MANAGERIAL ECONOMICS PROJECT

GROWTH OF TOURISM INDUSTRY IN INDIA

GROWTH OF INDIAN TOURISM INDUSTRY

UNDERTAKING
We declare that the work presented in this Project Report titled Growth of Tourism Industry in India submitted to the Business Environment Group, Indian Institute of Management, Lucknow (U.P.) India, is our original work. We have not plagiarized or submitted the same work anywhere else.

Group 3 Section E Anurag Singh (PGP27274) Arpit Gupta (PGP27275) Ashish Sethi (PGP27276) Ashwin Raju (PGP27277) Ashwini Saini (PGP27278) Ayushi Kalra (PGP27279) Azhar Ansari (PGP27280) Balachandran MK (PGP27281)

GROWTH OF INDIAN TOURISM INDUSTRY

CERTIFICATE
Certified that the work contained in the project titled Growth of Tourism Industry in India by Anurag Singh, Arpit Gupta, Ashish Sethi, Ashwin Raju, Ashwini Saini, Ayushi Kalra, Azhar Ansari and Balachandran MK has been carried out under my supervision and that this work has not been submitted elsewhere.

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ACKNOWLEDGEMENT
We have put in our efforts in this project. However, it would not have been possible without the kind support and help of our friends and the esteemed faculty members. We would like to extend our sincere thanks to all. Our deepest thanks to Dr. Hrushikesh Panda (Associate Professor), the guide of the project, for guiding and correcting our various iterations with attention and care. He has taken pain to go through the project and make necessary correction as and when needed.

Group 3 Section E Anurag Singh (PGP27274) Arpit Gupta (PGP27275) Ashish Sethi (PGP27276) Ashwin Raju (PGP27277) Ashwini Saini (PGP27278) Ayushi Kalra (PGP27279) Azhar Ansari (PGP27280) Balachandran MK (PGP27281)

GROWTH OF INDIAN TOURISM INDUSTRY

CONTENTS

INTRODUCTION INDIAN TOURISM INDUSTRY - A COMPARISON WITH THE WORLD TOURISM INDUSTRY IMPACT OF GROWTH OF INDIAN INCOME LEVELS ON DOMESTIC TOURISM GROWTH OF WORLD DEMAND AND BUSINESS HEALTH AND PLEASURE TOURISM AVAILABILITY OF INFRASTRUCTURE ADVERTISEMENT STRATEGY ADOPTED BY INDIA ACTUAL & POTENTIAL GROWTH OF TOURISM IN INDIA REFERENCES AND BIBLIOGRAPHY 28

5 7 10 12 15 17 20 24

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INTRODUCTION
Tourism sector in India ranks as the largest service industry, and contributes a massive 6.23% to the Indias GDP and accounts for 8.78% of the total employment opportunities in India. India attracts 740 million internal tourism visits of Indian citizens and in excess of 17.9 Mn foreign tourist arrivals annually. The total revenue generated by the tourism industry of India was about US$100 billion in 2008 and this figure is expected to more than double to a figure of US$275.5 billion by the year 2018 at an estimated growth rate of 9.4%. In the past year (2010), around 17.9 million foreign tourists are estimated to have visited India. The major chunk of foreign tourists comes from UK and USA. Tamil Nadu, Maharashtra, Delhi, Rajasthan and Uttar Pradesh are ranked as the top 5 states to attract inbound tourists. Domestic tourism in the year 2010 was also massive at a figure of 740 million Tourism industry in our country is seeing a great boom at the present. India also has great potential to become as one of the major global tourist attraction and the Indian tourism industry is already exploiting this available potential to the hilt. Tourism and Travel industry is the 2nd highest foreign exchange earner for the country, and the government has also given tourism and travel firms export house status. The optimism present in the Indian tourism industry can be ascribed to several reasons. Firstly, the incredible growth of Indian economy has increased more throwaway income in the hands of the middle class families, thus prompting increasingly high number of people to splurge money on vacations at home or abroad. Secondly, India is also is becoming a booming IT hub and this has resulted in increasingly more people coming to India on business related trips. Thirdly, insistent advertising campaigns like "Incredible India" by the Tourism Ministry has also played a chief role in changing the picture of India from that of the a despised land inhabited by snake charmers to a hot and happening destination and this trend has induced renewed attention among foreign travellers to consider India in their tours. Tourism and Travel Industry's role in Indian industry is enormous. Tourism is one of the chief foreign exchange earners and also contributes to the financial system indirectly through its links with other sectors like agriculture, horticulture, poultry, construction and handicrafts. Tourism industry also offers employment to millions of individuals in India either directly or indirectly through its myriad of links with other sectors of the economy. Based on one of the estimates the total direct employment that the tourism sector offers is roughly 20 million. Torism & Travel industry in India is known for its significant government presence. Each state has its own tourism corporation, which runs a chain of Guest houses/Rest houses/hotels/ and also operates various package tours, while for its part the central government operates and develops the India Tourism Development Corporation. The Government of India, in the year 2002, had announced a New Tourism Policy to give a boost to the tourism sector in the country. This policy is built around the 7-S Mantra of Suvidhaa

