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Tourism and Hospitality

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Tourism and Hospitality

July, 2012


Tourism and Hospitality in India is the largest service industry contributing up to 6.23 per cent to the National Gross Domestic Product (GDP) and providing 8.78 per cent of the total employment opportunity in India.

India’s travel and tourism industry is one of the most profitable industries in the country, and also credited with contributing a substantial amount of foreign exchange. Indian tourism offers a potpourri of different cultures, traditions, festivals, and places of interest.

The country will definitely be one of the favourite tourist destinations from 2009 to 2018, according to world travel and tourism Council (WTTC). Further, the Travel and Tourism Competitiveness Report by World Economic Forum, has ranked India at the sixth place in tourism and hospitality.

Key segments of the Indian tourism and hospitality industry are:

  • Accommodation and catering
  • Transportation
  • Attractions
  • Travel agents
  • Tour operators

Market Size

The tourism and hospitality sector’s direct contribution to the GDP in 2011 was estimated at US$ 32.7 billion. It registered a compound annual growth rate (CAGR) of 13 per cent during 2006-11. Total contribution increased to US$ 76.7 billion in 2011 from US$ 56.3 billion in 2009. The total contribution comprises direct, indirect and induced contribution to the GDP.

Foreign Tourist Arrivals (FTAs) during the Month of April 2012 was 452,000 as compared to FTAs of 438,000 during the month of April 2011 registering a growth of 3.3 per cent. Foreign Exchange Earnings (FEE) during the month of April 2012 were Rs 6745 crore (US$ 1.2 billion) as compared to Rs 5724 crore (US$ 1.02 billion) in April 2011. The growth rate in FEE in rupee terms in April 2012 over April 2011 was 17.8 per cent, according to the data released by the Ministry of Tourism.

In India, medical tourism is a sunrise sector valued at more than US$ 310 million. Currently, India receives more than 100,000 foreign patients a year. The number of medical tourists is anticipated to grow at a CAGR of over 19 per cent during the forecast period to reach 1.3 million by 2013.

The Indian hospitality industry, on the other hand, is projected to grow at a rate of 8.8 per cent during 2007-16, placing India as the second-fastest growing tourism market in the world.


Foreign direct investment (FDI) of up to 100 per cent is permissible in the sector through the automatic route. The term hotels include restaurants, beach resorts, and other tourist complexes providing accommodation and/or catering and food facilities to tourists. Tourism related industry include travel agencies, tour operating agencies and tourist transport operating agencies, units providing facilities for cultural, adventure and wild life experience to tourists, surface, air and water transport facilities to tourists, leisure, entertainment, amusement, sports, and health units for tourists and convention/seminar units and organisations.

According to data released by the Department of Industrial Policy and Promotion (DIPP), the hotel and tourism sector has attracted FDI worth Rs 14,770.58 crore (US$ 2.64 billion) between April 2000 and January 2012.

Some of the major investments in the sector are as follows:

  • Online travel firm, Yatra has acquired Travelguru from US-based Travelocity Global. "We will invest Rs 10 crore (US$ 1.8 million) in Travelguru for building up its brand and consumer presence," according to Dhruv Shringi, Co-Founder and CEO,
  • Berggruen Hotels, a mid-market business hotel chain funded by US-based Berggruen Holdings, plans to invest Rs 450 crore (US$ 80.56 million) in new projects across India. The company operates under the brand Keys Hotels and aims to add 2,300 rooms over the next 18-24 months
  • Dutch pension fund (PF) manager, APG Group plans to invest Rs 650 crore (US$ 116.36 million) to buy 6 per cent stake in Delhi-based mid-market hotel Group, Lemon Tree Hotels. The Group would form a joint venture (JV) with Lemon Tree to build 35 hotels in the country in four years
  • UK-based Eaton Smart Hotel has started its operations at Terminal 3 (T3) of the Delhi International Airport, making it the first transit hotel in India. Eaton, the 93 room property, is being managed by the Langham Hospitality group