SWOT ANALYSIS ON

TOURISM INDUSTRY

IN

INDIA

SUBMITTED BY-

DEEPANKAR SINGH

2010MB43

Incredible India !!India is probably the only country that offers various categories of tourism. These include history tourism, adventure tourism, medical tourism (ayurveda and other forms of Indian medications), spiritual tourism, beach tourism (India has the longest coastline in the East) etc. Explore India - choose the locales of your choice, and see what each state has to offer. Lose yourself in the wonder that is India. Meander through lands steeped in chivalry and pageantry that begin before recorded history. Explore modern cities that have grown organically from the roots of a multi-hued past. Make a pilgrimage to holy shrines that echo with tales of antiquity. Frolic on a vast array of golden beaches that dot an enviable coastline, washed by two seas and an ocean. Sport with adventure in style. Let the jungle lure you to a fascinating world at a diverse array of wildlife sanctuaries and national parks....... this is the wonder that is India.

Indian Tourism industry is one of the most important export industries of the country. Although the international tourist inflow is relatively low,   India has found tourism emerging as an important sector of its economy.

Tourism yields substantial foreign exchange for India. It is turning into a volume game where a large number of participants are contributing to the revenue of the industry. Segments such as hotels, tour operators, airlines, shipping etc., are significant contributors to this...

OVERVIEW

SIZE

o Travel and Tourism is a US$41.8-billion industry in India, 5.3% of GDP

o 4.9 million international tourist arrivals in 2007, an increase of over 9% from the previous year

o 382 million domestic visits estimated in 2006; the domestic tourism market grew at about 12% CAGR in the last 5 years

o Only 109,000 rooms in 1,980 hotels across the country registered in 2006*

o Five-star hotel rooms constitute 27%, four-star 7.5% and three-star 22%

o All India industrywide occupancy of over 66.9% in 2006-07

o Scarcity of rooms in several cities such as Mumbai, Delhi and Bengaluru has resulted in rates of over US$300 per night

STRUCTURE

o The industry is dominated by 4-5 large Indian hotel owner-managers – The Taj Group, Oberoi, ITC, Leela and Bharat Hotels

o Most major international chains like Sheraton/Starwood, Inter Continental, Hyatt, Marriott, Hilton, Le Meridien, Carlson, Shangri-La, Four Seasons are represented by management or franchise contracts. Aman and Accor plan to own hotels as well.

o Others such as Ritz Carlton and Mandarin are in the process of establishing their presence in India, primarily through management contracts

o The branded segment represents approximately 30,000 rooms or 30% of the total hotel stock

o Compounded growth in the last 5 years, in terms of rooms added, was the strongest in the five-star deluxe category at 6%

POLICY

o 100% FDI is permitted in Hotels and Tourism, through the automatic route

o Hotels in Delhi set up before 2010 have been granted infrastructure status with special tax concessions

Key Statistics - India

Travel & Tourism Revenue (US$ billion, 2006)

41.8

Inbound Tourist Arrivals million nos. (2007)

4.9

Inbound Tourism Revenue (US$ billion, 2007)

7.7

Average Spend per Tourist (US$, 2007)

1566

Domestic Tourism (million visits., 2005)

382

Outbound Tourism (million nos., 2005)

7.18

Hotel Industry – number of hotels (2006)

1,980

Hotel Industry – number of rooms (2006)

1,09,392

Source: WTTC Country Reports, FHRAI, HVS, Dept. of Tourism

OUTLOOK

o Foreign tourist arrivals are targeted to grow to 10 million in 5 years

o Domestic tourism is expected to increase by 15% to 20% p.a. over the next 5 years

o Rapid growth in average room rates is expected to continue until sufficient new supply comes on stream

o Average room rates increased by over 15% in 2007; the fastest growth rate was in 4-star and 5-star segments

POTENTIAL

o Favourable demographics and rapid economic growth point to a long-term secular uptrend in the domestic demand for hotels – for business and leisure

o International inbound traffic is expected to grow rapidly with increasing investment and trade activity

o WTTC has identified India as one of the fastest growing countries in terms of tourism demand

o India has benefited from an aggressive promotion campaign and an out-performing economy

o The growth momentum in domestic and international travel is expected to receive a further boost with more budget airlines/lower air-fares, open sky policies and expected improvements in travel infrastructure (roads, airports, railways)

o There are opportunities in all price and value chain segments due to the shortage of hotel stock; plans are on to increase quality accommodation from the current 110,000 rooms to 200,000 rooms by 2011

o Hotel-asset construction and ownership

o Low penetration of brands (about 30%) provides opportunities for management contracts and franchising with local hotel owners/developers

o Serviced apartments in major cities – no chain operating in all cities, very little stock

o Need for world-class MICE infrastructure in major Indian cities

o Significant requirement of hotel stock and tourist infrastructure for the Commonwealth Games in New Delhi in 2010

TOURISM DESTINATIONS

Religious Tourism

Tirupati, Haridvar, Kashi, Kanyakumari, shirdi sai baba, Amarnath, Vaishno Devi, Akshardham

Cultural Tourism Taj Mahal, Gol Gumbaz, Qutub Minar, Hampi

Coastal Tourism Kerala, Cochin, Goa

Industry Tourism Mumbai, Delhi, Bangalore, Hyderabad

Hill Stations Ooty, Kodai, Manali, Shimla, Darjeeling