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(facilitation), Soochanaa (information), Surakshaa (security), Sanrachnaa (infrastructure), Sahyog (cooperation), , Swaagat (welcome) and Safaai (cleanliness). Some of the salient features of the Tourism Policy are:

The policy proposes, to enable both the state and central government to promote the development of this sector, the inclusion of tourism in the concurrent list of the Constitution. No approval is required for up to 51% of foreign equity in tourism related projects. NRI investment is also allowed up to 100%. Automatic approval is in place for Technology improvement agreements in the hotel industry, subjected to the fulfilment of some basic parameters. Special consideration rates on customs duty of 25% for merchandise that are necessary for initial setting up, or for significant expansion of the hotels. Up to 50% of the profits earned by travel agents, hotels and tour operators in foreign exchange are excused from income tax. The remaining proceeds are also let off if the amount is reinvested in a project that is tourism related.

Apart from these features, the government has also taken a number of other measures for the advertising and promotion of tourism in India. A multi-pronged approach has been devised and adopted, which includes new means for speedy execution of development of incorporated tourism circuits and rural and village destinations, tourism projects, special facility building in the unorganized and untapped hospitality sector and new marketing strategy. The future for travel industry in India looks exceptionally bright. India as a tourism destination is seen at the moment as the toast of the world. Conde Nast has ranked India amongst one the top 10 attractive tourist destinations. JBIC also ranked India as the fifth most attractive for investments. in addition, India is perhaps the only country that offers a variety of categories of tourism. These include adventure tourism, history tourism, spiritual tourism, medical tourism (ayurveda, siddha and other such forms of Indian medications), cultural tourism, rural tourism, eco tourism, religious/pilgrimage tourism and beach tourism etc.

Government Initiatives The Government has authorized 100 % foreign investment under the automatic route in the tourism and hotel related industry, as reported by the Consolidated FDI Policy, released by DIPP (Ministry of Commerce and Industry, Government of India). The terms hotel includes beach resorts, restaurants and other tourism complexes providing lodgings and /or providing catering and food amenities to tourists. The term tourism related industry includes:

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Tour operating agencies, travel agencies and tourist transport operating agencies Units providing facilities for adventure, cultural and wildlife experience to tourists Surface, water and air transport services for tourists Seminar/convention units and organisations

The Government of India has announced a proposal of granting Tourist Visa on Arrival (T-VoA) for the citizens of Japan, Finland, New Zealand, Luxembourg and Singapore. The scheme is legitimate for citizens of the above listed countries planning to visit India on single entry strictly with the intention of tourism and for a short time of up to a limit of 30 days. The government has taken up numerous initiatives to boost the hospitality and tourism sector profits and performance. Identification and development of about 37 destinations within the recent two years, and implementation of 600 projects for 300 tourist spots across India with an investment of more than US$24 million are some projects taken by the Government to create awareness for the sector and enhance the travel industry. These hard work have been tied with monetary backing from the Central government to as much as US$ 5 million and US$ 10 million, as reported in the Tourism report by the Gujarat Government. The Ministry of Tourism using the Marketing Development Assistance (MDA) Scheme has also set up committees to give a hand and motivate travel tour operators and facilitate them to make acquainted with international standards of hospitality. Also, the Government provides pecuniary assistance to travel agents to partake in travel marts and annual conventions for tourism and travel, as reported in the Annual report by the Ministry of Tourism. The Uttarakhand State Government has introduced 100 % tax exemption program to exempt amusement parks, multiplex projects and other tourist facilities for a period of 5 years as per the Vision 2020 document. On similar lines, the Rajasthan government has reduced the luxury tax level to 8% from the prevailing 10 % levels. Madhya Pradesh, Kerala, Gujarat and Orissa have entered into Private Public Partnerships (PPP) to advance tourism and travel to attract tourists. According to the 11th Five Year Plan, a total of US$ 472 billion is being planned to be invested in modernizing and upgrading civil amenities like ropeways, telecom services, bridges, roads, ports and other forms of transport as present in the report by the Planning Commission.

INDIAN TOURISM INDUSTRY - A COMPARISON WITH THE WORLD TOURISM INDUSTRY

World Tourism The World Tourism Organization defines tourists as people who travel and stay in places outside their usual place of living for more than a day and less than for a year that too for leisure and other purposes. It is strictly not related to the activities that are remunerated from within the place visited.

