Tourism & Hospitality About the Sector

GrowthSource Tourism & Hospitality Industry Report

About the Sector

January 2020

For Tourism & Hospitality Skills Council

By: GS Advisors Private Ltd. www.growthsource.in

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Disclaimer r

All information contained in this document has been obtained by GrowthSource (GS Advisors Private Limited) from sources believed by it to be accurate and reliable. Although reasonable care has been taken to ensure that the information herein is true, such information is provided ‘as is’ without any warranty of any kind, and GrowthSource in particular, makes no representation or warranty, express or implied, as to the accuracy, timeliness or completeness of any such information. All information contained herein must be construed solely as statements of opinion, and GrowthSource shall not be liable for any losses incurred by users from any use of this document or its contents in any manner. Opinions expressed in this document are not the opinions of GrowthSource (GS Advisors Private Limited) and should not be construed as any indication of recommendation by anyone. 2

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Contents

Global Industry Overview 4

Hospitality and Tourism Industry in India 10

Hotel Industry 16

Restaurants Industry 21

Facilities Management 26

Tours and Travel 32

Adventure Tourism 39

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Global Industry Overview

Tourism is an important component of export diversification both for emerging and advanced economies, with a strong capacity to reduce trade deficits and to compensate for weaker export revenues from other goods and services. The Tourism and Hospitality industry is one of the fastest growing industries in the world.

According to the World Tourism Organization (UNWTO) 1.5 billion international tourist arrivals were recorded in 2019, globally. A 4% increase on the previous year, which is also forecast for 2020, confirming tourism as a leading and resilient economic sector, especially in view of current uncertainties. By the same token, this calls for such growth to be managed responsibly to best seize the opportunities tourism can generate for communities around the world. 1

This is the tenth consecutive year of growth, although slower compared to the exceptional rates of 2017 (+7%) and 2018 (+2018). Demand was slower in advanced economies and particularly in Europe. 1

Economic growth is projected to pick up to 3.4% in 2020 from 3.0% from 2019, according to the International Monetary Fund’s World Economic outlook update of October 2019, reflecting primarily an improvement in a number of emerging markets in Latin America, the Middle East and Europe. Yet, with uncertainty about prospects for several of these countries projected, projected slowdown in China and US, and prominent downside risks, a much more subdued pace of global activities could well materialized. 1

India’s Position in The World

The Tourism and Hospitality industry in India is one of the largest service industries. Tourism is an integral pillar of the Make in India program. The Tourism industry in India generated USD 247.3 Bn showing a growth of 6.7% during the year 2018, accounting for 9.2% of the total economy.2

References: 1 UNWTO World Tourism Barometer January 2020 Excerpts, https://webunwto.s3.eu-west-1.amazonaws.com/s3fs-public/2020- 01/UNWTO_Barom20_01_January_excerpt.pdf 4

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2 Tourism and Hospitality https://www.makeinindia.com/sector/tourism-and-hospitality Some important fact of Indian Tourism: 2019 3

Inbound Tourism in India: 3

Reference: 3 India Tourism Statistics at a Glance 2020, https://tourism.gov.in/sites/default/files/2020- 09/ITS%20at%20a%20glance_Book%20%282%29.pdf

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Month-wise Foreign Tourist Arrivals in India, Jan 2018-June 2020 (Provisional): 3

P: Provisional, @ Growth rate over January-June of previous year.

Purpose wise foreign Tourists Arrival in 2019: 3

Reference: 3 India Tourism Statistics at a Glance 2020, https://tourism.gov.in/sites/default/files/2020- 09/ITS%20at%20a%20glance_Book%20%282%29.pdf

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Top 10 Source Countries for Foreign Tourist Arrivals (FTAs) in India in 2019: 3

The Indian tourism & hospitality industry has emerged as one of the key drivers of growth among the services sector in India. Tourism in India has significant potential considering the rich cultural and historical heritage, variety in ecology, terrains and places of natural beauty spread across the country.

According to World Travel Tourism Council, India ranked third among 185 countries in terms of travel and tourism’s total contribution to GDP in 2018, and 34th in the Travel and Tourism Competitiveness Report 2019 published by the World Economic Forum. 4

During 2019, foreign tourist arrivals (FTAs) in India stood at 10.89 million, achieving a growth rate of 3.20% y-o-y. During 2019, FEEs from tourism increased 4.8% y-o-y to Rs 1,94,881 crore (US$ 29.96 billion). In 2019, arrivals through e-Tourist Visa increased by 23.6% y-o-y to 2.9 million. 4

By 2029 Indian Tourism Sector is expected to grow 6.7% to reach Rs. 35 trillion (US$ 488 billion), and accounting for 9.2% of the total economy. International Tourists arrival in India is expected to reach 20.5 million by 2028. 4

Reference: 3 India Tourism Statistics at a Glance 2020, https://tourism.gov.in/sites/default/files/2020- 09/ITS%20at%20a%20glance_Book%20%282%29.pdf 4 https://www.ibef.org/industry/tourism-hospitality-india/infographic 7

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A growing Travel & Tourism Industry not only drives the country’s economic growth in other sectors but also places it on the global map. Due to various measures adopted by the government such as Incredible India, Athithi Devo Bhava, introduction of E-tourist visa and many others, inflow of foreign (FTAs) and domestic tourists (TAs) has risen significantly in the last five years.

