Click Here Project Reporter QClick Here Digest 2010Click Here Property 200

Focus: Tourism & Hospitality


The state of Indian economy is much better compared to other countries of the world. The Gross Domestic Product improved to 8.5 per cent in 2010-11 from 8 per cent in 2009-10 due to better farm output and construction activities and fi nancial services performance. The growth offered is immense in many of the sectors, companies from all over the world are making a bee line to set up shop in India. With the expansion of growth avenues, people from different parts of the world are landing here to explore the business and travel opportunities. Foreign tourist visits to the country registered an impressive growth of 24.2% in the year 2010. Similarly domestic tourist visits also showed a growth of 10.7 % last year. The number of domestic tourist visits to the States/ UTs during the year 2010 was 740 million as compared to 669 million in 2009 and 563 million in 2008. Due to more infl ux of people the prospects of the Tourism and Hospitality industry is growing manifold.

The Ministry of Tourism(MOT) has made consistent efforts to develop quality tourism infrastructure at tourist destinations and circuits and has identifi ed 38 mega tourism projects, out of which 26 have been sanctioned till 4th February, 2011. The efforts for revving up the existing tourist spots and identifying the newer ones needs a big push from the government. The current efforts are falling short compared to the country’s potential in this regard.

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Facts & Figures

Foreign Tourist Arrivals (FTAs) during the Month of July, 2011 was 4.98 lakh as compared to FTAs of 4.52 lakh during the month of July, 2010 and 4.33 lakh in July, 2009. There has been a growth of 10.1% in July, 2011 over July, 2010 as compared to a growth of 4.5 % registered in July 2010 over July, 2009. The 10.1% growth rate in July 2011 was higher than 7.2% growth rate observed in June, 2011. FTAs during the period January-July 2011 were 34.17 lakh with a growth of 10.8 %, as compared to the FTAs of 30.85 lakh with a growth of 8.2 % during January-July 2010 over the corresponding period of 2009. Foreign Exchange Earnings (FEE) during the month of July 2011 were ` 7116 crore as compared to ` 5444 crore in July 2010 and ` 4983 crore in July 2009. The growth rate in FEE in Rupee terms in July 2011 over July 2010 was 30.7 % as compared to 9.3 % in July 2010 over July 2009. FEE from tourism in rupee terms during January-July 2011 were ` 42279 crore with a growth of 14.8 %, as compared to the FEE of ` 36817 crore with a growth of 24.1 % during January- July 2010 over the corresponding period of 2009. FEE in US$ terms during the month of July 2011 were US$ 1603 million as compared to FEE of US$ 1163 million during the month of July 2010 and US$ 1028 million in April 2009. The growth rate in FEE in US$ terms in July 2011 over July 2010 was 37.8 % as compared to the growth of 13.1 % in July 2010 over July 2009. FEE from tourism in terms of US$ during January-July 2011 were US$ 9414 million with a growth of 17.6%, as compared to US$ 8005 million with a growth of 32.6 % during January-July 2010 over the corresponding period of 2009. The Domestic Tourist Visits (DTVs) in India increased from 563 million in 2008 to 740 million in 2010.

Promoting Tourism

The Ministry of Tourism (MOT), Government of India, as part of its publicity, promotional and marketing activities, releases print, electronic, online and outdoor media campaigns in the international markets, under the Incredible India brandline, to showcase India’s tourism potential and to increase inbound tourism to the country. Development and promotion of tourism including the identifi cation of new tourism destinations and setting up of Mega Tourism Parks for holding the tourists for a longer period as well as adopting public – private partnership model for their development are primarily the responsibility of the State Governments/Union Territories (U.T) Administrations. MOT has appointed a National Level Consultant (NLC) to develop action plans for setting up of Tourism Parks including their locations and integrated development of tourist destinations/circuits in consultation with States/UTs.

Medical Tourism

The Tourism ministry is leaving no stone unturned and has kicked off number of road shows abroad to promote medical/health tourism in India which is estimated to grow at a rate of 35 per cent. Due to low cost and advanced medical services available in India, more and more people from abroad are coming to India. It is estimated that 63,000 foreign tourists have arrived from US, Denmark, Turkey, Iran, Afghanistan and Pakistan for dental and other surgeries, knee transplants and even cosmetic surgery.