GROWTH OF INDIAN TOURISM INDUSTRY

Tourism has become a popular global leisure activity throughout the world. It is a major revenue source for many countries of the world. In 2010, there were over 940 million international tourist arrivals, with a growth of 6.6% as compared to 2009. International tourism receipts grew to US$919 billion (euro 693 billion) in 2010, corresponding to an increase in real terms of 4.7%. Tourism is vital for many countries, such as France, Egypt, Lebanon, Israel, USA, Spain, Italy, England and Thailand, and many island nations, such as The Bahamas, Fiji, Maldives, and the Seychelles etc. It is due to the large intake of capital for businesses with their goods and services and employment opportunities in the service industries associated with tourism. These service industries include transportation services, such as airlines, cruise ships, railways and taxicabs; hospitality services, such as hotels and resorts for accommodations, and amusement parks, casinos, shopping malls, music venues and theatres for entertainment. Following is a list of countries with highest number of international tourist arrivals:

Although there is no direct correlation between money spent by a country to promote tourism and the number of foreign tourists visiting the place but there is some relationship. Following is the list of countries with top expenditures on promoting tourism:

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Indian Tourism India currently is 12th in Asia and 68th in the list of overall in the list of the world's most attractive tourist destinations, as per the Travel and Tourism Competitiveness Report 2011 by the World Economic Forum (WEF). The Indian travel and hospitality sector has nearly doubled during the last three years owing to the increasing numbers of both domestic as well as international tourists. The hospitality and tourism industry experienced a growth trend of 24.6 per cent during 2009-2010 as compared to 2008-2009. According to the Market Research Division of the Ministry of Tourism, the total number of foreign tourists in the country in 2010 was 5.58 million as compared to 5.17 million in 2009, registering a rise of 8.1 per cent. This shows rising interest of international tourists in India as a tourist spot. The important trends in the sector for June 2011 based on the report by the Ministry of Tourism are as follows: Constant increase in the total number of tourists visiting the country during month of June in past years: 0.39 million in June, 2010; 0.37 million during June 2010 and 0.352 million in June 2009. A growth of 7.2 per cent has been registered during June 2011 as compared to 4.9 per cent growth in June 2010. Also, the 7.2 per cent growth rate in June 2011 was higher than the observed growth rate of 7.0 per cent in May 2011. Foreign Tourist Arrivals during the period January-June 2011 were 2.91 million with a growth of 10.9 per cent as compared to the FTAs of 2.63 million with a growth of 8.9 per cent during January-June 2010 over the corresponding period of 2009.

Following is the list of source countries from which foreign tourists come to India:

GROWTH OF INDIAN TOURISM INDUSTRY

IMPACT OF GROWTH OF INDIAN INCOME LEVELS ON DOMESTIC TOURISM

Year

Indian Income (Per Capita GDP) Rs. 25,956.00 Rs. 29,382.00 Rs. 35,430.00 Rs. 40,141.00 Rs. 44,345.00

Domestic Tourism (In Millions) 462.31 526.43 563.03 668.8 740.21

Correlation

2006 2007 2008 2009 2010

0.983218588

National Income (Per Capita GDP)

According to analysis above, it can be seen that the impact of growth in national income levels in India on the domestic tourism is substantial. In fact, the correlation between the two has been National Income (Per data GDP) calculated to be approximately 98.3%, based on theCapitapublished by the Government of India, which suggests that rising national income levels have been a key driving force for rising domestic tourism in India. While the national income levels, for which per capita GDP value is used as an estimate, has enjoyed an average year-on-year growth of 14.4% in the period from 2006-2010, in the same period the average year-on-year growth of 12.6%.

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The volume of domestic travel in India reached an all-time high of 740 million during 2010, 10.5% higher than the previous year. Before rising by 18.8% in 2009, rise in domestic travel had slowed down to 6.9% during 2008. The fact that domestic tourism revived in 2009 reflects the preference for domestic visits over international visits and recovery in business sentiments in the later part of the year. Indians by nature believe in saving, and would always tend to err on the side of caution. Although the economic slowdown did not have too much of an adverse impact on India, Indian consumers tended to postpone their travel plans during the period. Most of the domestic tourism in this period comprised of shorter duration holidays or trips as the number of Indians travelling abroad for business purposes declined significantly.

Qualitative Analysis Indians have undergone significant lifestyle changes in the recent past and now have higher disposable incomes, which have resulted in shifting travel preferences and travelers are looking for unique once-in-a-life time experiences. Consequently, travel service providers are offering niche, customized tourism products. This has led to emergence of niche segments such as cultural tourism, cruise tourism, wellness tourism, wine tourism, pop-culture tourism, monsoon tourism etc. In the past, the key contexts in which Indians travelled domestically were Marriages Bereavements Child births Business Education

While these are still perfectly applicable, it has been observed that in the recent past, more and more Indians, especially from the urban parts of the country, are travelling domestically for leisure. Since the daily life of these individuals gets more hectic and isolated, they seek refreshment and time alone with the family and friends, and tourism within the country offers the ideal cost effective avenues for this purpose. As Indians today have greater savings through higher disposable incomes, they are becoming more conscious of the need to explore rich heritage of different parts of India for personal growth, and are thus spending more on domestic tourism annually.

