Tourism Sector in India: View from multiple aspects.

Service sector mainly includes Trade, hotels, and restaurants, Transport, storage, and
communications, financial services (banking and insurance), Real estate and business
services, public administration and defense services, other services.
Services sector contributes over 50 per cent to India’s GDP. While Covid-19 pandemic has
had an adverse impact on most sectors of the economy, the services sector has been the worst
affected as its’ share in India’s GVA declined from 55 per cent in 2019-20 to 53 per cent in
2021-22.1 Within the services sector, the effect of Covid-19 has been varied. While non-
contact services such as information, communication, financial, professional, and business
services have remained resilient, the impact has been much severe on contact-based services
such as tourism, retail trade, hotel, entertainment and recreation, etc.

This assignment is an overview of tourism sector.

The travel and tourism industry has emerged as one of the largest and fastest growing
economic sectors globally. Its contribution to the global Gross Domestic Product and
employment has increased significantly. The Indian tourism industry has emerged as one of
the key drivers of growth among the services sector in India. Tourism in India is a sun rise
industry, an employment generator, a significant source of foreign exchange for the country
and an economic activity that helps local and host communities. Rising income levels and
changing lifestyles, development of diverse tourism offerings and policy and regulatory
support by the government are playing a pivotal role in shaping the travel and tourism sector
in India.
Although, The World Economic Forum’s (WEF) ranked India 54th position (down from
46th in 2019) with a score of 4.1 in its Travel and Tourism Development Index 2021, but
still, India remains the top performer in South Asia.

Countries in the Global Ranking:

Rank Country Score

1 Japan 5.2

2 United States of America (USA) 5.2

3 Spain 5.2

4 France 5.1

5 Germany 5.1

54 India 4.1
Growth of Tourism in India – Key Drivers

The growth of the Indian travel and tourism industry is being impacted by several industry
drivers:
1. Healthy economic growth and rising income levels- Favourable growth in the Indian
economy, rise in middle class population (National Council of Applied Economic
Research (NCAER) Study: number of middle-class households expected to increase
from 31.4 million in 2010 to 113.8 million by 2025-2026) and increasing levels of
disposable income with increased affinity for leisure travel are some of the driving
forces.
2. Changing consumer lifestyles- With more than 65 per cent of the Indian population
falling in the age group of 15-64 years, Indian travelers are more open to holidays and
are keen to explore newer destinations.
3. Diverse product offerings -Diverse tourism offerings in India such as rural, medical,
pilgrimage, adventure and various other forms are driving tourism growth.
4. Easy finance availability- Increased adoption of credit culture and availability of
holidays on Equated Monthly Installments (EMI) is another growth driver
5. Host nation for major international events- India is fast emerging as the preferred
nation for hosting of major international events such as the Commonwealth Games
held in 2010. Meetings, Incentives, Conventions and Exhibitions (MICE) tourism is
on a rise on account of increased business travel in India.

Key Challenges in Tourism Sector in India

1) Impact of Coronavirus on Global Tourism - The coronavirus health crisis has hit
the global economy hard and the tourism industry most of all. The World
Tourism Organization (WTO) is expecting a drop in tourism revenue of 300 to
500 billion dollars in 2020, up to one-third of the 1,500 billion generated in 2019.
Although the coronavirus crisis has short-term destructive effects on the tourism
industry, it is challenging the practices of the tourism industry and is drawing
attention to a succession of issues like poor risk management in the travel
industry, viral globalization, and travel of diseases with tourists to cross borders.
This is also an opportunity to rethink the tourism industry from a critical
perspective. There are several areas for potential transformation and move
towards responsible, sustainable, and socially innovative tourism.

2) Cost of Vacation & Inflation- One of the major challenges that the tourism
industry faces is the fluctuations in currency exchange rates. The inability to
know the value of a currency means that long-range tourism prices are especially
hard to predict and the fallout from this monetary instability is already impacting
multiple tourism support systems. The tourism industry is seasonal in nature and
 does not guarantee round the year flow of income which hampers the overall
business setup.
Inflation is rising at an alarming and restaurants have had to raise prices or lower
their service. Transportation companies have been hard hit. The airline industry is
especially vulnerable. Airlines depend on both the food industry and the fuel
industry. Already on the margin, airlines can do nothing more than cut services
and raise prices. The result of such a situation keeps the leisure travelers stay
away from expensive vacations which further hits the overall tourism sector.