The Finance Minister has allocated a budget of Rs. 2500 Crore for 2020-21 for the development of tourism sector in the nation. During the budget announcement the fact that Tourism growth is directly related to economic growth and employment generation. The travel and tourism industry has accepted the measures positively and have lauded the initiatives. 5

The budget proposes 100 more airports by 2024 under the subsidised UDAN scheme, introduction of more Tejas trains from iconic destinations and development of five iconic destinations. 5

It has also been a positive step to increase the infrastructure spending like creating five ‘smart cities’ and extending grant to states for destination development. Five archaeological sites, Rakhigarhi in Haryana, Hastinapur in UP, Dholavira in Gujarat, Shivsagar in Assam and Adichanallur in Tamil Nadu will be developed as iconic destinations with museums on the site to provide boost to the tourism sector. 5

The budget also proposes to allocate Rs. 3150 crores for the Ministry of Culture. The first Indian Institute of Heritage and Conservation will be set up with the status of a deemed university to be operated under the Ministry of Culture. 5

Reference: 5 https://www.traveltradejournal.com/2020/02/india-union-budget-2020-views-of-tourism-and-hospitality-industry/

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As of the overall year of 2019 share of top 10 States/UTs of India in Number of Domestic Tourist Visits: 3

P: Provisional # Figure for the year 2019 has been estimated using All India growth rate

Major Countries availing e-Tourist Visas in 2019 & January-March 2020 (provisional): 3

Reference: 3 India Tourism Statistics at a Glance 2020, https://tourism.gov.in/sites/default/files/2020- 09/ITS%20at%20a%20glance_Book%20%282%29.pdf

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Hospitality and Tourism Industry in India

The Hospitality and Tourism Industry is one of the key drivers for economic growth among the services sector in India.

It not only promotes different cultures and cuisines, but also fuels employment generation and expansion of other sectors leading to a robust economy. Total contribution by travel and tourism sector to India’s GDP is expected to increase from Rs 15.24 lakh crore (US$ 234.03 billion) in 2017 to Rs 32.05 lakh crore (US$ 492.21 billion) in 2028. Total earning from the sector in India is targeted to reach US$ 50 billion by 2022. 6

Under the Swadesh Darshan scheme, 77 projects have been sanctioned of worth Rs 6,035.70 crore (US$ 863.60 million). In Union Budget 2020-21, the Government has allotted Rs 1,200 crore (US$ 171.70 million) for the development of tourist circuits under Swadesh Darshan for Northeast. 6

The launch of several branding and marketing initiatives by the Government of India such as ‘Incredible India!’ and ‘Athiti Devo Bhava’ has provided a focused impetus to growth. The Indian Government has also released a fresh category of visa - the medical visa or M-visa, to encourage medical tourism in the country. The Government is working to achieve one per cent share in world's international tourist arrivals by 2020 and two per cent share by 2025. 6

The Government is also making serious efforts to boost investment in the tourism sector. In the hotel and tourism sector, 100 per cent FDI (Foreign Direct Investment) is allowed through the automatic route. A five-year tax holiday has been offered for 2-, 3- and 4-star category hotels located around UNESCO World Heritage sites (except Delhi and Mumbai). 6

Ministry of Tourism launched DekhoApnaDesh webinar in April 2020 to provide information on the many destinations and the sheer depth and expanse of the culture and heritage of Incredible India. Till August 17, 2020, 48 webinars were conducted under the series. 6

Reference:

6 https://www.ibef.org/industry/indian-tourism-and-hospitality-industry-analysis-presentation

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Types of Tourism Tourism is one of the fastest growing industries in India. Being one of the biggest industries, tourism falls into various sub-categories. These include: 1. Wellness Tourism 2. Religious Tourism 3. Heritage Tourism 4. Medical Tourism 5. Sports & Adventure Tourism 6. Niche Tourism 7. Nature, eco & Rural Tourism 8. Wildlife Tourism 9. Leisure and recreation 10. Cruise 11. Gastronomy 12. Desert 13. Culture 14. MICE

Wellness Tourism Wellness Tourism attracts many international visitors keen on finding peace, promoting a balanced lifestyle, while also incorporating healthier treatments and activities. Some of the sought-after treatments include Ayurveda, yoga, and meditation. Wellness tourism focuses on travelling for health and well-being. Many activities consist of rejuvenation treatments, healthy cleanses, spiritual growth, natural therapies, spa treatments, creative development, and exercises.

In 2017, India ranked 7th in the top 20 wellness tourism markets, and 10th among the top 20 spa markets in the world, while ranking 3rd in both the top 10 wellness tourism markets and top 10 spa markets in Asia Pacific. According to reports, Indians made 56 million wellness- related trips, both domestic and international, in 2017 (a growth of 45 per cent over 2015), which included expenditures worth $16.3 billion. Also, India ranked 2nd in terms of leading growth markets for wellness tourism, depicting an average annual growth rate of 20.3 per cent from 2015 to 2017, adding a little over 17 million wellness trips in the same period. 7

Reference: 7 https://www.traveltrendstoday.in/news/india-tourism/item/7482-wellness-tourism-taking-a-step-forward

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The Indian wellness tourism industry thrives majorly on the key segments like ayurveda, yoga, meditation, and rejuvenation amongst others. As per industry speculations, Indian wellness tourism is set to reach US$ 9 billion by 2020. 7

Religious Tourism India is one of the biggest religious destinations that has captured global curiosity. With several famous temples, mosques, gurdwaras and spiritual sites – India has always offered mass appeal for those looking to explore a different side of life. Religion and spirituality are two strong factors in attracting tourism. Some of the most popular spiritual destinations are Rishikesh, Tiruvannamalai, Shirdi, Bodhgaya, Amritsar, Ajmer, Tirupati, Rameswaram, Thanjavur, and Varanasi.

Travelling to holy sites and religious locations are a significant motivating force for domestic tourism. Spiritual tourism is related a little more to wellness tourism and is a prime attracting force for many international visitors who find spiritual cleansing more exotic and who want to explore a new way of life.

Exploring eastern tradition and value is a culture change many of those coming from other parts of the world which makes wellness and spiritual tourism another important contributing aspect. The government’s initiatives to encourage religious tourism include allocation of special budgeting to promote religious destinations.