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GROWTH OF WORLD DEMAND AND BUSINESS

International Tourism Over time, an ever increasing number of destinations have opened up and invested in tourism development, turning modern tourism into a key driver of socio-economic progress through the creation of jobs and enterprises, infrastructure development and the export revenues earned. As an internationally traded service, inbound tourism has become one of the worlds major trade categories. The overall export income generated by inbound tourism, including passenger transport, exceeded US$ 1 trillion in 2010, or close to US$ 3 billion a day. Tourism exports account for as much as 30% of the worlds exports of commercial services and 6% of overall exports of goods and services. Globally, as an export category, tourism ranks fourth after fuels, chemicals and automotive products. For many developing countries it is one of the main sources of foreign exchange income and the number one export category, creating much needed employment and opportunities for development. The most comprehensive way to measure the economic importance of both inbound and domestic tourism in national economies is through the 2008 Tourism Satellite Account (TSA) Recommended Methodological Framework, approved by the UN Statistics Commission. Though many countries have taken steps towards the implementation of a TSA, relatively few have full, comparable results available. The knowledge and experience gained through the TSA exercise has certainly contributed to a much better understanding of the role of tourism in economies worldwide and allows for a tentative approximation of key indicators. Based on the currently still fragmented information from countries with data available, tourisms contribution to worldwide gross domestic product (GDP) is estimated at some 5%. Tourisms contribution to employment tends to be slightly higher and is estimated in the order of 6-7% of the overall number of jobs worldwide (direct and indirect). For advanced, diversified economies, the contribution of tourism to GDP ranges from approximately 2% for countries where tourism is a comparatively small sector; to over 10% for countries where tourism is an important pillar of the economy. For small islands and developing countries, or specific regional and local destinations where tourism is a key economic sector, the importance of tourism tends to be even higher.

2010: a multi-speed recovery In 2010, world tourism recovered more strongly than expected from the shock it suffered in late 2008 and 2009 as a result of the global financial crisis and economic recession. Worldwide, international tourist arrivals reached 940 million in 2010, up 6.6% over the previous year. The vast majority of destinations reported positive and often double-digit increases, sufficient to

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offset losses or bring them close to this target. Recovery came at different speeds much faster in most emerging economies (+8%) and slower in most advanced ones (+5%).

Key trends 2010: Worldwide, international tourism rebounded strongly, with international tourist arrivals up 6.6% over 2009, to 940 million. The increase more than offset the decline caused by the economic downturn, with an additional 23 million arrivals over the former peak year of 2008. In 2010, international tourism receipts are estimated to have reached US$ 919 billion worldwide (693 billion euros), up from US$ 851 billion (610 billion euros) in 2009, corresponding to an increase in real terms of 4.7%. As a reflection of the economic conditions, recovery was particularly strong in emerging economies, where arrivals grew faster (+8%) than in advanced ones (+5%).

Current developments and outlook: According to the April 2011 Interim Update of the UNWTO World Tourism Barometer, International tourist arrivals grew by close to 5% during the first two months of 2011, consolidating the rebound registered in 2010. According to the forecast prepared by UNWTO at the beginning of the year, international tourist arrivals are projected to increase in 2011 by 4% to 5%. The impact of developments in North Africa and the Middle East, as well as the devastating earthquake

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and tsunami that hit Japan in March, are not expected to substantially affect this overall forecast. Long-term trend: Over the past six decades, tourism has experienced continued expansion and diversification becoming one of the largest and fastest growing economic sectors in the world. Many new destinations have emerged alongside the traditional ones of Europe and North America. In spite of occasional shocks, international tourist arrivals have shown virtually uninterrupted growth: from 25 million in 1950, to 277 million in 1980, to 435 million in 1990, to 675 million in 2000, and the current 940 million. As growth has been particularly fast in the worlds emerging regions, the share in international tourist arrivals received by emerging and developing economies has steadily risen, from 31% in 1990 to 47% in 2010.

Forecast for 2011 According to the forecast prepared by UNWTO at the beginning of the year, international tourist arrivals are projected to increase by some 4% to 5% in 2011. The impact of recent developments in North Africa and the Middle East, as well as the tragic earthquake and tsunami that hit Japan in March, are not expected to substantially affect this projected growth. Results for North East Asia, North Africa and the Middle East are below initial forecasts, but destinations in Europe and South America are so far performing better than anticipated. On the whole, and as in previous similar situations, a temporary redistribution of traffic, together with an increase in intra-regional travel as opposed to interregional, is likely to occur. International tourist arrivals grew by close to 5% during the first months of 2011, consolidating the 7% rebound registered in 2010. According to the April Interim Update of the UNWTO World Tourism Barometer, growth was positive in all world (sub) regions during January and February 2011, with the exception of the Middle East and North Africa. South America and South Asia led growth (both at +15%), followed by Sub-Saharan Africa (+13%) and Central and Eastern Europe (+12%).

World Europe Asia and the Pacific Americas Africa Middle East

2010 +6.7% +3.2% +12.6% +7.7% +6.4% +13.9%

Forecast 2011 4% to 5% 2% to 4% 7% to 9% 4% to 6% 4% to 7% 7% to 10%

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Asia and the Pacific, the region with one of the fastest growth rates in 2010, saw its pace of growth slow down (+6%), although from a very strong performance the previous year. Results were better than expected for Europe (+6%), boosted by the recovery of Central and Eastern Europe, and the temporary redistribution of travel to destinations in Southern and Mediterranean Europe due to developments in North Africa (-9%) and the Middle East (-10%). The Americas (+5%) was in line with the world average, with strong results for South America and the Caribbean, but rather weaker growth in North and Central America. Worldwide, international tourist arrivals surpassed 124 million in the first two months of 2011, up from 119 million in the same period of 2010, with emerging economies (+6%) continuing to grow at a faster pace than advanced ones (+4%).