Rural Tourism

The Ministry of Tourism has so far sanctioned 169 rural tourism sites in 28 states/Union Territories. The scheme of rural tourism was started by the Ministry in 2002-03 with the objective of showcasing rural life, art, culture and heritage at rural locations and in villages, which have core competence in art and craft, handloom, and textiles as also an asset base in the natural environment. The intention is to benefi t the local community economically and socially as well as enable interaction between tourists and local population for a mutually enriching experience. The promotion of village tourism is also aimed at generating revenue for the rural communities through tourist visitations.

Hospitality Sector Potential

As the number of hotels in all the categories including fi vestar, four-star, three-star and limited service hotels are not adequate in India. The Indian market has got lot of potential in all segments of the hospitality sector. The metro cities are the hot favourites as such for the hospitality majors, but now even Tier-I, II and III cities are picking up and cities like Gurgaon, Ludhiana, Lucknow, Chandigarh, Guwahati, Bhubaneswar, Jaipur, Ahmedabad, Surat, Nagpur, Indore, Goa, Vishakapatnam, Mysore, Coimbatore and Kochi are offering more opportunities for the Tourism and Hospitality sector to set up facilities. The Tier-II and III cities are expected to drive growth and investment in India after the metros. Huge unexplored potential exists in these areas.

Budget v/s Luxury Hotels

The middle income groups are the dominant segment as of now in the Indian market. Hospitality industry has identifi ed the growth potential of this segment and is fast moving towards setting up of budget hotels instead of just setting up more of luxury hotels. Samhi Hotels Pvt Ltd is planning to raise more than US$100 million for setting up hotels in India mainly in the mid-market segment. Hotel Leelaventure Ltd is planning to launch its mid-market property by the end of fi nancial year. InterContinental Hotel Group has collaborated with Duet India Hotels Group, to develop and manage its budget hotel Holiday Inn Express in the Indian market. Hotel Marriott International Inc. has also signed an agreement with Samhi Hotels, New-Delhi based company, to launch a mid-market brand Fairfi eld by Marriott. The capex for mid-market properties is less compared to setting up luxury hotels and this segment offers huge opportunities for growth.

Areas of Concern

The Ministry of Tourism has been releasing ‘Atithidevo bhava’ – Social Awareness Campaigns to sensitize various stakeholders in the tourism industry and the general public, inter alia, about their conduct and attitude towards tourists as well as issues relating to hygiene and cleanliness and to reinforce the spirit of ‘Atithidevo bhava’. To ensure safety and security of tourists, Ministry of Tourism has advised all the State Governments/Union Territory Administrations to deploy Tourist Police in the States/Union Territories. Some of the State Governments have deployed tourist police in one form or the other. In order to meet the huge skill gap in the hospitality industry, the Ministry has adopted a multipronged strategy which includes strengthening and expanding the institutional infrastructure for training and education. For this purpose, Ministry of Tourism has decided to support creation of new Institutes of Hotel Management (IHM) and Food Craft Institutes (FCI) in States besides providing fi nancial assistances for modernization and capacity enhancement of existing IHMs and FCIs. Under its ‘Hunar Se Rozgar Tak’ training programme for creating employable skills in the hospitality sector, the ministry has trained 4960 youth by 31st December, 2010 against the target of 5500 for 2010-11.

Future Outlook

The WTO (World Travel Organization) predicts that India will receive 25 million tourists by year 2015. Global hospitality majors are positive about the Indian Hospitality sector growth. As per recent news reports, Starwood Hotels & Resorts Worldwide has said that it expects India to become its third biggest market by 2015 as the expansion is happening faster than planned earlier. They are targeting to set up 100 hotels in India by 2015. The general outlook for the hotel sector is stable and consistent. As per FHRAI, the country currently has over 200,000 hotel rooms spread across hotel categories and guest-houses and is still facing a shortfall of over 100,000 rooms. According to industry sources, India will add more than one lakh hotel guest rooms to its inventory over the next fi ve years. A CII-McKinsey report projects that earnings through medical tourism would go up to $2 billion by 2012. Apart from tapping traditional tourism avenues. New areas such as Rural tourism, Eco tourism, Medical tourism, Adventure tourism, Cruise and Heliport tourism are identifi ed for future growth.

Sandeep Sharma,
Executive Editor / Project Reporter

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