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Tourism & Hospitality Industry in India

July, 2014


The tourism and hospitality industry is one of the largest segments under the services sector of the Indian economy. Tourism in India is a key growth driver and a significant source of foreign exchange earnings.In India, the sector's direct contribution to gross domestic product (GDP) is expected to grow at 7.8 per cent per annum during the period 2013-2023.

The tourism sector in India is flourishing due to an increase in foreign tourist arrivals (FTA) and a larger number of Indians travelling to domestic destinations. According to statistics available with the World Travel and Tourism Council (WTTC), revenues gained from domestic tourism rose by 5.1 per cent in 2013 and is expected to increase by 8.2 per cent this year. Hotels are also an extremely important component of the tourism industry. The Indian hospitality sector has been growing at a cumulative annual growth rate of 14 per cent every year, adding significant amount of foreign exchange to the economy.

The role of the Indian government, which has provided policy and infrastructural support,has been instrumental in the growth and development of the industry.The tourism policy of the government aims at speedy implementation of tourism projects, development of integrated tourism circuits, special capacity building in the hospitality sector and new marketing strategies.

Market size

The total market size of the tourism and hospitality industry in India stood at US$ 117.7 billion in 2011 and is anticipated to touch US$ 418.9 billion by 2022.

FTAs during the period January-June 2014 stood at 3.54 million as compared to FTAs of 3.36 million during the corresponding period of 2013, registering a growth of 4.5 per cent. FTAs during June 2014 were 492,000 as compared to 451,000 during June 2013, a growth of 11.5 per cent.

Foreign exchange earnings (FEE) during January-June 2014 stood at Rs 56,760 crore (US$ 9.44 billion)as compared to FEEs of Rs 51,587 crore(US$ 8.58 billion)during the same period last year, registering a growth of 17.9 per cent. FEEs during June 2014 were Rs 8,458 crore (US$ 1.41billion).

The number of tourists availing the tourist Visa on Arrival (VOA) scheme during January-June 2014 have recorded a growth of 28.1 percent. During the period, a total number of 11,953 VOAs have been issued as compared to 9,328 VOAs during the corresponding period of 2013.


The foreign direct investment (FDI) inflows in hotel and tourism sector during the period April 2000–March 2014 stood at US$ 7,348.09 million, as per the data released by Department of Industrial Policy and Promotion (DIPP).

The following are some of the major investments and developments in the Indian tourism and hospitality sector:

  • India's largest integrated travel company Thomas Cook's human resources and staffing arm Ikya Group plans to buy Hofincons Infotech and Industrial Services. The deal is estimated to be valued around Rs 75-100 crore(US$ 12.47-16.63 million).
  • Hyatt has announced the opening of Hyatt Raipur, its sixth Hyatt-branded property in India. "We are delighted to introduce the first Hyatt-branded hotel to Raipur. Hyatt hotels are intimate, upscale hotels that offer authentic hospitality in a vibrant environment," as per Mr Pablo Graf, Senior Vice President -Operations, Hyatt Hotels & Resorts, South West Asia.
  • Lemon Tree Hotels plans to invest Rs 1,000 crore (US$ 166.35 million) to ramp up room capacity from 2,800 to 8,000 across the country by the end of 2017. "Our ramp-up will include rooms in our upscale brand Lemon Tree Premier, mid-scale brand Lemon Tree Hotels and economy brand Red Fox," said Mr Sumant Jaidka, COO, Lemon Tree Hotels.
  • Oberoi Realty plans to bring iconic luxury brand Ritz-Carlton to Mumbai. The American brand hotel is being planned in Worli and is expected to come up by 2016 at a cost of Rs 750 crore(US$ 124.75million).
  • Movenpick Hotels and Resorts has signed a management agreement to operate a new hotel in Kochi, its third property in India. The hotel will be owned by ITMA Hotels India Pvt Ltd, an associate company of Jomer Properties and Investments.

Government Initiatives

The Ministry of Tourism has launched a web-based Public Delivery System to ease the process of filing applications by the travel trade service providers seeking recognition from the Ministry, and also to bring in transparency in granting the approvals. All the applications will now be examined, processed and approved within 45 days from the receipt of completed applications.

Tripigator.com, a travel planning engine, was launched in Delhi in partnership with Incredible India of Ministry of Tourism, on May 5, 2014. The website instantly generates personalised travel itineraries with fewer inputs and significantly reduces users' efforts by replacing 10 tabs with one tab.

The Ministry has also launched a campaign 'Clean India' to sensitise all sections of the society on the importance of cleanliness and hygiene in public places, particularly monuments and tourist destinations. The campaign is a blend of persuasion, education, training, demonstration and sensitisation of all sections of the society.

The Ministry of Tourism has been making efforts to develop quality tourism infrastructure at tourist destinations and circuits in the country. It has sanctioned Rs 4,090.31 crore (US$ 680.52 million) for a total number of 1,226 tourism projects, which includes projects related to Product/Infrastructure Development for Destination and Circuits (PIDDC), Human Resource Development (HRD), Fairs and Festivals, and Adventure and Rural Tourism for infrastructure augmentation.

Road Ahead

India is projected to be number one for growth globally in the wellness tourism sector in the next five years, clocking over 20 per cent gains annually through 2017, according to a study conducted by SRI International.

The government's decision to introduce the electronic visa facility (e-Visa) will give a much needed boost to inbound travel in India. Enforcing the electronic travel authorisation (ETA) before the next tourism season, which starts in November, will result in a clear jump of at least 15 per cent, and this is only the start, as per Mr Madhavan Menon, Managing Director, Thomas Cook India.

The hospitality sector in India expects 52,000 new hotel rooms to be added in five years (2013-17), according to a survey by Cushman & Wakefield. This will lead to a rise of over 65 per cent in total hotel inventory in India. The National Capital Region (NCR) is expected to contribute around one-third to the total expected hotel rooms supply during the period.

Exchange Rate Used: INR 1 = US$ 0.0166 as on July25, 2014

References: Media Reports, Ministry of Tourism, Press Releases, Department of Industrial Policy and Promotion (DIPP)