HEALTH AND PLEASURE TOURISM

Health Tourism The tourism industry globally is influenced by multiple factors, one of the most recently recognised being traveling across borders for health care. As medical treatment costs in the developed world blow out of proportion, with the United States leading the way, an increasing number of Westerners are finding the prospect of international travel for medical care more appealing. This has introduced the term health tourism or medical tourism that means, travelling to different parts of the world to avail advanced medical treatment. Health tourism in India has also seen a growth in the recent times primarily because of the cost benefit offered along with the focus on mental health and natural healing through yoga and Ayurveda. Approximately, 150,000 of travellers visit India for health care purposes.

Why India? The primary reasons for an increasing number of visitors to choose India as the destination for health treatment are as follows: Cost of medical services in India is almost 30% lower as compared to cost in the West, and is also the cheapest in South-Asia A large population of good English speaking doctors, guides and medical staff. This makes it easier for foreigners to relate well to Indian doctors. Indian hospitals excel in cardiology and cardiothoracic surgery, joint replacements, transplants, cosmetic treatments, dental care, Orthopaedic surgery and more. A plethora of medical services provided. Mainly includes full body pathology, comprehensive physical and gynaecological examinations, audiometry, spirometry, Chest X-ray, 12 lead ECG, 2D echo Colour Doppler, gold standard DXA bone

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densitometry, body fat analysis, coronary risk markers, cancer risk markers, high strength MRI etc. Use of latest technology and advanced diagnostic equipments for carrying out all medical treatments and investigations. Expertise in performing successful cardiac surgeries, bone marrow transplants, liver transplants, orthopaedic surgeries and other medical treatments. The cost of Infertility treatments in India is almost 1/4th of that in developed nations. The availability of modern assisted reproductive techniques, such as IVF, and a full range of Assisted Reproductive Technology (ART) services have made India the first choice for infertility treatments.

Health Tourism as a sector Off late, health tourism is being recognised as a growing sector in India. It is expected to grow at an annual rate of 30%, which will make it Rs.9500 crore industry by 2015. Cashing in on this expected growth in the sector, an increased number of health insurance companies, employers and health insurance agents have started devising attractive packages for foreign as well as domestic tourists. Ranging from medical institutes to great research centre, every medical facility can be availed for health tourism in India. It also covers several great health institutes along with advanced services. In India, the major destinations for medical tourism comprise primarily of the states in Southern part of India that are Kerala, Tamil Nadu and Karnataka. In these states, Chennai and Bangalore are the two major cities that witness maximum tourism for health purposes. All these medical sites of India provide best clinical services to all the tourists. These places also offer ancient Ayurvedic services to the patients. In addition, health tourism in India also includes some medical rejuvenated programs such as Rejuvenation Therapy (Rasayana Chikitsa), Body Immunisation & Longevity Treatment, Body Sudation (Sweda Karma), Mental & physical Well Being, and Panchakarma Treatment.

Pleasure Tourism There could be multiple motivators for a tourist to visit a place. Some of these include adventure, education, business etc. By categorising tourism on the basis of these motivations, we can classify it as either adventure tourism, education tourism or business tourism. Based on this classification, tourism purely for the purpose of vacationing is classified as pleasure tourism. Looking at the current scenario and trends in tourism in India, a huge proportion of tourism can be categorised as pleasure tourism. India witnesses a large number of domestic as well as foreign tourists visiting the nation, who are keen to explore the diverse culture and the

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picturesque landscapes ranging from the long stretch of Himalyas in the North to clear waters of the beaches down South. Because of the multiple options that it can provide to its tourists, India attracts a large chunk of the foreign tourists. To add to that, people are keen to visit and experience Taj Mahal, one of the seven wonders of the world. Hence, India is one of the must-visits for pleasure tourists globally. However, to ensure that the Indian tourism industry cashes in on the diversity it offers, it is important that it takes right steps in this direction. The marketing campaign of Incredible India initiated by the Indian Tourism Ministry is an appropriate example of positioning India as a destination for vacation, and exploring the diversity in terms of culture, language, region and nature.

AVAILABILITY OF INFRASTRUCTURE
Infrastructure plays a very important part in the growth of Tourism in India. From the tourism perspective, infrastructure would include a wide variety of requirements right from accommodation facilities to car rentals. Hence a keen understanding of the growth in Indian Infrastructure (pertaining to Tourism) is required to understand/propel the growth of Tourism in India.

