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Industry Structure

The tourism industry is classified into outbound, inbound & domestic and there are different opinions about the size of the industry.

Inbound Tourism

India attracted 7.70 million international tourist arrivals and $19.75 billion in foreign exchange earnings from tourism receipts in 2014. Tourism to India has seen a steady growth, year on year, from 4.45 million arrivals in 2006 to 7.7 million arrivals in 2014. The United States is the largest source of international tourists to India, while European Union nations and Japan are other major sources of international tourists.

India however receives less than 1% of international tourists annually and their average stay in India has come down to 18- 20 days. Inbound tourism is concentrated largely in the North and Rajasthan. Industry sources say that even today, the South accounts for only about 25 per cent of inbound tourism. 'The first time traveller will invariably go to Agra and Rajasthan and not venture to other locales'. However, 'with the thrust given by Kerala, it is an exotic option and Gujarat too is a destination of the future'. Less than 10% of international tourists visit the Taj Mahal, with majority visiting other cultural, thematic and holiday circuits. India has a fast-growing medical tourism sector offering world class low cost health care treatments and long term care.

Domestic Tourism

Domestic tourism within India adds about 740 million Indian travellers. Domestic tourism needs to be buoyed up. "Domestic tourists are looking at 3-4 holidays in a year in India and the concept of booking through a hotel directly is moving away and customers are increasingly coming to travel and tour agencies' avers an industry insider. The most favoured destinations continue to be the hill stations, Rajasthan and with the marketing thrust, Kerala is the largest destination for people in the West and South.

Outbound Tourism

India is now considered as one of the top outbound tourism markets in the world. India has emerged as the world’s fastest-growing outbound market in terms of percentage and in absolute numbers it is second only to China. India outbound continues to be a strong market with 20 million overseas visits, growing @ 15% annually and projected to be 50 million by 2020, with the total spending estimated at USD 28 billion.

The sluggish economy, poor sentiments, fluctuations in rupee value did not have much adverse impact on the Indian outbound tourism market and the number of Indian outbound tourists is rising year after year. Personal and official travel for holiday/ leisure, business and MICE tourism are the most significant contributors for growing outbound travel.

The Indian outbound industry will be driven by the growth of the Indian middle class and economic development. Accordingly the potential of Indian tourists travelling more and more around the world is huge. The easy availability of attractive packages, increased promotion by travel agents/ tour operators and destination countries will further drive outbound departures. As a result a growing number of countries will compete for a larger share of this huge market.

Taking note of the booming Indian outbound tourism and to encourage this wanderlust more than 60 foreign countries- including Ireland, Spain, South Korea, Indonesia, Macau (China) and Poland- have established tourism promotion offices in India. Others are making use of representations or their embassies/ cultural desks to test the waters, before taking the plunge. In order to service the growing demand in outbound business, travel agents in India are gearing up by hiring fresh talent and upgrading existing skills and knowledge to incorporate outbound tourism as part of their total product and service offering. They are either setting up small departments within the existing structure or expanding aggressively to promote new verticals or companies focused only on outbound tourism.

India Outbound Tourists Visit: Singapore has replaced Thailand and captured the number one position in 2014. Based on the current trends Singapore is expected to maintain its leading position for a couple of years. United States and China are the third and fourth popular destination for Indian travelers. Malaysia is also gaining foothold in the India outbound tourists numbers.

Indian Outbound Tourism Market / Spending: In terms of spending by Indian tourists, United States is the leader in spending in 2014. Indian tourists spending share in United States is higher than the combined share of the next top 9 tourism destination- US absorbs 30% of the total amount. Thailand and Australia stand at second and third spot in terms of outbound tourists spending by Indians in 2014. Singapore is standing at fourth spot in terms of spending by Indian tourists being followed by United Kingdom.

India as a MICE destination

India is forecast to become the world's sixth-largest business travel market by 2019, according to the Global Business Travel Association.

India is in a continual process of upgrading its MICE (Meetings, Incentives, Conferences & Exhibitions) facilities and is fast gaining its pace to become an ideal MICE destination. With the advanced technology and facilities, warm hospitality, personalized services coupled with immense natural beauty and rich cultural heritage, the goal seems to be not very far. MICE is the fastest growing section of the International tourism market. It caters to various forms of business meetings, International conferences and conventions, events and exhibitions and is capturing every big hotelier's attention.

The importance of the MICE industry lies in the fact that it converts the annual business meetings and conferences into a glamorous and enjoyable event for the delegates and attendants. Be it a meeting to bring people together either from within one company or from a broader spectrum or an international conference or product launch party or exhibition, MICE tourism finds itself being inevitable in all the occasions. While India's major convention centers and hotels meet business tourism requirements, the biggest benefit to the buyer is India itself. MICE market travelers, as well as individual business travelers, have the opportunity to explore diverse activities in conjunction with their business agenda.