3) Tax and Tourism- The tourism industry is a heavily taxed sector in some
countries. Various taxes are levied across the entire industry right from tour
operators, transporters, and airline industry to hotels and these include service
tax, luxury tax, tax on transportation, tax on aviation fuel, and various taxes on
transportation. In addition, these tax rates tend to vary across different states in
the country. All these taxes are finally passed on to the travelers in one or the
other way thus hampering its growth.

4) Risk & Security of Tourists- Safety will always be a paramount consideration for
the traveler. Security has been a major problem as well for the growth of tourism
for a number of years. Improper law and order, terrorist attacks, political unrest
adversely affect the sentiments of foreign tourists. Despite the economic growth,
tourism is vulnerable to natural and man-made crises, unexpected events that
affect traveler confidence in a tourist destination, whether the risk is real or
perceived. Already the events of the twenty-first century have tended to focus
attention on security risks to travel associated with terrorism and political groups.
Tourism is also affected also by natural disasters such as pandemics, tsunami,
earthquakes, floods, volcanoes, and avalanches. A crisis can be defined as any
unexpected event that affects traveler confidence in a destination and interferes
with the ability to operate normally.

5) Skilled Human Resources- The challenges facing the tourism sector will only be
met successfully only by a well-educated, well-trained, bright, energetic,
multilingual, and entrepreneurial workforce who understands the nature of
tourism and have professional training. High quality of professional human
resources in tourism will allow enterprises to gain a competitive edge and deliver
added value with their service.

6) A high-quality tourism workforce can only be achieved through high standards of

contemporary tourism education and training. Tourism education and training
involve the communication of knowledge, concepts, and techniques that are
specific to the field of tourism, but which draw upon the core disciplines and
themes of areas such as geography, finance, and marketing.
 The futures of tourism are exciting and tourism is a difficult sector to predict.
Each of the drivers of the future that we have outlined above is influential in its
own right, but when combined they deliver a powerful force shaping the futures
of tourism.

Trends showing Inbound Tourism: Foreign Tourist Arrivals (FTAs)

FTAs in India
FTAs in India (In Millions)
Year (In Millions
12
2001 2.54
10 2002 2.38
8 2003 2.73
6 2004 3.46
4 2005 3.92
2006 4.45
2
2007 5.08
0
01 03 05 07 09 11 13 15 17 19 21
2008 5.28
20 20 20 20 20 20 20 20 20 20 20 2009 5.17
2010 5.78
2011 6.31
Source - India Tourism Statistics- 2022 2012 6.58
2013 6.97
2014 7.68
2015 8.03
2016 8.8
2017 10.04
2018 10.56
2019 10.93
2020 2.74
2021 1.52

Emerging opportunities in Tourism Sectors

1. Safety & Hygiene Tourism Trends
Whether it is airlines, cruises, hotels, restaurants or bars, since the outbreak of COVID, safety
and hygiene standards have been absolutely paramount. With this in mind, there are a number
of tourism trends that are related to this, such as increased cleaning, socially distanced
seating, providing hand gel and enforcing masks in some settings.This is also now a vital part
of tourism marketing, with companies needing to make clear what their hygiene and safety
policies are and what measures they are taking to keep customers safe. The threat of COVID
has meant people are more reluctant to travel and visit tourism hot spots, so they will need to
be persuaded that it is safe.

2. Increased Emphasis on Leisure

COVID has forced countries to adopt travel restrictions, while many businesses are
encouraging employees to work from home and use video calling. As a result, business
events have been particularly badly affected and one of the resulting tourism trends has been
a switch in focus towards leisure customers.The pandemic has been hard on people and many
are desperate for a holiday. If your business is typically focused on business customers, you
may want to look into ways to change this approach, at least temporarily. In the process, you
will likely need to change your marketing messages and even the distribution channels you
use to generate sales.Depending on your business, you may wish to focus efforts on families,
couples, or groups of friends, and you could potentially create package deals to appeal to
these demographics. It is also a good idea to evaluate how your competitors have responded
to the crisis and whether they are doing anything that you could take inspiration from.