Hotels and Accommodation According to an estimate put forward by HVS International, by the end of 2011 around 10000 hotel rooms in Delhi, 9000 in Mumbai, 8000 in Bangalore, 7500 in Hyderabad are to be added. A lot of investment is coming in the Hotels industry and major players like ITC, Taj and Leela are planning to expand and make their presence felt in the Hotel Industry. Major players: Hotel Chains Taj, EIH(Oberoi), ITDC, ITC Small Chains - Leela Group, Asian, Bharat Public Sector Chains ITDC, HCI International Chains Marriott, Starwood, Berggruen, Emaar MGF Localised Hotel Companies

Also the government has understood the need for investment in Tourist infrastructure. Hence in Union Budget 2011, provisions have been made of Rs. 499 crore exclusively for Tourism infrastructure including budget accommodation, wayside amenities, tourist reception centres, refurbishment and illumination of monuments. Following is a chart showing the growth of Accommodation Industry in India

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Travel Accommodation
350,000.00 300,000.00 250,000.00 200,000.00 150,000.00 100,000.00 50,000.00 0.00

Travel Accommodation

2005

2006

2007

2008

2009

2010

The recession period displays a slump in the travel accommodation spendings but after 2009, the industry has bounced back. Not only has there been a growth in the general Travel Accommodation industry, there has also been a growth in the Hotels industry owing to the huge inflow of FDI and other internal investments towards improving infrastructure in the field of hospitality.

Hotels Industry
250,000.00 200,000.00 150,000.00 100,000.00 Hotels

50,000.00
0.00

2005

2006

2007

2008

2009

2010

Some of the Key Trends/Issues in the Hotel Industry are: In 2010, Hotels saw a 13% outlet growth and 24% current value growth. Growth has been higher in chained hotels. Improved average daily rates and occupancy levels helped growth in value terms. Improved consumer confidence and booming domestic tourism has increased the demand for hotel rooms in the country.

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With a view to increasing the supply of rooms in the country, the Ministry of Tourism and RBI separated credit for hotel projects from other types of commercial real estate borrowing, thereby relaxing norms and reducing interest rates. Also, the Ministry introduced a five-year tax holiday for 2-star, 3-star and 4-star hotels located in all UNESCO-declared World Heritage sites (except Mumbai and Delhi) which started operating with effect from 1 April 2008, and is due to end on 31 March 2013. To capitalise on the robust demand for tourism in India and to effectively meet the existing shortage of rooms in the country, hotel operators (both domestic and international) have announced new hotel projects in India, especially in non-metro cities and upcoming areas near the major metros. Marriott International is expected to have 23 hotels which would be operational by 2013, while Hilton Group is expected to add 21 hotels by 2013.

Connectivity With the advent of the aviation industry, the connectivity between cities has increased greatly. Also increase in Government spending on public infrastructure has led to better roads and public transport in the cities. But still, in comparison with International standards, India has got miles to go. To harness the full potential of the Tourism industry, the following changes are very much essential in the case of connectivity: Improvement in infrastructure facilities such as air, rail, road connectivity, and hospitality services at these destinations and the connecting cities Quality of Roadways. Nearly 70% of the tourists travel by road More expressways for faster travel World class Airport facilities and more air connectivity

Amenities Amenities available at various tourist locations and en route need to be improved. Basic amenities include facilities such as drinking water, well maintained and clean waiting rooms and toilets, first aid and wayside amenities such as traveller lounges, cafeteria, and parking facilities. India delivers badly in terms of availability of these basic infrastructural facilities. Inadequate infrastructure facilities would definitely affect inbound tourism and hence lead to increase in the outflow of domestic tourists from India to other international tourist destinations. Hence, for tourism industry to register improved growth, issues concerning basic amenities need to be addressed as soon as possible.

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Last Mile Connectivity Car Rentals Last mile connectivity has been a general issue in India. With a huge bunch of rickshaw walas and rented cars trying to exploit the business inflow owing to the growing tourism industry, there seems to be a loss in reliability among the tourists mind. Car Rentals in India has been one sector in the Last mile connectivity, which has shown signs of being organised an reliable. With the advent of Car Rentals like Meru and EasyCabs in Metros and other big cities and their easy accessibility, there seems to be a considerable growth in the Car Rentals industry. In 2010, Car Rentals showed a 14 % growth rate owing mainly to the recovering Economy and Commonwealth games. Carzonrent India is the leading car rental company in 2010, with a 17% value share in car rental, closely followed by Mercury Car Rentals and International Travel House. Car rental is expected to see a constant value CAGR of 8% over the coming period.

Car Rental
300 250 in mn Rupees 200 150 Car Rental Leisure Car Rental

100
50 0 2005 2006 2007 2008 2009 2010

ADVERTISEMENT STRATEGY ADOPTED BY INDIA

Indian tourism industry is at peak this moment. India as a country has a tremendous potential to become one of the major global tourist destination and Indian tourism industry is exploiting this potential to the maximum. Travel and tourism industry is the 2nd highest foreign exchange earner for India, and the government of India has given travel & tourism organizations export house status. The buoyancy in the Indian tourism industry can be attributed to 3 main factors : Firstly, the tremendous growth of Indian economy has resulted in more disposable income in the hands of Indian public, and thus prompting many people to spend money on vacations abroad or at home.