In PRASHAD scheme, 51 sites have been identified at present in 28 States for development. The inception of the scheme has INR 8400.2 Mn (USD 114.95 Mn) sanctioned for 28 projects in 17 States with a total release of INR 5051.5 Mn (USD 69.12 Mn) till 31.12.2019. 8

Heritage Tourism With incredibly rich culture and historical triumph, India is home to several ancient palaces, monuments, forts that invite tourism. Ministry of Tourism (MoT) launched the Swadesh Darshan Scheme (Central Sector Scheme)– for integrated development of theme-based tourist circuits in the country in 2014-15. In Swadesh Darshan Scheme INR 60357.0 Mn (USD 825.91 Mn) has been sanctioned for 77 projects with a total release of Rs. 36761.4 Mn (USD 503.03 Mn) till 31.12.2019 covering all thematic circuits. 8

References: 7 https://www.traveltrendstoday.in/news/india-tourism/item/7482-wellness-tourism-taking-a-step-forward 8 https://www.makeinindia.com/sector/tourism-and-hospitality 12

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Medical Tourism This is one of the largest growing sectors in India. Since medical tourism is one of the most common reasons for international visits, there have been more relaxed policies regarding visas on arrival and e-visas. India provides a large portion of alternative medicine at a lower cost than many countries around the globe.

Being one of the fastest growing medical destinations around the world, India is predicted to drive higher with time. Everybody can get tertiary medical treatment in India which is either not available or people cannot afford it in their home country. The NITI Aayog (The National Institute of Transforming India) identified the Medical Value Travel as a major source of foreign exchange earnings. According to a report by FICCI and IMS Health- India has nearly 18% of the global medical tourism market. Also, it has been estimated that India’s medical tourism industry could be worth $9 billion, and account for 20% of the global market share by 2020. The report even pointed out that India enjoyed high credibility in wellness, prevention, and alternative medicines. 9

Capitalising on the growing inflow of medical tourists, the government has expanded its e- tourism VISA regime in February 2019 to include medical visas. The maximum duration of stay under this visa is 6 months.

Adventure Tourism India offers a wide range of adventure sports for tourists. Trekking and skiing in the Himalayas, white water rafting on the Ganges and Beas, camel and jeep safaris in the deserts of Rajasthan, paragliding in Himachal, water sports in Goa and scuba diving in Lakshadweep and Andaman & Nicobar are just some of the options available for adventure tourists.

Niche Tourism This form of tourism explores specialization into the unique aspects of the country. Some of these include golf, film, adventure, medical, polo, MICE, (Meetings Incentives Conferences & Exhibitions) Eco and cruise tourism. This has also been done to overcome seasonality challenge in tourism and to promote India as a 365 days destination. Cruising is one of the most dynamic and fastest-growing segments of leisure travel, with an estimated market size of 1.2 million cruise visitors by 2030 according to the Government of India.

Reference: 9 http://ficci.in/ficci-in-news-page.asp?nid=17703 13

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Rural Tourism A typical village life as well as varied cultures and lifestyles in rural India make it another appealing aspect that pulls in heavy tourism. Around 31 villages across India have been earmarked for development, and the Ministry of Tourism is working with local committees to develop tourism. The Ministry of Tourism is expected to develop institutional mechanisms for supporting, promoting and organising large numbers of fairs, festivals and craft bazaars in rural areas, which will provide exposure and recognition, as well as an additional flow of income to local artisans.

Wildlife Tourism With a large number of animal preservation centers and national parks – India is home to several species of animals that make for popular tourist attractions. Ministry of Tourism has also ear marked Rs 2803.39 lakh for the development of Wildlife Circuit at in Madhya Pradesh.

Potential Growth

Tourism and travel are huge factors in benefitting India’s economy, environment, and image. With increased public interest in exploring India’s heritage, religious, wildlife, and adventure locations – there is also a corresponding effort to preserve these sites. For example, beautiful forts, and palaces in the cities of Hyderabad and Jaipur are studied and preserved. Tour guides are also well-versed in the history of certain monuments which helps safeguard knowledge and promote a sense of pride in what makes the country unique. This in turn continues as a cycle inviting more and more visitors to share in the beauty and history. Also, with animals and wildlife locations, preservation leads to taking care of the environment and our resources.

Government Initiatives

The Indian Government has realised the country’s potential in the tourism industry and has taken several steps to make India a global tourism hub.

Some of the major initiatives planned by the Government of India to boost the tourism and hospitality sector of India are as follows: 10

• Ministry of Tourism launched DekhoApnaDesh webinar series to provide information on many destinations and sheer depth and expanse on the culture and heritage of India.

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• Ministry of Tourism launched Audio Guide facility App called Audio Odigos for 12 sites in India (including iconic sites).

• Prime Minister, Mr Narendra Modi urged people to visit 15 domestic tourist destinations in India by 2022. • Statue of Sardar Vallabhbhai Patel, also known as ‘Statue of Unity’, was inaugurated in October 2018. It is the highest standing statue in the world at a height of 182 metre. It is expected to boost the tourism sector in the country and put it on the world tourism map. • Government of India is working to achieve one per cent share in world's international tourist arrivals by 2020 and 2 per cent share by 2025. • Under Budget 2020-21, the Government of India has allotted Rs 1,200 crore (US$ 171.70 million) for development of tourist circuits under Swadesh Darshan for eight Northeast states. • Under Budget 2020-21, the Government of India has allotted Rs 207.55 crore (US$ 29.70 million) for development of tourist circuits under PRASHAD scheme. • In 2019, Government reduced GST on hotel rooms with tariffs of Rs 1,001 (US$ 14.32) to Rs 7,500 (US$ 107.31) per night to 12 per cent and those above Rs 7,501 (US$ 107.32) to 18 per cent to increase India’s competitiveness as a tourism destination. • In September 2019, Japan joined a band of Asian countries, including Taiwan and Korea among others, to enter India’s tourism market.

