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Tourism & Hospitality Industry in India

January, 2015


Tourism and hospitality, a key sector of the Indian economy, plays a key role in the growth of Brand India and accounts for around 12.4 per cent of the total employment in India. Globally, tourism ranks fifth as an export category after fuels, chemicals, food and automotive products.

The tourism and hospitality sector in India is highly optimistic with a large number of hotel chains having lied up their expansion plans. The renewed sense of optimism comes on the back of a volatile economic environment for most part of 2014 and the sector hopes that initiatives announced by the new government, including those related to e-visas and specific funds for developing tourist circuits, would lead to good business.

The policies and changes implemented by the Government of India have been instrumental in providing the necessary boost to the Indian tourism and hospitality industry and attracting more and more foreign tourists every year.

Market Size

India is a fast growing market and sees a positive growth with respect to occupancy in hotels. The Indian hoteliers are very optimistic and tourist inflow is expected to increase in future. According to 2014 statistics shared by the Ministry of External Affairs, Government of India, the Indian hospitality sector has been growing at a cumulative annual growth rate of 14 per cent every year, adding significant amounts of foreign exchange to the economy and according to India. According to a report from HVS, the overall occupancy rates showed a marginal increase in the 2013 to 2014 fiscal year with 58.9 percent occupancy, an increase of 1.9 per cent from the previous year.

The number of Foreign Tourist Arrivals (FTAs) has grown steadily in the last three years reaching around 6.58 million in January – November 2014. Foreign exchange earnings from Tourism in terms of US dollar grew by 5.2 per cent during January-November 2014 as compared to 4.9 per cent over the corresponding period of 2013. FTAs during the Month of November 2014 were 7.50 lakh as compared to FTAs of 734,000 during the month of November 2013 and 701,000 in November 2012. There has been a growth of 2.2 per cent in FTAs in November 2014 over November 2013. FTAs during the period January- November 2014 were 6.58 million with a growth of 7.1 per cent, as compared to the FTAs of 6.14 million with a growth of 5.5 per cent during January- November 2013 over the corresponding period of 2012.

Foreign Exchange Earnings (FEEs) during the month of November 2014 were Rs 11,201 crore (US$ 1.81 billion) as compared to Rs 10,663 crore (US$ 1.73 billion) in November 2013 and Rs 9,723 crore (US$ 1.57 billion) in November 2012. The growth rate in FEEs in rupee terms in November 2014 over November 2013 was 5.0 per cent. FEEs from tourism in rupee terms during January- November 2014 were Rs 107,208 crore (US$ 17.4 billion) with a growth of 12.1 over the corresponding period of 2013.


The tourism and hospitality sector is among the top 10 sectors in India to attract the highest foreign direct investment (FDI). In the period April 2000 – November 2014, this sector attracted around US$ 7,661.6 million of FDI, according to the Department of Industrial Policy and Promotion (DIPP).

With the rise in the number of global tourists and realising India’s potential, many companies have invested in the tourism and hospitality sector. Some of the recent investments in this sector are as follows:

  • Seeking to tap the opportunity, global hospitality major Carlson Rezidor Hotel Group announced that it would have over 50 operational Park Inn by Radisson properties in India by 2024.
  • Starwood Hotels & Resorts has announced plans to have up to 65 operational properties by end of 2015 in India. It currently operates 39 hotels in India under six brands, including Luxury Collection, Westin, Sheraton, Le Meridien, Four Points by Sheraton and Aloft. It is looking to have a total of 100 hotels in its Indian portfolio by 2015.
  • Luxury hotels chain Kempinski has also announced plans to operate three new hotels in India by 2020 in Kolkata, Mumbai and Kerala if the ongoing negotiations were successful.
  • InterGlobe Hotels has announced the opening of ibis brand hotel in Delhi with plans to have 19 ibis hotels operational in India by 2016.
  • Lemon Tree Hotel Company has also announced plans to invest around Rs 4,500 crore (US$ 730.51 million) to add 5,200 rooms across India in the next four years.

Government Initiatives

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

The Minister of State of Tourism (Independent Charge), Culture (Independent Charge) and Civil Aviation, Dr. Mahesh Sharma has said that the Government has set a target to achieve one percent share in global tourism arrivals by next year. Dr. Mahesh Sharma said that to achieve this target a multi- pronged strategy is being worked out. The focus of the Government is on improving the cleanliness, hospitality and safety aspects of Tourism, he added. Also the synergy of the three Ministries i.e., Tourism, Culture, and Civil Aviation will be improved substantially to take tourism to new heights, he said.

India’s Union Home Minister Rajnath Singh, along with Dr. Mahesh Sharma, Minister of State Tourism & Culture and Minister of State for Civil Aviation launched the Tourist Visa on Arrival (TVoA) enabled with Electronic Travel Authorization (ETA) Scheme here last week.

The facility will be available at nine international airports in the country namely Delhi, Mumbai, Chennai, Kolkata, Hyderabad, Bengaluru, Thiruvananthapuram, Kochi and Goa. The TVoA enabled with ETA Scheme will facilitate nationals of 43 countries including Australia, Brazil, Cambodia, Cook Islands, Djibouti, Federated States of Micronesia, Fiji, Finland, Germany, Indonesia, Israel, Japan, Jordan, Kenya, Kingdom of Tongo, Laos, Luxembourg, Mauritius, Mexico, Myanmar, New Zealand, Niue, Norway, Oman, Palestine, Papua & New Guinea, Philippines, Republic of Kiribati, Republic of Korea (i.e. South Korea), Republic of Marshall Islands, Republic of Nauru, Republic of Palau, Russia, Samoa, Singapore, Solomon Islands, Thailand, Tuvalu, UAE, Ukraine, USA, Vietnam and Vanuatu.

Road Ahead

India’s travel and tourism industry has huge growth potential. The medical tourism market in India is projected to hit US$ 3.9 billion mark this year having grown at a compounded annual growth rate (CAGR) of 27 per cent over the last three years, according to a joint report by FICCI and KPMG. Also, inflow of medical tourists is expected to cross 320 million by 2015 compared with 85 million in 2012. The tourism industry is also looking forward to the E-visa scheme which is expected to double the tourist inflow to 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.

Exchange Rate Used: INR 1 = US$ 0.0162 as on January 21, 2015

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