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Secondly, India is a booming IT hub and more and more people visit India on business trips. Thirdly, an aggressive advertising campaign "Incredible India" started by Tourism Ministry of India has played a major role in changing the image of India from that of the land of snake charmers to a happening place that has sparked a renewed interest among foreign travelers as well as the citizens of India. The Government of India has a Tourism Policy to promote tourism sector which is built around the 7-S Mantra of Swaagat (welcome) Soochanaa (information) Suvidhaa (facilitation) Surakshaa (security) Sahyog (cooperation) Sanrachnaa (infrastructure) Safaai (cleanliness). Apart from this, government has also taken several other measures for the promotion of tourism in India. A multi-pronged approach has been adopted that includes a new mechanism for speedy implementation of tourism projects, and rural destinations, special capacity building in the unorganized hospitality sector, development of integrated tourism circuits and a new marketing strategy.

INCREDIBLE INDIA CAMPAIGN The phrase Incredible India basically refers to those aspects of India which demonstrate (to foreign tourists) its moral values, places of historical interest, rich cultural heritage and traditional way of life. For example Elephanta Caves are "Incredible India" but Dharavi in Mumbai is not; Taj Mahal in Agra is a part of "Incredible India" but the city of Agra in general is not Incredible India. Indian weddings are a part of Incredible India but bride burning and dowry is not Incredible India. Similarly, Indian taxis and Autorickshaws are a part of Incredible India but Indian traffic and the driving style of Indian people is not Incredible India. Indian cuisine is Incredible India but food shortages and food riots are not a part of Incredible India. Incredible India is the name of the major campaign started by the Government of India to promote tourism in India. In his campaign, India is portrayed as a place of breath taking life experiences exhibited as nature and scenary, cultural and religious festivals , fauna, flora and a lot more made it to the core of the campaign. One of the early campaigns simply focused on highlighting the Incredible India logo. The exclamation mark which formed the I of India was creatively used across several visuals.

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In the second year, the campaign focused mainly on spiritual tourism. The content and execution were designed to appeal to the upmarket individual travelers.

Seeing the encouraging response of the earlier campaigns, the 2006-07 campaign went beyond showcasing the logo. It now emphasized on the diversity of India but did so in a tone & manner that was full of wry wit.

There was also a quiet confidence and passion on display almost the we are like this only tone in the 2007 India Now campaign in London. Some of the most famous ones are:

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The Incredible India experience was brought alive in several exhibitions and events: Internationale Tourismus Bourse in Berlin, India@60 campaign that was hosted in New York to mark Indias 60th year of Independence etc. The 2007-08 campaign continued with its focus on jaw-dropping diversity of India, featuring breathtaking images and screen shots and a clever pun as the headline.

The 2008-09 print campaign featured people who came to India as tourists but stayed back to make India their home. It conveys how strong an impact India can have on an individual motivating a person from another country to make it his or her motherland.

A new TVC also came into existence as a part of Indian television, showcasing the experiences of a foreigner in India, prompting him to describe it as none other than Incredible India. This campaign is a truly concerted effort which ensures that there isnt a huge gap between expectation and delivery on the ground of Indian Tourism sector. The Ministry of Tourism, Government of India, annually undertakes international Media Campaigns - electronic, outdoor, print and online, under the Incredible India Campaign brand line in key markets across the world. The objective of the Campaigns is to create awareness about the tourism products and destinations of India and to promote India as a preferred tourist destination in other countries of the world.

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The Ministry has also proposed to launch a Global Print Campaign in the overseas markets during 2011-12. The Campaign will be launched in selected Print Publications for which a Media Plan has been finalized. The Campaign will be undertaken in different phases from 2011 to 2012.

ACTUAL & POTENTIAL GROWTH OF TOURISM IN INDIA

Driven by the burgeoning Indian middle class, growth in high spending foreign tourists, and coordinated government campaigns to promote Incredible India, Indian tourism industry is now included in the Core Sectors of the Indian Economy. Present Scenario The tourism industry in India is substantial and vibrant, and the country is fast becoming a major global destination. Indias travel and tourism industry is one of them most profitable industries in the country, and also credited with contributing a substantial amount of foreign exchange. In 2010 the total number of foreign tourists that arrived in India was 5.58 million and they brought in a foreign exchange earning of Rs. 648.89 billion ($14.4 billion). Contribution of 6.23% to the national GDP. 8.78% of the total employment in India. In 2010, India witnessed more than 5.58 million foreign tourist arrivals. The tourism industry in India generated more than US$14.4 billion last year. 705 million annual domestic tourist visits. Expected to increase to US$275.5 billion by 2018 at a 9.4% annual growth rate. The Travel & Tourism Competitiveness Report, 2007, ranked tourism in India 6th in terms of price competitiveness. 39th in terms of Safety and Security. The 2010 Commonwealth Games in Delhi have significantly boosted tourism in India