The industry has four significant sub sectors: 1. Hotels 2. Facilities management 3. Restaurants 4. Tour and travel

Reference: 10 https://www.ibef.org/industry/tourism-hospitality-india.aspx

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Hotel Industry A booming travel and tourism industry have a direct impact on the hospitality sector clocking record growth in Occupancy Rates and Revenue per Available Rooms (RevPAR) of Indian Branded Hotels over the last 10 years. According to Indian Hotel Industry Survey 2016-17, compiled by Hotelivate and Federation of Hotel & Restaurant Associations of India (FHRAI) the Indian Hotel Industry is expected to touch $ 13 billion by 2020.10

The industry provides direct employment to approximately 17 million people as per data shared by FHRAI which comprises of 2,662 member hotels, 1,225 restaurants, 95 associate members and four regional associations.10

The net sales of the industry witnessed a 5.5% increase during the first half of fiscal 2019. Revenue registered a CAGR growth of about 3.1% for the 3-year period between fiscal 2017 and fiscal 2019.11

The demand slow down for hospitality industry could be the outcome of the general slowdown in the economy. Also, GST implementation in the country and various rate revisions further had a significant impact on the travellers’ sentiment. With the influx of both domestic and international tourism within the country, the hotel industry is growing and thriving. The marketplace has a wide range of hotel diversity with varying locations, themes, and service efficiency.12

Furthermore, nationwide occupancy rates witnessed 66.7 per cent growth in 2018-19 among 1,068 branded hotels tracked, the highest recorded since the last decade and 1.4 per cent higher than last year. It reached its highest RevPAR (Revenue per available room) at Rs 3,981 in 2018-19, a five per cent rise over last year. The industry also recorded an average rate of Rs 5,973 in 2018-19, a 3.6 per cent rise over last year.

References: 10 Indian Hotel Industry Survey 2016-17 by FHRAI & Hotelivate 11 Industry Research-Indian Hotel Industry by CARE Ratings

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The highest growth in average rates was witnessed by 2-star hotels at Rs 2,497 in 2018-19 an 18.1 per cent rise over last year. Growth in occupancy levels was 6.2 per cent over last year.

Exibit 1: Existing Supply across Major cities 2009/10 - 2018/19

12 Month Compounde City 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 Change d Growth

Agra** 1,439 1,439 1,739 1,299 1,293 1,755 2,036 2,092 2,256 2,125 -5.8% 4.4% Ahmedabad** 1,521 1,785 1,975 2,477 2,777 2,944 3,054 3,117 3,393 3,000 -11.6% 7.8% Bengaluru 5,597 5,947 7,713 8,536 10,162 11,117 11,539 11,995 12,594 14,287 13.4% 11.0% Chennai 3,806 4,066 4,904 6,330 7,105 7,444 7,585 8,332 9,061 9,863 8.9% 11.2% New Delhi* 8,129 9,111 10,697 11,338 12,370 13,193 14,142 14,296 14,450 14,730 1.9% 6.8% Gurugram** 1,980 3,246 3,782 4,559 5,190 5,323 5,117 5,263 5,890 5,866 -0.4% 12.8% Noida** 300 351 527 841 1,239 1,322 1,322 1,422 1,515 1,378 -9.0% 18.5% Goa 3,288 3,375 3,885 4,406 4,703 5,298 5,574 6,400 6,386 6,828 6.9% 8.5% Hyderabad 3,782 4,036 4,797 5,411 5,734 5,954 5,992 6,254 6,846 6,965 1.7% 7.0% Jaipur 2,472 2,554 3,054 4,129 4,523 4,822 4,931 5,058 5,352 5,613 4.9% 9.5% Kolkata 1,520 1,588 1,787 2,163 2,243 2,701 2,701 3,199 3,652 3,742 2.5% 10.5% Mumbai 9,877 11,303 12,052 12,807 13,022 12,865 13,054 13,494 13,524 13,687 1.2% 3.7% Pune 2,672 4,691 5,672 5,317 6,159 6,137 6,108 6,445 6,353 6,460 1.7% 10.3% Other Cities 15,412 18,039 21,729 24,642 24,657 26,820 28,445 31,852 35,293 38,815 10.0% 10.8% Total 61,795 71,531 84,313 94,255 1,01,177 1,07,695 1,11,600 1,19,219 1,26,565 1,33,359 5.4% 10.6% *New Delhi Excluding Gurgaon/Noida/Greater Noida Data **Agra/Ahmedabad/Gurugram/Noida witnessed a drop in inventory primarily due to shutting down & deflagging of some properties

The Indian hotel industry is on the upswing owing a great deal to technological advancement and modernization that has raised considerably the average revenues earned per room for hotels at every level of service, causing the industry to push forward with an increase in overall room availability.

The existing room supply grew by 5.4 per cent in 2018-19 to 1,33,359 branded hotel rooms in the country. Statistics of room supply for 13 major cities is as follows:

Out of the total revenue generated by the branded hotels, the share of room revenue was the highest 53.6 per cent in 2016-17 an increase over its percentage share in 2015-16. On the other hand, contribution from Food & Beverage and Banquets declined to 39.5% in 2016-17 from 41.5% in 2015-16. The contribution of the other operating departments has remained range-bound, with a marginal increase recorded in 2016-17 over the previous fiscal.12

12 Hotelivate & FHRAI India-Indian Hotel Industry Survey-2016-17

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This surge is attributed to the following factors: 1. Rise in both foreign and domestic travellers.

2. Upsurge in middle class travel and spending power

3. Significant rise in business and leisure travellers. According to World Travel and Tourism Council (WTTC) India ranked 18th in the number of business travellers in the country. This is expected to go within the top 5 in the coming years.

