on the down side time is a constraint - thereby resulting in shorter but more frequent breakaways.”

Segments like cruising have picked up steam in India market. Government is now focusing to improve the port infrastructure and are looking for ways to make this segment seamless. Earlier this year, the Ministry of Shipping, in conjunction with the Ministry of Tourism, had announced reforms to the regulatory processes governing the cruise tourism industry in the country. The objective of the ministry is to revolutionise this industry which has a high employment generation potential, by simplifying the rules and procedures pertaining to various aspects of cruise port operations like security, immigration, and customs. Also the Government is now investing huge amount into development of existing major ports with world class amenities.

Ratna Chadha, Chief Executive, TIRUN, India representative of Royal Caribbean Cruises said, “Government is diligently working on improving the ports and infrastructure and is serious to make cruise tourism a success in India. Major ports are set to cut berthing charges for cruise ships and there will be e-landing and e-visa facilities for the tourists. This year, the country witnessed 60,000 cruise tourists through 55 ships and there is a potential to increase it to 30 lakh cruise tourists in the coming years. As we all know that the cruise business is cyclical, we hope for promising years ahead.”


Expectations from 2018

With a more optimistic vision, the industry is anticipating a better year ahead. With the economic policies steadying, next year should be a smooth year for the industry.

Speaking about the trends for 2018 Ankur Bhatia, Executive Director, Bird Group & Member of CII’s Core Committee on Aviation said, “2018 for aviation, travel and hospitality industry will be a promising one as domestic travel and MICE picks up resulting in business growth. With the upcoming Union Budget for 2018-19, we are looking forward to reforms supporting the industry. While the government is aggressively marketing brand India globally, it is imperative to focus internally and address issues around taxation, infrastructure and inconsistent regulations imposed by various states to achieve the potential of these industries. We also hope the Union Budget will empower each of the industries to take full advantage of varied opportunities ahead.”

Hotels look at 2018 as a positive year for growth. The power of domestic market has helped hotels to have a better occupancy rate and a slightly better ARR compared to previous year. This year will also witness a growth in millennial travel which will boost the demand for hotels.

Rishi Puri, Vice President, Lords Hotels & Resorts said, “We anticipate that in 2018, we’ll see a sharp increase in travellers within the country which will be driven by the millennial. The destinations will no longer be limited to the popular choices but also will include the lesser explored places including smaller cities and towns that are connected by flights. The millennial’ decision will mostly be based on the perception of value which includes a new experience, little known history about the destination, and its food and culture against the cost of such an expedition. The year 2018 looks promising and ideally would have been something 2017 would have witnessed but for the unfortunate series of events in the year.”

Echoing similar opinion Sanzeev Bhatia, VP & GM, The Metropolitan Hotel & Spa said, “Since there will not be much increase in inventory in Delhi, we are hopeful of a better business in Delhi. The trends of increased tourism will continue in 2018 resulting in better ADR and occupancy in hotels. MICE and corporate business is also expected to grow multifold in 2018. So in total we will be expecting an excellent growth in terms of business for Delhi Hotels.”


Increasing Horizon

Indian outbound market has matured leaps and bounds in the last decade. Now travellers are not only looking to visit destinations for sightseeing, but are looking for a unique experience. This has given rise to demand for lesser known or non-traditional destinations. The trend continues and travellers are looking for the lesser explored paths.

Magow said, “While Goa, Kerala and Manali continue to remain popular around the year. We expect higher growth across off-beat locations like Serbia and Croatia amongst others. Cities like Shillong, Pondicherry, Neyveli which are being connected through airports due to Civil aviation ministry’s Udaan scheme will also see an increasing traction amongst travellers.”

Another trend in 2018 will be that there will be travellers who will repeat destinations, but only for novel experiences. People will travel for more for niche products apart from new destinations.

Kerkar said, “For many travellers, it's the experience that matters rather than a destination. For example, people will travel to the UK for the second or third time to seek newer experiences such as wine tours, castle holidays or just enjoy the countryside on self-drive vacations. It does not mean that newer destinations will not be explored. South America, Eastern Europe, East Africa, the Balkans are the new emerging destinations for the Indian traveller.”

In terms of cruising travellers are now exploring various new far away destinations. With the growing popularity of this segment short fly-cruising to countries like Singapore and Hong Kong have witnessed growth. In 2018, long-haul destinations like Alaska, Caribbean will see demand from India market. Chadha added, “Singapore and HongKong are fast becoming hubs for cruising in India. We are the currently largest source of business for Singapore cruises from India. With our new builds, we are witnessing a growing demand for cruises to Alaska, Europe, and the Caribbean.”

Login to post comments



Informa Markets Travel Portfolio

  • slider-logo4.png
  • slider-logo1.png
  • slider-logo2.png
  • slider-logo3.png

  1. Events
  2. Webinars


From: 02 Nov 2020 To: 04 Nov 2020

FITUR 2020

From: 22 Jan 2020 To: 26 Jan 2020

MATKA 2020

From: 17 Jan 2020 To: 19 Jan 2020
Webinar Archives
  1. Appointment