The tourist is our God

by India Inc. Staff
The Tourist is our God

The old Sanskrit saying ‘Atithi Devo Bhava’, which has been loosely translated in the headline, is paying India rich dividends as foreign hotel and restaurant chains flock to the country to create jobs and provide economic opportunities to many more.

It is widely accepted that the hospitality and tourism sector is a key driver of employment and growth the world over. In the Indian context, the Narendra Modi government has identified this sector as key to generating jobs for the millions of youngsters who join the workforce every year – with sound reason.

The now disbanded Planning Commission, which has been replaced by the NITI Aayog, had calculated that the tourism and hospitality sector generates more jobs per every unit of investment than any other sector and is an ideal vehicle to provide employment to the widest array of both skilled and unskilled people even in the most remote areas of the country.

According to a report by the World Travel and Tourism Council, the Indian hospitality sector is likely to emerge as one of the largest employers in the economy – providing jobs to about 40 million people by 2019.

Market Size

Supporting the growth of the tourism and hospitality sector in India is its rising 300-million strong middle class, which, increasingly, has greater disposable income at its disposal. Domestic tourism within the country expanded 15.5 per cent to 1.65 billion (provisional) during 2016. The leading 10 states accounted for 84 per cent of this, according to Indian Ministry of Tourism figures.

Foreign tourist arrivals in India are also growing in tandem. These rose 18 per cent to reach 723,000 in September 2017. The Modi government’s initiative to issue e-visas to foreign tourists is a major contributory factor behind this increase. About 118,000 inbound foreign tourists availed of e-visas in September 2017, a jump of 71 per cent over the figure for the same month the previous year.

Experts estimate that India will rank among the world’s top five business travel markets by 2030. The spending on business travel is expected to increase three times by 2030 from $30 billion in 2015.

Foreign chains coming in droves

Almost every major international hospitality major, including the likes of Sheraton, Hilton, Holiday Inn, Le Meridien, Amanda, Satinwoods, Banana Tree, InterContinental, Accor, Mandarin Oriental, Cabana Hotels, Marriott International, Berggruen Hotels, Hampton Inns, Premier Travel Inn, Starwood and Hyatt are stepping up their investments in the country, providing stiff competition to large Indian hotel chains such as ITC, Indian Hotels Company Ltd (which runs the Taj group of hotels), East India Hotels (which runs the Oberoi chain) and Bharat Hotels (Lalit Group), among others.

Fresh investments by international hotel chains on expanding their India operations are expected to take their share of the Indian hospitality pie to 50 per cent by 2022, from the current level of 44 per cent.

This sector is among the leading drivers of the surge in foreign direct investment (FDI) into the country. Between April 2000 and June 2017, the hotel and tourism sector attracted around $10.48 billion of FDI, according to the data released by Department of Industrial Policy and Promotion (DIPP).

The Indian Brand Equity Foundation (IBEF) highlights some recent investments in the sector as the following:

  • Hyatt Hotels Corporation has outlined plans of bringing its Hyatt Centric brand to India soon along with three new hotels in Kochi, Rameswaram and Hyderabad by 2017.
  • AccorHotels, a French multinational hotel group, plans to expand its footprint in Guwahati and Kolkata by adding more 550 rooms to its portfolio of hotels in the next three years.
  • MakeMyTrip raised $330 million from Ctrip.com International Ltd, Naspers Ltd and few undisclosed investors, in a bid to withstand competition in the ticketing segment.
  • MakeMyTrip has agreed to buy Ibibo Group’s India travel business at a deal value of $720 million, thus creating India’s largest online travel firm with a value of $1.8 billion, as estimated by Morgan Stanley.
  • Yellow Tie Hospitality Management Llp, specialising in franchise management of food and beverages firms, plans to invest up to $15-20 million in five restaurant ventures of celebrity chef Harpal Singh Sokhi. The goal: have 250 outlets under these brands by 2020.
  • DineEquity Incorporation has signed a franchisee partnership deal with food services firm Kwal’s Group, in order to enter the Indian market with its breakfast chain IHOP.
  • Vatika Hotels Pvt Ltd has raised Rs 495 crore (US$ 74.25 million) in debt from Axis Bank Ltd to expand its hotels and quick-service restaurant chain besides its business centres.

Analysts estimate that the Indian mid-market hotel segment will receive about $1 billion in FDI excluding land over next five years, with major hotel chains like Marriott, Carlson Rezidor and others planning mid-market and budget hotels in Tier-II cities.

French multinational Accor Hotels, which already operates 10 of its 30 hotel brands in India – with an inventory of almost 10,000 rooms – is planning to expand its footprint in India. It recently announced that it will bring its premium chain, Raffles, to this country shortly.

Not only hotels

Many foreign restaurant and fast food chains have also made large investments in India. These include McDonalds, Pizza Hut, KFC, Dunkin Donuts, Domino’s, US Pizza and Costa Coffee.

The Indian tourism and travel industry is the country’s third-largest foreign exchange earner and accounts for more than 6 per cent of India’s GDP and almost 9 per cent of employment, according to official figures.