4. Doubling of air travel over the past 7 years

5. Rise in economic growth

6. Increasing Foreign Exchange Earnings

Classification of Hotels Hotels can be classified into 3 major segments: 1) Location: ● Airport Hotels ● Forest Hotels ● Resorts ● City Hotels ● Suburban Hotels ● Motels

2) Service: ● Upscale Hotels ● Mid-Market Hotels ● Economy Hotels

3) Themes ● Spa Hotels ● Heritage Hotels ● Ecotels ● Boutique Hotels

Some of the Top Brands of the International and Domestic Hotel Industry include:

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Top International Hotel Brands Top Domestic Hotel Brands Hyatt Taj Hotels Marriott International The Oberoi Group InterContinental Hotels Group ITC Hotels Accor Hospitality Company Lemon Tree Hotels Radisson Hotels Group Bharat Hotels Four Seasons Hotels Inc. Royal Orchid Hotels Westin Starwood Park Hotels Carlson Rezidor Pride Hotels

International hotel chains are expanding themselves throughout India. They have significantly increased their footmark and are expected to account for 47 per cent share in the Tourism & Hospitality sector by 2020 and 50 per cent by 2022. Posing a stiff competition to the local majors.

Increased foreign interest in the country has led the hotel industry to match the competition regarding service efficiency, technological improvement, and more rigid standardization into maintaining performance. This includes better infrastructure, new designs, rigorous training for potential staff, and overall ease.

Classification of Hotel Customers 1) Business Traveller - Business traveling is increasing with more and more opportunities that have been arising in India and around the world. Most of the times business individuals tend to be more price insensitive and are willing to pay a higher price for the ability to have a short comfortable stay and to be able to have the flexibility to book last minute. 2) Leisure Traveller - Often time many leisure travellers, both domestic and international, tend to explore new countries or different parts of their own country for cultural experiences, site-seeing, and heritage exploration. Most of the time leisure travellers tend to be more price sensitive and are willing to reduce flexibility of their place of residence for allocating their budget towards other aspects of their trip. 3) Airline Cabin Crew - Airline cabin crew members are a consistent source of business for the hotel industry. Since airlines and travel are a guaranteed business, they are provided with an annual contract that offers a set number of rooms for a fixed discounted price.

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The industry is expected to register an overall healthy growth in revenue following economic growth and consistently growing middle class along with increasing disposable income. Other key factors that drive the market are:

1. India’s attractiveness as a medical tourism destination 2. Steadily growing Meetings, Incentives, Conferences and Exhibitions (MICE) segment 3. Increasing fondness among millennial to travel

Furthermore, major markets in the industry are expected to sustain the average room rates (ARRs) and grow at an average of 3.5-4.5% per annum. Average occupancy is expected to rise to about 68-70% by the end of fiscal 2023 compared with 66.6% in fiscal 2018. Accordingly, the hotel industry is expected to see an increase in room revenue at the rate of about 10-12% CAGR over the next 5 years

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Restaurant Industry

One of India’s biggest appealing aspects is its cuisines and serves as a significant factor in inviting foreign and domestic tourists directly impacting the restaurant industry. Currently, India is the seventh largest economy in the world which continues to be one of the fastest growing and expected to become the fifth largest economy by 2023 with young population.

Indian economy’s growth has become more stable, diversified, and resilient due to strong GDP growth, increase in disposable income, declining unemployment and steady inflation. India is the world’s third largest economy in purchasing parity terms, aspires to better the lives of all its citizens and become a high-middle income country by 2030.

The industry is evolving rapidly with India being the youngest country with internet and tech- savvy consumer base, having a high disposable income with little time to cook indoors. This is reflected in the number of eating out frequency – an average of 6.6 per month in the country, providing food service players an exciting opportunity to expand. 18

According to a statement, NRAI IFSR 2019 estimates Indian food service industry’s market size at Rs 4,23,865 crore in 2018-19, which is expected to grow at a CAGR of 9 per cent to reach Rs 5,99,782 crore by 2022-23. While the food services industry has seen a steady growth over the last three years, the report says the industry has its fair share of roadblocks and challenges like high real estate and manpower costs, inadequate supply chain infrastructure, financing issues and majorly policy formulation. The main aim is to aid entrepreneurs and investors take informed decisions and unite the industry under one banner.18

Reference: 18 https://www.thestatesman.com/business/indian-restaurant-industry-employed-7-3-million-people-2018-19-nrai-1502753854.html

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Eating out preferences of the new-age, young, dynamic consumer has moved to weekdays from only weekends. The growing participation of women in the workforce and double-income families’ preference for eating out or ready-to-eat meals are creating new opportunities in the industry.

Eating out is not restricted to occasions such as business meetings, alternate to home cooking, looking to try new cuisines but has become an occasion in itself. Added to that, eating food at high-quality outlets has become a norm among the consumers across all socio- economic categories.

According to reports, Indian food service industry is the largest service sector in India after retail and insurance and is 20 times of the film industry, 4.7 times of hotels and 1.5 times of the pharmaceutical sector.

It offers tremendous opportunity for growth due to changing economic and demographic profile, secular trends of the youth, growing affluence, rising urbanisation, increase in disposable income and increased internet penetration. Some other factors that are driving consumption are growth of organised retail, burgeoning digital connectivity, technological innovations and increased focus on health and wellness.

With factors such as urbanisation, rising income levels and improved investment climate, the food service sector holds a huge opportunity. The sector has observed tremendous development in the past three years, which grew at 11 per cent CAGR during 2015-16 to 2018-19. The sector is estimated at Rs 4,23,865 crores in 2018-19 and is projected to reach Rs 5,99,784 at a CAGR of 9 per cent by 2022-23. 19

The growth is noticeable at segment and format levels as well of the food service sector in India. The organised segment, which holds a share of 35 per cent, witnessed a CAGR of 13 per cent during 2015-16 to 2018-19. The sector is estimated to have a market size of Rs 1,48,353 cr in 2018-19. The segment is further estimated to grow at a CAGR of 15 per cent to reach Rs 2,57,907 in 2022-2023. 19

Reference: 19 https://www.foodhospitality.in/in-focus/nrai-india-food-services-report-ifsr-2019-the-sector-is-projected-to-grow-at-a-cagr-of-9- per-cent-by-2022-23/417232/