3. Shift From International to Local

The various travel restrictions and the reluctance of many people to travel abroad has meant
many in the tourism industry are having to focus on local customers, rather than international
ones. This does not mean giving up on international travellers entirely, but it is likely to
require a change in your core marketing strategies.With hotels, it could be best to highlight
the kinds of facilities that may appeal to the local market, such as your restaurant, your gym
facilities, your Wi-Fi and even the fact that your hotel rooms are ideal for remote work.
Airlines and tourism management companies may also need to shift gears and prioritise
domestic tourists.It is worth remembering that local customers are less likely to cancel too, as
they will only have to pay attention to local restrictions and are not as likely to have to
quarantine after their visit.

4. Growth of Contactless Payments

Contactless payments have been a staple when it comes to technology in tourism for some
time now, but the emergence of options like Google Pay and Apple Pay has helped to take
this to the next level, meaning customers do not even need to carry around a debit card or
credit card to pay for meals, hotel stays, transport, and other services.Allowing contactless
payments has enabled tourism companies to reduce friction and improve the speed of check-
ins and check-outs. It also means goods can be paid for swiftly, encouraging spontaneous
purchases. With coronavirus, contactless payments are in greater demand than ever, as staff
and customers often prefer to avoid handling cash.

5. Voice Search & Voice Control

With home smart speakers growing in popularity, as well as mobile assistants like Siri,
Google Assistant and Bixby, more and more tourism customers are turning to voice search.
For those in the tourism industry, it is important to capture these guests by structuring website
content properly so it appears in voice search and allows for voice bookingsTourist
information is a key part of the customer experience with many companies and voice control
and AI can be invaluable here. Moreover, hotel rooms can include smart speakers or other
IoT devices that are compatible with voice control, allowing users to more easily turn devices
on and off, or change settings within their rooms.
6. Virtual Reality Tourism Trends
Virtual reality is another of the major tourism trends disrupting the industry and capitalising
on the technology can give you an edge over rivals who have not yet adopted it. Through
online VR tours, customers can experience hotel interiors, restaurant interiors, outdoor tourist
attractions and more, all from their home. Crucially, they are able to do this at the decision-
making phase of the customer journey. This can then be the difference between customers
completing a booking or backing out and VR is especially useful within the context of
COVID, where customers may have second thoughts and may need extra encouragement to
press ahead with their plans. Most modern VR tours are also web-based, meaning they can be
viewed through any mainstream web browser. The quality of the VR tour and the extent of
immersion can then be improved further through VR headsets.

8. Eco Travel
Tourism trends are heavily influenced by the concerns and mores of the customer base. As a
new generation becomes increasingly relevant in the marketplace, the ideals driving their
purchasing decisions create new tourism trends. Eco travel is just one example of these
tourism trends, reflecting a growing concern among today’s travellers for ethical and
sustainable tourism options. Eco travel includes simple changes, such as the availability of
carbon credits when booking a flight or the option to rent an electric instead of a conventional
vehicle. More sophisticated examples might include tourism with a volunteer element,
perhaps working on a nature reserve or engaging in conservation work.

9. Local Experience
Today’s tourists don’t want to be insulated from the places they visit inside a cultural bubble.
They want to engage with and participate in the local culture. From enjoying local cuisine to
celebrating regional festivals and holidays, local experiences are set to become some of the
top tourist trends to watch. One example of a popular local experience would be visiting
Japan during a major festival, renting formal Japanese clothes to wear, consuming regional
delicacies and engaging in traditional games or cultural activities. Another might be a long
stay with a host family in the destination country as a means to learn more about the local
culture.

10. Personalisation
You’re probably familiar with those ads that pop up on social media and certain other
websites, ads related to things you’ve looked at or purchased online. This is just one example
of personalisation. As well as in marketing tourism more effectively, personalisation can
apply to every aspect of the tourist experience. Today’s consumers expect experiences that
closely match their personal preferences, from destinations to accommodation and the kinds
of activities they’ll engage in. The more closely an experience can be tailored to a client’s
desires and expectations, the more likely they are to return and to use the same service again.