The Tourism & Hospitality (T&H) segment in India is likely to do well in the coming months and year as the Government of India has laid special focus on promoting Tourism in India. Travel and tourism segment is the third-largest foreign exchange earner for India. Prime Minister of India in his recent Independence Day speech has given a call to the countrymen to visit 15 domestic tourist destinations by 2022. This is likely to boost domestic tourism and generate employment opportunities for the local population. Once the demand is built, the tourism infrastructure will come up either through private enterprise or government push. The T&H sector in India have the potential to drive the service industry and ultimately boost economic growth.The development of tourism infrastructure is being given top priority by the Government of India in order to provide a rich & pleasant experience to the tourists and derive economic benefits for the country. Sandeep Sharma takes a look at the Tourism & Hospitality sector in India.
FACTS AND FIGURES
According to IBEF, the tourism & hospitality sector’s contribution to India’s GDP is expected to increase from ` 15.24 trillion (US$ 234.03 billion) in 2017 to ` 32.05 trillion (US$ 492.21 billion) in 2028. India ranked 7th among 184 countries in terms of travel & tourism’s total contribution to GDP in 2017. The Foreign Tourist Arrivals in India during 2016, 2017 and 2018 were 8.80 million, 10.04 million and 10.6 million respectively. Foreign exchange earnings from tourism in India stood at US$27.7 billion in 2018-19 compared to US$28.7 billion in 2017-18.
The Ministry of Tourism under its flagship schemes of Swadesh Darshan and National Mission on Pilgrimage Rejuvenation and Spiritual, Heritage Augmentation Drive (PRASHAD) isgiving due emphasis for development of tourism infrastructure and facilities. The ministry is focussing on increasing and facilitating tourism in India by augmenting tourism infrastructure, easing of visa regime, assurance of quality standards in services of tourism service providers, etc. Under the Swadesh Darshan Scheme, 15 themes have been identified for developing theme based circuits. These themes include Buddhist Circuit, Coastal Circuit, Desert Circuit, Eco Circuit, Heritage Circuit, Himalayan Circuit, Krishna Circuit, North-East Circuit, Ramayana Circuit, Rural Circuit, Spiritual Circuit, Sufi Circuit, Tirthankar Circuit, Tribal Circuit and Wildlife Circuit.
Under the PRASHAD Scheme, 41 religious cities/sites in 25 States have been identified for development which are Amaravati and Srisailam (Andhra Pradesh), Kamakhya (Assam), Parasuram Kund (Lohit District, Arunachal Pradesh), Patna and Gaya (Bihar), Balmeshwari Devi Temple (Rajnandgaon, Chhattisgarh), Dwarka and Somnath (Gujarat), Gurudwara Nada Saheb (Panchkula, Haryana), Maa Chintpurni (Una, Himachal Pradesh), Hazratbal and Katra (Jammu & Kashmir), Deogarh and Parasnath (Jharkhand), Chamundeshwari Devi (Mysuru, Karnataka), Guruvayoor, St. Thomas International Shrine (Malayattoor) and Cheraman Juma Mosque (Thrissur, Kerala), Omkareshwar and Amarkantak (Madhya Pradesh), Babedpara, West Jaintia Hills and Sohra (Meghalaya), Aizwal (Mizoram), Kohima and Mokokchung Districts(Nagaland), Trimbakeshwar (Maharashtra), Puri (Odisha), Amritsar (Punjab), Ajmer (Rajasthan), Kanchipuram and Vellankani (Tamil Nadu), Tripura Sundari (Tripura), Varanasi and Mathura (Uttar Pradesh), Badrinath, Kedarnath, Gangotri and Yamunotri (Uttarakhand) and Belur (West Bengal).As the Hospitality sector is more or less connected with the Tourism sector, the development of the above-mentioned sites are likely to pave way for development of new hotel properties, and expansion of the existing properties across the country thus accomodating tourist on a wider scale.
Under ‘Adopt a Heritage site scheme’, ten MoUs have been signed for developing tourist amenities at the following sites: 1) Area surrounding Gangotri Temple & Trail to Gaumukh, Uttarakhand. 2) Mt. Stok Kangri Trek, Ladakh, Jammu and Kashmir. 3) Red Fort, New Delhi. 4) Gandikota Fort, Andhra Pradesh. 5) Surajkund, Haryana. 6) Jantar Mantar, Delhi. 7) Qutub Minar, Delhi. 8) Ajanta Caves, Maharashtra. 9) Leh Palace, Jammu & Kashmir, and 10) Hampi (Hazara Rama Temple), Karnataka
The Ministry of Tourism extends Central Financial Assistance to the State Governments/Union Territory Administrations for tourism projects identified in consultation with them for the improvement of existing tourism products and also for developing new ones. Under the Centrally Sponsored Scheme of Product / Infrastructure Development for Destinations and Circuits, 100% Central Assistance is given for development of destinations/ circuits including mega projects to world standard and also for rural tourism infrastructure development. The Ministry of Tourism provides financial assistance up to Rs. 5.00 crore for the development of Destinations and Rs. 8.00 crore for Circuits. The upper limit of financial assistance has been increased to Rs. 25 crore and Rs. 50 crore for development of identified mega destinations and circuits respectively.Under the schemes to promote rural tourism inthe country, the thrust is for development of tourism infrastructure at the identified rural tourism sites so that socio-economic benefits percolate down to the rural community. A maximum of Rs. 50.00 lakh is sanctioned for each project under this scheme for development of tourism related infrastructure.
HOSPITALITY SECTOR OUTLOOK
According to CARE Ratings report titled, ‘Indian Hotel Industry - Review & Prospects’, released in January 2019, the hospitality industry is likely to register an overall healthy growth in revenueon back of economic growth and consistently growing middle class along with increasing disposable income. There are various other key factors that drive the market, including India’s attractiveness as a medical tourism destination; steadily growing Meetings, Incentives, Conferences and Exhibitions (MICE) segment; and, an increasing fondness among millennial to travel. Also, the expected future inventory in 11 major markets (across categories - only branded) is lower at around 49,400 rooms for the next 5 years (FY18 to FY23). Therefore, with increasing demand on back of improvement in economic activities and lower room additions, CARE Ratings expect the major markets in the industry to sustain the average room rates (ARRs) going forward and grow at an average of 3.5-4.5% per annum. Also, the occupancy is expected to inch up to an average of about 68-70% by the end of FY23 compared with 66.6% in FY18. Accordingly, the hotel industry is expected to see an increase in room revenue at the rate of about 10-12% CAGR over the 5 years.
As per the Government of India Vision-2030, the country is poised to become a five trillion dollar economy in the next five years and aspires to become 10 trillion dollar economy thereafter. The government plans to create physical and social infrastructure for ten trillion dollar economy. The Government of India is taking steps to augment the various sectors of the economy like roads & highways, railways, airports, and irrigation. Due to the concerted efforts of the government in various sectors of the economy, it is likely to attract foreign investment in India. The growth of the economy promises healthy increase in boosting the Tourism and Hospitality sector. Tourism is a major engine of economic growth and if boosted can be one of the main source of earning foreign exchange. Exploring the tourism potential across the length and breadth of the country can lead to generation of large scale employment of diverse kind, from the most specialized to the unskilled and hence can play a major role in creation of additional employment opportunities.