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The unorganised sector’s size is estimated to reach Rs. 2,75,512 crore in 2018-19, with a 65 per cent share of the overall food service market. The segment witnessed a CAGR of 10 per cent during 2015-16 to 2018-19. The segment is further estimated to grow at a CAGR of six per cent from 2018-19 to 2022-2023 to reach a value of Rs 3,41,877 cr. However, the share of the unorganised sector is forecast to drop to 57 per cent by 2022-23. 19

The organised segment comprises standalone and chain restaurants. The organised standalone market has a share of 75 per cent with an estimated size of Rs 1,10,534 cr in 2018-2019. The standalone market has grown at a CAGR of 11 per cent between 2015-16 and 2018-19. The chain format within the organised segment has a 25 per cent market share, with an estimated size of Rs 37,819 cr in 2018-19, which has grown at a CAGR of 23 per cent from 2015-16 to 2018-19.19

With young adults eating out more commonly and sharing more interest in foreign cuisine - there has been a significant increase in foreign and Indian casual dining restaurants as well as fast food chains. Many existing fast food joints are also branching out and adding outlets throughout the country.

Besides this, Indian consumers are willing to experiment with various authentic Indian regional as well as cuisines from other international regions. The food service industry is catering to these demands by serving a variety of foods from across the world like Italian, Mexican, Japanese, Middle Eastern, European, African besides the popular Chinese, Thai and American fast food.

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Globally, food businesses are being promoted to boost tourism. A similar effort can be implemented in India capitalising on the diversity that the country has to offer. Food hubs, envisaged as experience centers can serve as places for experiencing local and regional cuisines as part of a larger culture. Hospitality is a great dining experience when guest’s needs are anticipated and met that goes far beyond presentation, unique food concept and exceptional service.

India’s foodservice market is broadly classified as:

Category % Casual Dining Restaurants 55% Quick Service restaurant and fast 20% food (QSR) Pubs, Bars, Clubs and Lounges 12% (PBCL) Café Chains 7% Full-Service Restaurants (Fine, 2% premium dining etc.) Others (Frozen desserts and ice creams) 3% Total 100%

Indian foodservice industry category segmentation: %share, by value, 2017

Casual Dining Pub,club and bar Full Service Restaurant Quick Service Restaurant and fast food Café Others

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Presence of International chains

The Indian food services industry is evolving into a competitive market as diverse international chains are entering the arena through partnerships, multi polar and integrated business models clearly moving away from home grown, standalone, family run business ventures. The 35% share of organised sector in the Indian food service industry is steadily rising.

The sector also continues to attract interest from domestic as well as international investors as the sector in a domestic consumption driven with high growth potential.

Indian food service market witnessed a private equity deal activity of US$114 million in 2017 across 18 deals. Some of the renowned Indian and international investors such as Saama Capital Management, DSG Partners Asia, Powai Lake Ventures, CX Capital Management, Goldman Sachs, Eight Roads Ventures, Mayfield Fund, Carpediem Advisors, Everstone Capital21 have been active in the food services space in India.

Attractive macroeconomic factors, greater ease of doing business and a changing consumer mindset have made the Indian food services sector an attractive destination for investors.

Added to this, the Indian Government’s promise in ramping up infrastructure and amending policies to favour business and stimulate growth is expected to result in tremendous growth in economy and in turn improved consumer confidence. While this means that consumer demand will keep growing in the future, thereby propelling India’s GDP via internal consumption, it also means that the types of products, services and experiences will undergo a big change to keep pace with the outlook of this young population.

Even as the food services industry has shown a year-on-year growth since the last three years, it has had its fair share of challenges and roadblocks. Some of them are: 1. High real estate and manpower costs 2. Inadequate supply chain infrastructure 3. Financing issues 4. Policy formulation

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Key Trends

Social Media / Digital Marketing 1. Rise of various food tech models, enhanced penetration of internet and increase in internet speeds, use of technology to improve consumer experience and continued use of social media for consumer engagement are some of the key trends that are continuing to shape the Indian food service sector. 2. Social media presence for restaurants also defines how popular they are. Social media accessible through smart devices is an integral part of the young population’s lifestyle. It has become an avenue for them to express their views and opinions, compare and evaluate choices and share feedback. 3. Use of digital marketing in the restaurant space is the new trend in the food and restaurant segment in India to communicate offers, incentives, product information and promotions. 4. Food guides and eating out directories of restaurants with reviews, opinions and vital information are available by food discovery or restaurant search players on just a few clicks away. 5. Besides this, Fine dine restaurants are offering table reservation service to their clients to manage demand more efficiently to improve on sourcing & staffing. It is beneficial to a customer as reservation guarantee one’s table at the time and place, he has planned and likely to receive better service at the restaurant. 6. Online ordering has eased the process of customers having to travel to a restaurant for eating out. Today customers can use their smartphones to order food from any restaurant of their choice and are able to save time and enjoy restaurant food at the same time.

Emerging Retail Formats 1. One of the most popular and most visited retail formats is the mall providing everything that a person wants to buy, all under one roof from clothes, accessories and cinemas to dedicated food courts including fine, casual / fun casual restaurants offer a controlled operating environment atmosphere and provide parking. 2. Other retail avenues are airports and amusement parks which drive consumers towards food services. 3. The delivery segment is growing steadily, and restaurants are providing option to the consumer to order food.

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4. Cloud kitchen is emerging as an alternative as it can be setup with a very low Capital Expenditure as compared to a Cafe or Restaurant and helps in the operation of a chain of restaurants. A cloud kitchen is a centralised kitchen for a chain of outlets/ restaurants that accepts orders only through online ordering systems and offers no dine-in facility. They have a base kitchen that delivers raw materials, sauces and all ingredients in portions to multiple restaurants. This format is helping the industry to reduce the high rental cost and also cost of labour and also helping in faster turnaround over and above standardisation of quality. 5. Dark Kitchen, also known as virtual kitchen, is a fully equipped commercial kitchen with no restaurant or even a takeaway counter which are dedicated to meet the requirements of online delivery services, facilitated by the third-party delivery apps.