In part to its booming IT and outsourcing industry, a growing number of business trips are made by foreigners to India, who will often add a weekend break or longer holiday to their trip. Foreign tourists spend more in India than almost in any other country worldwide. The Tourism Ministry has also played an important role in the development of the industry, initiating advertising campaigns such as the 'Incredible India' campaign, which promoted Indias culture and tourist attractions in a fresh and memorable way. The campaign helped create a

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colourful image of India in the minds of consumers all over the world, and has directly led to an increase in the interest among tourists. The tourism sector is not only a multifaceted industry that contributes to a variety of economic sectors, but also a labour-intensive industry with the capacity to create jobs. The numbers tell the story: almost 20 million people are now working in the Indias tourism industry. Increased tourism in India has created jobs in a variety of related sectors: Horticulture Handicrafts Agriculture Construction Poultry

Indian governmental bodies have also made a significant impact in tourism by enforcing every state government to issue: An Act to provide for the conservation and preservation of tourist areas in that State and for matters connected therewith or incidental thereto. A new growth sector is medical tourism. It is currently growing at around 30% per annum. Medical tourist arrivals are expected to reach one million soon. Medical tourism in Asia, plastic surgery in particular, has grown rapidly. Medical tourism is approaching fever pitch at the tune of $4 Billion US, fuelled largely by the cosmetic surgery market. One of the problems India has, despite having some world-class hospitals, is sanitation. India is probably the only country that offers various categories of tourism. These include: Historical tourism Adventure tourism Medical tourism (Ayurveda and other forms of Indian medications) Spiritual tourism (pilgrimage) Beach tourism (India has the longest coastline in the East) etc. Wildlife tourism (Eco tourism) Cultural

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Following is a Roadmap to Recovery for the tourism industry in the aftermath of the global economic crisis. RESILIENCE Focus on job retention and sector support Understand the market and respond rapidly Boost partnerships and competition Advance innovation and technology Strengthen regional and interregional support STIMULUS 6. Create new jobs, particularly in small and medium enterprises 7. Mainstream tourism in stimulus and infrastructure programmes 8. Review tax and visa barriers to growth 9. Improve tourism promotion and capitalise on major events 10. Include tourism in aid-for-trade and development support GREEN ECONOMY 11. Develop green jobs and skills training 12. Respond effectively to climate change 13. Profile tourism in all green economy strategies 14. Encourage green tourism infrastructure investment 15. Promote a green tourism culture in suppliers, consumers and communities

1. 2. 3. 4. 5.

Till date, the Government has identified 38 projects out of which 23 have been sanctioned.

The key aim of the Safe and Honourable Tourism is to ensure that Indian tourism follows international standards of safe tourism practices, applicable to both tourists and local residents, i.e. local people and communities who may be impacted by tourism in some way. In order to promote tourism, Government of India launched a scheme of Tourist Visa on Arrival (TVoA) in January 2010 on pilot basis. It is single entry visa a short period with a validity of 30 days strictly for the purpose of tourism and a tourist can come to India only twice a year on this visa. The fee for the visa on arrival is $ 60 (Sixty United States Dollars) or equivalent amount in Indian Rupees per passenger (including children). In order to boost investment in the tourism sector which has high employment potential, the government extended the benefit of investment linked deduction. Benefits of 100% investment linked tax deduction on capital expenditure (excluding land, goodwill and financial instrument) for building and operating a new hotel (commissioned after 1st April 2010) of two-star category and above, extended from select locations to across the country. The government also has a voluntary scheme of granting approval to bona fide tour operators, travel agents, tourist transport operators, and adventure tour operators who satisfy certain criteria specified in terms of turnover, infrastructure, and manpower.

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The Ministry of Tourism planned to continue promotional efforts under the Incredible India campaign in overseas and domestic markets. The Ministry also planned to lay emphasis on social awareness campaigns in the domestic market to sensitize the masses and various stakeholders to the importance of tourism. The key challenge is to establish India, into some traditional areas such as tourism and shipping where other countries have already established themselves.

Physical Target 2010-11 The total outlay for the scheme is towards: GOI UNDP Endangered Tourism Project Market Research including 20 years perspective plan Construction of Building for Indian Institute of Skiing and Mountaineering at Gulmarg Computerization and Information Technology Creation of Land Bank for Hotels 2.5% of the Annual Plan (2011-12) has been allocated for TSP (Tribal Sub Plan) under the plan scheme product/infrastructure development for Destinations and circuits Product/Infrastructure Development for Destination and Circuits Assistance for large Revenue Generating Projects Domestic promotion and publicity including Market Development Assistance, Assistance to Institutes of Hotel Management / Food Crafts Industry Capacity building for Service Providers Incentives to Accommodation Infrastructure Externally aided projects for development of Buddhist Centres/Sights at Ajanta/Ellora and Buddhist Centre in Uttar Pradesh

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REFERENCES AND BIBLIOGRAPHY

http://www.incredibleindia.org/newsite/cms_page.asp?pageid=866 http://www.dnb.co.in/Travel_Tourism/Indian_Travel_and_Tourism_Industry.asp http://www.incredibleindia.org/Resource-Directory.html http://www.incredibleindia.org/

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