It has significant linkages with other sectors such as agriculture, horticulture, transportation, handicrafts and construction. The tourism industry includes travel agencies, tour operating agencies and tourist transport operating agencies; units providing facilities for cultural, adventure and wildlife tourism; surface, air and water transport facilities for tourists; and convention/seminar units and organisations.

Different strokes for different folks

The Indian tourism sector includes medical and healthcare tourism, adventure tourism, heritage tourism, ecotourism, rural tourism and pilgrimage tourism.

Medical tourism, also known as health tourism, has emerged as an important segment, owing to India’s skilled healthcare professionals and the lower cost of healthcare facilities in the country.

Wellness tourism is regarded as a sub-segment of medical tourism and it includes the promotion and maintenance of good health and wellbeing. India, with its widespread use of Ayurveda, Yoga, Siddha and Naturopathy, complemented by its spiritual philosophy, is a well-known wellness destination.

Heritage tourism is oriented towards exploring the cultural heritage of a tourist location. India is well known for its rich heritage and ancient culture. The country’s rich heritage is amply reflected in the various temples, majestic forts, gardens, religious monuments, museums, art galleries and urban and rural sites.

Due to its varied topography and distinctive climatic conditions, India is endowed with various forms of flora and fauna, and it has numerous species of birds, mammals, reptiles, amphibians and plants life on offer for tourism. Wildlife tourism includes wildlife photography, bird watching, jungle safari, elephant safari, jeep safari, jungle camping, ecotourism, etc.

Meetings, incentives, conferences and exhibitions (MICE) tourism is also one of the fastest-growing in the global tourism industry. It caters to business travellers by providing a one-stop shop for various forms of business meetings, international conferences and conventions, events and exhibitions.

The Ashok, New Delhi, Hyderabad International Convention Centre, Hyderabad, and Le Meridian, Cochin, are forerunners in the Indian MICE tourism industry, facilitating domestic and international business meetings and conferences.

Rural tourism showcases rural life, art, culture and heritage at rural locations. The existing scheme for destination development supports the development of infrastructure in rural areas. Under this scheme, the thrust is on promotion of village tourism as a primary product to spread tourism and its socio-economic benefits to rural and new geographic regions.

The Ministry of Tourism has joined hands with the UNDP for capacity building — around 153 rural tourism projects have been sanctioned in 29 states and Union Territories including 36 rural sites where UNDP offers support in capacity building.

Adventure tourism promotion measures include financial assistance to state governments/Union Territory administrations for development of adventure tourism destinations and granting of exemption from customs duty on inflatable rafts, snow-skis sail boards and other water sports equipment. Adventure tourism activities in India include mountaineering, trekking, mountain biking, river rafting and rock climbing.

Government Initiatives

The Indian government has realised the country’s potential in the tourism industry and has taken several steps to make India a global tourism hub.

In the Union Budget 2017-18, the Government of India announced some initiatives to give a boost to the tourism and hospitality sector such as setting up of five special tourism zones, special pilgrimage or tourism trains and worldwide launch of Incredible India campaign among others.

Some of the major initiatives taken by the Government of India to give a boost to the tourism and hospitality sector of India are as follows:

  • The Ministry of Environment, Forest and Climate Change, Government of India, is planning to revise India’s coastal regulation norms aimed at opening up the 7,500 km long coastline for developmental activities like tourism and real estate.
  • The Central Government has taken a number of steps for smooth transitioning to cashless mode of payment to ensure that no hardship is faced by the tourists and the tourism industry remains unaffected from government’s demonetisation move.
  • Maharashtra Tourism Development Corporation (MTDC) has come up with a unique tourism experience of visiting the open cast coal mine of Gondegaon and underground coal mine of Saoner, which are near Nagpur and part of Western Coalfields Limited.
  • A Tripartite Memorandum of Understanding (MoU) was signed among the Indian Ministry of Tourism, National Projects Construction Corporation (NPCC), National Buildings Construction Corporation (NBCC) and Government of Jammu and Kashmir for the implementation of tourism projects in Jammu and Kashmir.

In terms of incentives, a five-year tax holiday is extended to organisations that set up hotels, resorts and convention centers at specific destinations. Besides this, the government has initiated measures to bolster the sector, such as provision of visa on arrival for tourists from Finland, Japan, Luxembourg, New Zealand and Singapore, and launch of several schemes that promote rural tourism and infrastructure related with the sector.

The government has also launched campaigns such as Incredible India!, Colours of India, Atithi Devo Bhavah and the Wellness Campaign to promote the Indian tourism and hospitality industry.

Road Ahead

India’s travel and tourism industry has huge growth potential. The tourism industry is also looking forward to the expansion of the e-visa scheme, which is expected to double the tourist inflow to India. JW Marriott plans to have 175-200 hotels in India over the next four years.

Accor Hotels India has adopted a “Born in France, made in India” approach to increase its properties in India, which has reached a total of 45 hotels and is expected to increase to 55 hotels by 2017.

The future looks bright. The tourism sector will be among the early beneficiaries of continued growth, with most analysts agreeing that the Indian economy will expand at or about 8 per cent per annum over the medium term.

Tourism in India

Tourism in India

Major Attractions

Major Attractions

2018-12-31T11:54:06+00:00November 30th, 2017|2018/2017, Cover Story, India Investment Journal November Edition, Year|

About the Author: India Inc. Staff