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Tourism & Hospitality Industry in India

July, 2013


The tourism and hospitality industry of India is thriving and growing at a fast pace. The country's travel and tourism industry is one of the most profitable industries in the country, and is credited with contributing a substantial amount of foreign exchange. India's rich cultural heritage, traditions, festivals, food, architectural monuments, hospitality and services are positive strengths for its tourism sector.

Hotels are an important component of the tourism product. They contribute in the overall tourism experience through the standards of facilities and services offered by them. With international tourism increasing year-on-year (y-o-y) and the continued strength of domestic tourism, India will see incredible opportunities for growth.

The Indian tourism sector needs an urgent image makeover and higher investment in infrastructure, including through public-private partnership (PPP) mode to capitalise on opportunities provided by overall growth in world tourist arrivals, according to the Economic Survey 2012-2013.

According to a new research report by RNCOS, “Booming Medical Tourism in India”, the medical tourism market in India has also witnessed a rapid growth over the past few years. India has become a hub for medical tourists due the growing popularity of traditional alternative therapies, such as ayurveda, therapeutic massage, yoga, and meditation among the tourists. Moreover, improvements in the medical infrastructure with a growing pool of qualified specialists, is attracting medical tourists from all across the globe.

World class treatment at almost 1/10th of the cost with no waiting time for surgeries as compared with advanced nations like the UK and the USA have been instrumental in a large number of foreign arrivals to access health care services in India. The medical tourism market in India is valued to be worth over US$ 310 million with 100,000 foreign patients coming in every year.

Market Size

The amount of foreign direct investments (FDI) inflow into the hotel and tourism sector during April 2000 to April 2013 was worth US$ 6,664.20 million, as per data provided by Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce.

Foreign tourist arrivals (FTA) during the Month of June 2013 stood at 4.44 lakh as compared to FTAs of 4.33 lakh during June 2012, registering a growth of 2.5 per cent.

Foreign exchange earnings (FEE) during the month of June 2013 were US$ 1.2 billion as compared to FEEs of US$ 1.15 billion during June 2012, registering a growth of 4.3 per cent.

The Visa on Arrival (VOA) scheme of the Government of India has registered a growth of 22.9 percent during June 2013. During the month, a total number of 1,062 VOAs were issued as compared to 864 in June 2012.

Major developments and Investments

India is one of the top tourism destinations in Asia, according to a CNN global travel survey. The country has received 3.3 million foreign tourists during the period January to June 2013.

With the emphasis shifting more on unexplored and offbeat destinations and unique experience-based itineraries, the Indian travellers are seeking to explore the most exquisite travel options. "We expect the luxury domestic travel sector to grow by 20-25 per cent. In next 5-10 years, India will see a greater amount of travel spends," said Mr Sunil Hasija, Executive Director, TUI India.

Hospitality chain Hilton is planning to have 50 hotels in India by 2016. Christopher J Nassetta, President and Global CEO, Hilton Worldwide, said, "India is the best story for the hospitality industry from the fundamentals point of view." The company is getting into the luxury segment with the launch of the 250 room Conrad in Bengaluru shortly.

Taj Group plans to set up two hotels - Taj and Vivanta by Taj - in Kunming, the capital and largest city of the Yunnan province in South-West China.

French Accor Group has become the fastest growing hospitality chain in India. The group currently has 20 hotels operational, apart from two convention centres, and 27 are in advanced stages of construction along with 23 in design stage.

India and Japan plan to strengthen cooperation in tourism sector. Both the countries will identify areas for working together and explore new opportunities in tourism sector especially in the field of human resource development (HRD) and investment in the tourism sector.