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Facilities Management

The Facilities Management (FM) services is an intrinsic part of Tourism and Hospitality industry. The International Facilities Management Association (IFMA 2003) defines FM as “The practice of coordinating the physical workplace with the people and workplace of the organization. It integrates the principles of business administration, architecture and the behavioural and engineering science”.

Thus, it covers real estate, financial, change, human resources, health and safety and contract management in addition to building and engineering services maintenance, domestic services and utilities supplies.

The global FM industry valued at $606.4 billion in 2015 is expected to grow to $1,887 billion by 2024. The growing footprint of Facilities Management in the country demands innovation and expertise in Specialised Engineering Services, covering areas such as energy efficiency, thermal audits, and Green Building concepts. Growth in industrial, manufacturing and commercial sectors are set to transform the Indian FM market by 2020.

The Indian Facilities Management market was estimated to be worth Rs 5 lakh crore in 2018 accounting for 3.2 per cent of the country’s GDP. It is growing at the rate of 20-25 per cent annually and is largely unorganised comprising of only 10 per cent organised players. The organised market itself is worth Rs 50,000 crore and expected to grow to Rs 1.25 lakh crore by 2022 at the growth rate of 35.72 per cent annually.13

The Indian FM industry is expected to cross $19 bn by 2020 with a CAGR of 17 per cent between 2015-20 due to growth in retail and hospitality sectors, boom in real estate and increasing awareness levels according to a report published by Global Infrastructure Facilities and Project Managers Association (GIFPMA). Currently, 80 per cent of the services offered by facilities management companies are on a sub-contractual basis, but as organised players are entering the market, it is expected that the trend will shift towards integrated facility management in future.14 References: 13 smergers.com - based on secondary research by smergers.com https://www.smergers.com/industry-watch/facility-management-industry/ 14 https://www.ibef.org/news/indias-facility-management-market-to-grow-at-17-per-cent-cagr-and-cross-us-19-billion-by-2020

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Facilities Management services in India are not regulated by any government body. The big organized players comply with laws related to labour, insurance, ESI, man-power training etc. Majority of small, locally spread, unorganized players do not comply with these laws properly.

There is prime focus on creating a sustainable environment in order to optimize employees and their work environment in order to help organizations meet their goals. Facility management services are divided into two segments:

● Soft services-- Focuses on human interaction and division of labour. House-keeping and janitorial, security, front office, catering, cleaning among others. Focuses on human interaction and division of labour. ● Hard services--Focuses on physical structure which consist of energy management, plumbing, water management, waste management, fire safety, electro-mechanical and lighting

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Some of the key demand sectors for facility management hard and soft services are in Tier I cities such as Delhi - NCR, Mumbai, Bangalore, and Chennai. Demand is growing at a slower pace in Tier II and Tier III cities. India also intends to outsource such facilities as the market expands.

A huge portion of the continued growth is attributed to outsourcing of facility management services, greater demand for hygiene and cleanliness, as well as growth in commercial real estate. Various multinational corporations as well as domestic companies are also looking to invest provided India’s facility management meets global requirements.

Some of the major Indian companies include:

Updater Services (P) Limited (UDS) BVG India Ltd. ISS Facility Management Sanjay Maintenance Services Tops Group Service Max Facility Management Pvt. Ltd. EFS Facilities Services Pest Control (India) Pvt. Ltd.

Some of the Global players include: CB Richard Ellis Inc.

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Colliers International Group Inc. Compass Group Cushman and Wakefield G4S Jones Lang LaSalle, Inc., (JLL) Knight Frank Mortice Group PLC – Tenon FM Quess Corp SIS Group Enterprises Sodexo

Some of the key industries using FM Services include IT, ITES, BPO, BFSI, manufacturing, FMCG, Hospitality and Tourism, infrastructure, healthcare, retail, education and government sectors.

The Indian Facilities Management (FM) industry is poised to grow by leaps and bounds as the economic activity stabilises in the country. during the rapid development. Some key growth drivers include:

- Growth in commercial and residential real estate - Increase in SEZs, mega food parks, smart cities and housing projects - Greater awareness of cleanliness and hygiene amongst industries - Reduction in operating costs of the facilities/buildings - More outsourcing by corporates who were hitherto insourcing - Inability to provide specialized cleaning by inhouse personnel - Increased business activities from Tier-2 and Tier-3 cities - Increase in outsourcing of facility management services by Government offices

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Tours and Travel

Industry Overview Total contribution by travel and tourism sector to India’s GDP is expected to increase from Rs 15.24 lakh crore (US$ 234.03 billion) in 2017 to Rs 32.05 lakh crore (US$ 492.21 billion) in 2028. Total earning from the sector in India is targeted to reach US$ 50 billion by 2022.15

The Ministry of Tourism (MoT) has been actively working towards the development of quality tourism infrastructure at various tourist destinations and circuits in the States / Union Territories by sanctioning expenditure budgets across schemes like SWADESH DARSHAN and PRASHAD. The Ministry of Tourism has been actively promoting India as a 365-days tourist destination with the introduction of niche tourism products in the country like Cruise, Adventure, Medical, Wellness, Golf, Polo, MICE Tourism, Eco-tourism, Film Tourism, Sustainable Tourism, etc. to overcome ‘seasonality’ challenge in tourism.

List of approved Travel and Tour Operators Number of operators in the country recognized by Ministry of Tourism as on 31-05-2019

S. No. Operator Numbers 1 Travel Agent 222 2 Inbound Tour Operator 516 3 Tourist Transport Operator 114 4 Adventure Tour Operator 57 5 Domestic Tour Operator 152 Total 1061

References:

15 https://www.ibef.org/industry/indian-tourism-and-hospitality-industry-analysis-presentation

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Travel and tour service providers are categorised into five segments as per the guidelines prescribed by the Ministry of Tourism for approval.

