Indian Tourism Industry

Topics: Tourism, Inventory, Types of tourism Pages: 11 (3275 words) Published: July 5, 2011

This sector is one of the most crucial sectors of the economy in the country. It is not only a significant contributor to GDP and foreign exchange reserve of the country, but also it provides widespread employment. Tourism sector can also be considered the backbone for allied sectors, like hospitality, civil aviation, and transport. Sensing the importance of the sector, Indian Government has invested abundantly in the past for infrastructure development. It has been partially successful with increase in foreign tourist arrivals over the last decade, courtesy “Incredible India Campaign”. Infrastructure in the hospitality sector is still a matter of concern amongst other factors like season-based tourism in some states. India is currently ranked 12th in the Asia Pacific region and 68th overall in the list of the world's attractive destinations, according to the Travel and Tourism Competitiveness Report 2011 by the World Economic Forum (WEF).

Domestic tourism is very huge in the country, promoted by various intents. Pilgrim and leisure tourism are two very important sectors. A lot of scope is available for new businesses to enter and tap the segment. With the rising economic status of the middle class and affluent population, outbound travel is on the rise. Though Thailand, Malaysia, and Singapore circuit the most favored destinations among the tourists, interest for off-track destinations are also increasing. Foreign tourist arrivals in the country have increased substantially during the past decade motivated by both, business and leisure needs and are further expected to grow at a CAGR of around 8% during 2010-2014, as per our new research report “Indian Tourism Industry Analysis”.

Sub-segments of Tourism Industry

 The tourism sector in India has revealed that it is set for a fast growth stage marked by a huge potential in various segments in the industry. Government initiatives, both at center and state level have facilitated rapid development in the sector and are expected to continue in future as well. The market is fragmented and unorganized but is highly competitive. Also, various trends have emerged during the last few years.

Supply :| We have a shortage of more than 100,000 guest rooms short in the country. This is expected to keep increasing for the next few years. | Demand :| Largely depends on business travelers but tourist traffic is also on the rise. Demand normally spurts in the peak season between November and March.| Barriers to entry :| High capital costs, poor infrastructure facilities and scarcity of land especially in the metros.| Bargaining power of suppliers:| Limited due to higher competition, especially in the metros.| Bargaining power of customers:| Higher in metro cities due to increasing room supply.| Competition:| Intense in metro cities, slowly picking up in secondary cities. Competition has picked up due to the entry of foreign hotel chains.|

Over the years, demand-supply gap in the Indian hospitality industry has widened. For instance, while there were only 11,000 hotel rooms in Delhi in early 2009, an additional 30,000 hotel rooms will be required in the city for the Commonwealth Games 2010. This gap is expected to reduce in the future as several hotel projects are in the pipeline. As on December 31, 2008, India had 1,593 government-approved hotels, with 95,087 rooms. More than 15,600 rooms are expected to be added in 2010. Investment in travel and tourism in India is expected to reach US$ 34.7 billion in 2010 and US$ 109.3 billion by 2020.

Contribution to the economy
The hotel and tourism industry’s contribution to the Indian economy by way of foreign direct investments (FDI) inflows were pegged at US$ 2.35 billion from April 2000 to February 2011, according to the Department of Industrial Policy and Promotion (DIPP). The domestic hospitality sector is...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Tourism Industry Essay
  • Indian Tourism Industry & Economic Reforms Essay
  • Destination Marketing for the Development of Tourism Industry Essay
  • Tourism Industry explanation Essay
  • indian IT industry Essay
  • Essay about Tourism Industry
  • Indian Pharma Industry Essay
  • Tourism and Indian Economy Essay

Become a StudyMode Member

Sign Up - It's Free