Inside The Indian Tourism & Hospitality Sector

Given its varied topography and abundance of distinct cultural experiences, India is one of the top travel destinations worldwide in terms of spending on travel. Two of India's biggest businesses, travel and tourism together account for about US$ 178 billion of the nation's GDP, according to an IBEF research on the growth of the travel and hospitality sector.

 

There are several lovely beaches scattered around the vast coastline of the nation. As a result, it is predicted that by the Financial Year 2027, the Indian travel market will grow to a value of $125 billion. By 2028, it's anticipated that 30.5 million foreign visitors will arrive.

For more than ten years, Indian businesses, like those in several other industries, have used technology as a vital development facilitator. The travel sector has experienced substantial innovation, and there is still room for more. Examples of these innovations include search engines, online travel agents, and global distribution system (GDS) services. 

Travel and hospitality industries' embracing cloud solutions and the advancement of Software as a Service (SaaS) technology are key factors driving their tech-oriented growth.

India is a sizable market for tourism and travel. Cruises, adventure, health, wellness, sports, MICE, eco-tourism, movies, and rural, and religious travel are just a few of its specialized travel items. India is becoming known to both domestic and foreign travelers as a spiritual tourism destination. India came in at number 34 in the World Economic Forum's 2019 Travel & Tourism Competitiveness Report.

Opportunities for Investments

With a land area of 3.3 million square kilometers, India is the seventh largest country in the world. It offers a variety of landscapes, stunning beaches, ten biogeographic zones, 40 Unesco World Heritage sites, 105 national parks, and 564 animal sanctuaries.

The direct GDP contribution of the nation's tourist industry is predicted to increase at an annual rate of 10.35 percent between 2019 and 2028. The World Travel Tourism Council (WTTC) placed the nation 10th out of 185 nations in terms of the GDP contribution from travel and tourism in 2019.

India ranked 65th in 2013 and 34th in 2019 on the Travel & Tourism Competitiveness Index. With an expected growth of US$ 492.21 billion by 2028, the tourism industry in the nation is currently on the verge of breaking into the top five business travel markets segment. By 2029, it will have created 53 million jobs and contributed US$ 512 billion to India's GDP.

Up to the year before the epidemic in 2019, tourism accounted for the third-highest amount of foreign exchange earnings in India, with the country's tourism and hospitality industry emerging as one of the main service industries propelling growth. 

Following a protracted period of travel restrictions imposed to combat the epidemic, India's domestic tourism industry is again growing in 2022, with rising air and rail travel, improved hotel occupancy rates, and more foot traffic at key tourist attractions.

Important Factors for Growth

1. Economic expansion

With an estimated 6.4% growth in 2022, India's economy will continue to be the fastest expanding in the world, raising people's standards of living and giving them more money to spend on leisure activities.

2. Regulation of Foreign Direct Investment

India's tourism market is very open to access. Under the automatic route, 100% FDI is permitted in the tourist sector. Additionally, 100% FDI is permitted in tourism construction projects, such as the building of hotels, resorts, and recreational facilities.

3. Governmental Campaigns

Enabling government and regulatory initiatives like an additional outlay of US$ 316.3 million being earmarked for the Ministry of Tourism in the 2022-23 Union Budget will support tourism-linked businesses in the country.

4. Growing Middle Class and Increasing Discretionary Income

Increased household spending on leisure and recreation is being supported by a gradual growth in the proportion of multiple-income families, which is resulting in higher disposable income (total personal disposable income climbed to US$238.5 million in 2021 from US$199.68 million in the previous year). The expansion of both domestic and international tourism has also been aided by the growing middle class.

5. Dividend by Demographics

With a comparatively higher spending capability, over 60% of Indians are in the working cohort, which includes those between the ages of 15 and 64.

6. Booking services is simple

This has been made possible by growing e-commerce sectors, smartphone usage, and better internet connectivity. Regarding digital tools for trip planning, booking, and experience, India is among the most technologically proficient countries in the world.

7. Diversity in geography and culture

India has enormous potential for the growth of the travel, tourism, and hospitality industries because of its visibly rich cultural, historical, and religious history as well as its various natural landscapes, ecology, and topography.

8. Enhancing Medical Facilities

India is a popular destination for medical tourists, particularly from the Middle East and Africa, because it has world-class, super specialty hospitals with JCI and NABH accreditation, as well as highly qualified medical staff. from 2020 to 2027, the medical tourism industry in India is expected to grow at a compound annual growth rate (CAGR) of 21.1 percent.

State-sponsored Projects

The Indian government has taken several actions to establish India as a major international tourism destination after realizing the potential of the nation in this sector. The following are a few of the significant programs the Indian government has in store to strengthen the country's tourist and hospitality industry. 

The tourism industry received Rs. 2,449.62 crore (US$ 294.8 million) from Finance Minister Ms. Nirmala Sitharaman's interim budget for 2024. This represents a 44.7% increase over the previous fiscal year. Compared to the initial allocation of Rs. 2,400 crore (US$ 288.8 million) in the 2023 Union Budget, which was later revised to Rs. 1,692.10 crore (US$ 203.6 million), this is a favorable change.

With the approval of 76 projects, the Ministry of Tourism initiated the Swadesh Darshan Scheme to create theme-based tourism circuits. Redesigned as Swadesh Darshan 2.0 (SD2.0), it focuses on eco-friendly travel, choosing 57 locations for growth and having States and Unions draft plans in line with it. 

52 tourism-related projects worth over Rs. 1400 crore (US$ 168.5 million) were unveiled and inaugurated by Prime Minister Mr. Narendra Modi as part of the Swadesh Darshan and PRASHAD Scheme.

Through an initiative called SAATHI (System for Assessment, Awareness, and Training for Hospitality Industry), the Ministry of Tourism has partnered with the Quality Council of India (QCI) to support the hospitality industry's readiness to continue operations safely and mitigate risks arising out of the COVID-19 pandemic. After reviewing the SAATHI framework and pledging to adhere to all applicable rules, a hotel or unit is granted self-certification. 

Self-certified hotels and apartments participate in webinars to get live answers to questions. If the hotel or unit so chooses, they can collaborate with QCI-accredited agencies to conduct a site assessment using the SAATHI framework. The evaluated unit receives a report detailing the assessment along with suggestions for improvement.

Loans up to US$ 12,110 will be made available under the Loan Guarantee Scheme for the Affected Tourism Service Sector (LGSCATSS) to all tour operators, travel agents, and tourist transport operators who have been approved or acknowledged by the Ministry of Tourism. Guarantees for Skill Development Loans up to Rs. 1.5 lakh (US$ 1,801) provided by IBA member banks to qualified borrowers in the absence of collateral or third-party guarantees.

Conclusion

Staycations, in which guests check into opulent hotels to unwind and relieve stress, are said to be a growing trend. Major hotel chains like Marriott International, IHG Hotels & Resorts, and Oberoi Hotels are responding to these requirements by launching staycation packages that let visitors select from a variety of carefully crafted experiences right inside the hotel. 

The travel and tourism sector in India has enormous growth potential. The e-Visa program's extension, which is anticipated to triple the number of tourists visiting India, is another development that the business is anticipating. According to a joint study by Assocham and Yes Bank, India's travel and tourism industry has the potential to grow by 2.5% due to increased budgetary allocation and reasonably priced healthcare facilities.