- published in February 2012 edition of Travel Trend Today(T3), a business magazine for travel trade.
A
country blessed with diversity, both in terms of culture and geography, India
has always been a fascinating nation to tourists. Owing to its diversity it
attracts tourists from across the world and today it is one of the major global
tourist destinations. Indian travel and
tourism is one of the most profitable and the largest service industry which
contributes 6.23% to GDP (2010). According to the Planning Commission tourism
sector has been instrumental in generating foreign exchange, employment opportunities
and income. Yet this sector is far from
its potential but is expected to grow at double digit pace in next 7 years.
The
Indian tourism industry experienced a strong period of growth fuelled by sustained
economic growth, strengthening of ties with developed world via opening of
sectors. Liberalisation of international airspace, cheaper flights and the use
of the Internet as a travel tool has also contributed in the growth of this sector.
Catalysing the above is rise in global spending power of households; the
flourishing middle class and richer upper class. In the era of globalisation and economic
openness; economic cycles, exchange rate fluctuations and other macro-economic
turns affect tourism receipts. Tourism is extremely sensitive to business cycle
fluctuations in the short run, but in the long run it has its own cycle of
around 7-10 yrs in duration. In 2008-09 the business cycle trough coincided
with the tourism cycle trough which adversely impacted this sector. The current
economic environment has direct impact on the Indian tourism industry.
Cheaper Leisure,
cheaper venture
2011
has been a year of turmoil in the global economy. Debt pressure and low
credibility in many European economies has not only curtailed economic growth
across the world but has created an uncertainty about the future. In such a
lack lustre background, travel and tourism industry is rebounding globally
after its trough in 2008-09, with increase in global tourism spending by 4.5 %
in 2011. Strained personal accounts
suppressed leisure travel for the last few. However, work stress and life style
stagnation is forcing people to travel at least to cheaper destinations like
India, Combodia and Africa. This has resulted in overall growth rate of global tourism spending to 3.8% in 2011 but
is expected to go up to 4.7% in 2012 (Figure 2). Furthermore, business tourism
has experienced an upsurge due to the availability of lucrative but stressed
ventures in turmoil economies. This too is likely to continue in 2012 growing
at a rate of 6.4%.
Figure 1: Annual Growth (%) of Global Tourism Spending
Source: World
Travel and Tourism Council
Time to Tour India
India
offers a diverse range of tourism packages. It could be classified into the
following categories: Adventure, Cultural/ Pilgrim, Ecotourism and Medical
Tourism. All have witnessed a surge in demand and boost in revenues. While some of this came from the Indian
Tourism and Culture Ministry’s ‘Incredible India’ initiative, rest is
attributed to cost-effectiveness and uniqueness of India. According to India
Tourism Statistics 2010, inbound tourism makes significant contribution to the
foreign exchange reserves of the country. In 2010, foreign exchange earnings
(FEE) from tourism were US$ 14.19 billion as compared to US$ 11.39 billion in
2009, registering a growth of 24.6%.
Figure 2: Foreign exchange earning from Tourism in India
Source:
Indiastat.com and author's calculations.
India
caters to back-packers and luxury royal travellers. It is a more sort after
destination than its competitors as it is cheaper for what it offers. Arrivals
between January and September 2011 were at 4.4 million or a growth of 10%
year-on-year. This rising trend together
with depreciating rupee has already brought in 5% more inbound tourist in
December and January 2011 as compared to the same time previous year. The
current Rupee depreciation and volatility would be temporary and is likely to
be reversed by March 2012. Coupled with good winters, India seems to be a hot
tourist destination for foreign visitors. This has and is likely to cause an
upsurge in domestic holiday as people would prefer to travel within the country
rather than lose out on weak Rupees. We expect
that FTA in Q1Y12 to be up by 9% and domestic visits to be up by 11% from Q1Y11
levels.
Medical
Tourism of India has been consistently rising in the last few years due to its
low cost- high quality image. Chennai for instance happens to attract 45% of
all foreign medical students, while Kolkata attracts medical tourists from
Bangladesh, Nepal and Bhutan. Medical
tourism in India is a $1.8 Billion business increasing exponentially due to
influx in cosmetic surgery market. Following the recent trends in this Industry
we expect medical tourism to grow at an annual rate of 32 %. Q1Y12 would
experience the highest growth rate of around 41%. This is attributed to good
weather condition and cheaper treatment due to weaker rupee. Many travellers
would like to combine a holiday with medical treatment and this season is most
appropriate for that.
In
conclusion, 2012 is expected to be a brighter year for Indian travel and
tourism industry with increase in in-bound travel due to cost effectiveness and
the diversity it offers. Out-bound travel is also likely to increase due to
increase after March 2012 when inflation is controlled and economic boom
continues. Snowfall in Punjab in
January, sunshine in Goa and Kerala would continue to attract tourists.
[1] I
acknowledge Ms. Anushree Kejriwal for her contribution in making the graphs and
suggestions for the article.
nice informations
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