To grow the business tourism in India, the country boasts of some world-class convention centres. There are multiple plans on the anvil for more world-class convention centers, airports that contest with the best in the world and efforts to team the famous Indian hospitality with customization as per a visitor’s requirement. According to Peter Kerkar, director of Cox & Kings, the move to develop an international convention centre in Goa would attract huge conventions and conferences that do not consider India at the moment.

Major MICE destinations in India are Agra, Chennai, Cochin, Delhi, Hyderabad, Noida amongst others. Convention centers in several cities accommodate groups of up to 5,000. Delhi and neighboring Noida, long time convention gathering points, both feature expo centers, as does Chennai on the east coast. India's centrally-located technology center, Hyderabad, features a facility that targets the MICE market. Even much smaller Agra, home to the Taj Mahal, entered the market with new meetings facility, as has Cochin, a tropical city bordered by the enchanting backwaters area of Kerala state.

Take a close look at INDIA as your next MICE destination. India CAN deliver !!! For details feel free to contact us.

Expert Opinions

According to one travel expert, "India is a country that is either loved or hated by foreign travelers; there is no middle path. Though there is lack of hotel accommodation, air travel, space and sanitation, it still is a great destination."

Says Mr M Narayanan, Managing Director, Tourism Finance Corp of India (TFCI) "Tourism is no more being seen as the rich man's past time. An increasing number of ordinary people are now going on holiday tours giving a fillip to the industry's growth."

Says Mr. Kavi Ghei, Director, TRAC Representations, "The government is concentrating on developing domestic tourism as disposable incomes in the hands of Indians are on the rise. There is a variety of options available for different strata of tourists- right from the affluent to those with on a shoestring budget. What has been lacking is an effort to market this spectrum of possibilities in the right way to potential foreign tourists. The government is now setting this wrong right by putting across these positives in the international marketplaces with the help of professionals. The ‘Incredible India’ campaign is a step in this direction."

Says Dr Ramesh Kapur, MD, Radisson Hotels, Delhi, "India should be aiming at getting the kind of tourist inflows that countries like Singapore are attracting". Dr. Kapur is far from satisfied.

According to Mr. L. Prithviraj Singh, Chief Operating Officer-Leisure, Cox & Kings (India), "Around 2.5 million tourists are coming in while outbound is still a nascent market. The potential for growth in the latter segment is much more than for incoming tourists.'' In fact, the recent rise in airline seating capacity to India and increase in hotel rooms have spelt greater affordability for the foreign traveller.

"Unfortunately, foreign agents look upon India as a troublesome country - in terms of operations not in terms of safety. We have also got into this trap of India becoming an expensive destination - added to an expensive air fare - as there is `no open sky' policy. The entry points are the metros where hotel tariffs are very high. Basic infrastructure too is a problem.''

"One has to really bring tourism to its potential. We have not even scratched the surface. The need is to evolve a long term policy. Disinvestment of Government stake in Indian Airlines, Air India and ITDC in the long term will be a good thing and the privatised hotels will open up a new level of affordable hotels.'' says Mr. Singh, adding, "The problem in India is the absence of `open sky' policy. If there is one, prices will drop, capacities will improve and once that happens, all the other problems will be sorted out.''

Mr. Sunil Gupta, Head- Leisure Travel, Thomas Cook (India) says, "Inbound tourism is growing at a consistent CAGR of 6 per cent annually while outbound tourism is growing at 15 per cent year-on-year".

Mr. Ranjit Malkani, Chairman & Managing Director, Kuoni Travel India (KTIL)- "Growth in inbound travel so far has been due to tourists from West Asia, Latin America and Japan. The trend in European arrivals has been flat, though a 5-6 per cent growth is expected courtesy the rise in airline seat capacity.''

Industry Players

Among the leading players, Kuoni Travel (India) (KTIL) is the country's biggest, fully owned by the Zurich-based Kuoni Travel Holding. The company acquired Tour Club which caters to the outbound segment from West Asia to India. Inbound travel from West Asia has been growing at 15 per cent, among the highest growth rates in the segment. KTIL had already spent Rs. 200 crores in earlier acquisitions, which included travel majors SOTC (Kuoni's route to an Indian presence) and SITA World Travel.

Cox & Kings India too has an open mind on acquisitions both in the domestic and overseas markets. "We will look at niche companies overseas as well which we feel we can develop.'' The company claims the second largest share of the domestic pie after Kuoni in inbound and outbound travel. "What separates us is the charter segment which, for example, comes into Goa. We set up a subsidiary- Far Pavilions - to cater to this segment and that has made a fair amount of progress.''

Thomas Cook (India) Limited (TCIL) says increased investment in marketing leisure travel and expansion of distribution network is expected to yield significant benefits in the peak travelling period between May and July. There has also been continued investment in building businesses in Sri Lanka and Mauritius along with completion of back-office implementation of SAP, call centre infrastructure and telecommunication network. Earlier, TCIL was mainly in the business of forex dealing and travel and tours. "The domestic sector needs more focus and we realise that the customer wants quality service. Reliability is a major issue. A focus area for us is A/C rail charters where we book and pay for an A/C railway coach and tourists can visit different cities/ locations."

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