1. Travel Agents: A travel agent is one who decides of tickets for travel by air, rail, ship, passport, visa, etc. He/she may also arrange accommodation, tours, entertainment and other tourism related services. 2. Inbound Tour Operators: Inbound tour operator is one who plans for transport, accommodation, sightseeing, entertainment and other tourism related services for foreign tourists. 3. Tourist Transport Operators: A Tourist Transport Operator Organization is one, which provides tourist transport like cars, coaches, boats etc. to tourists for transfers, sightseeing and journeys to tourist places etc. 4. Adventure Tour Operators: An adventure tour operator is one who is engaged in activities related to Adventure Tourism in India namely, water sports, aero sports, mountaineering, trekking and safari of various kinds, etc. In addition to that he may also make arrangements for transport, accommodation, etc. 5. Domestic Tour Operators: A domestic tour operator is one who makes arrangements for transport, accommodation, sightseeing, entertainment and other tourism related services for domestic tourists.

Apart from the above, the sub-sector has also undergone a change post the advent of online consumer base and large Indian and foreign companies entering the market. This has changed the landscape with a reorganisation of categories with similar functions. New categories that have come up are: 1. Travel Agencies: Businesses that operate between travellers and the travel industry. There is focus on advertising pre-packaged travel tours offering consumers the best deals. 2. Online Travel Agencies: these are online companies that allow you to “self-serve” your travel necessities by personal preferences. Such as Makemytrip.com, yatra.com, expedia.com among others. 3. Tour Operators: These include inbound, adventure, domestic, and tourist operators. They bundle packages that tend to work with attractions, hotels, and transportation services to provide combination deals to travellers at a better price than if purchased separately.

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4. Tour Guides/Tourism Service Providers: these are informative package deals that offer tourists and travellers in depth and knowledgeable insight regarding certain locations, historical sites, or cultural activities, usually with a guide. 5. Transport Operators: These include agencies or persons taking care of the inbound transportation requirements of the tourist including car rentals etc.

1. Heritage

a. History: One who gives information of the past, moreover found at Palaces, Forts, Museums, Battlefields, Tombs / Mausoleums, Temples, Churches etc. b. Archaeological: One who gives information on the ancient civilizations and the bygone era, found at museums and archeologically sites like the Giza Pyramids, Harappa & Mohenjo-Daro, Nalanda University, Machu Picchu etc c. Architecture Guide: One who gives information of the art and construction strategy of the monuments and masterpieces from the past, found especially outside Temples, Palaces, Tombs / Mausoleums, Towers etc.

2. Culture

One who gives information on the lifestyle pattern on the native society of that Tourist Destination

a. Cuisine Guide: One who gives information on the Agriculture, cultivation, and staple diet of a place, delicacies of that region and where to eat what and when. He /she takes the guest around the city making them taste specialties prepared at different food shops and restaurants. Places visited are Farms, Restaurants, Sweet Shops, Chocolate Factory, Cheese Factory, Vineyards, Orchards etc. b. Religious Guide / Temple Guide / Pilgrim Guide: One who gives information on the religion, gods & goddesses, mythology, traditions, rituals etc, such guides are hired especially during festival times, they are found at temples, and other shrines

3. Adventure Guide

• Mountaineering Guide • Trekking Guide • Skiing Guide • Surfing Guide • Scuba Diving / Snorkelling Guide

4. Forest / Wilderness Guide

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• Hunting Guide • Safari Guide

5. Business Guide

• Real Estate Consultant

6. Coach Guide

• City Tour Guide

7. Nature Guide

• Dessert Guide • Hill Station Guide • Botanical Garden Guide

8. Special Interest Guide:

• Cruise Guide, Golf Guide, Shopping Guide, Hotel Guide, Wedding Guide etc.38

In addition to these new roles have come up owing to technological advancement in the industry.

1. Payment processing issues and lack of technical know-how: Owing to the limited technical know-how and lack of required finance, the vertical such as business analyst (process, SOPs), business finance, revenue manager, quality management, home expert and travel consultant is set to develop.

2. In online travel agencies, roles of holiday experts, travel consultants and sales people are expected to be in demand. With the increased thrust of inbound tourism, many people might be required in the travel and tour operators’ segment in tier 2 and 3 cities and in popular tourist destinations in India.

Initiatives taken up by the government to boost trained employment in the sector.

1. Incredible India Tourist Facilitator Certification Programme: Ministry of Tourism (MoT) has launched its “Incredible India Tourist Facilitators” Certification Course. MoT

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is moving away from the existing system of licensing. An online Learning Management System for the Tourist Facilitators has been launched on World Tourism Day, 27th September 2018. Registration for the certification has already been commenced with effect from 15.11.2018.

The objective is to provide online training and accreditation of the Tour Facilitators through a centralized PAN India Guide e-learning module. The system will provide basic, advanced and language course for tour facilitation and guiding. It would enable a pool of well trained and professional Tour Facilitators.

2. Approval of Travel Trade Service Provider: MoT presently approves the following categories of Travel Trade Service Providers: i. Inbound Tour Operators ii. Travel Agents iii. Domestic Tour Operators iv. Adventure Tour Operators v. Tourist Transporters Operators Revised guidelines of this scheme were issued on 18th July, 2011. The aims and objectives of this scheme are to encourage quality, standard and service in these categories. This is a voluntary scheme open to all bonafide agencies.

3. Web-based Public Delivery System For the recognition of the Travel Trade Service Providers: Ministry of Tourism has set up a Web-based Public Delivery System w.e.f. 12th May 2014. The objective of the system is to ease the process of filing applications by the Travel Trade Service Providers seeking recognition from this Ministry and also to bring in transparency in granting the approvals. The new procedure accepts applications online from service providers thereby make the process paperless. All the applications are submitted online through the URL http://etraveltradeapproval.nic.in and examined, processed and approved / rejected within 45 days from the receipt of completed applications. This initiative is part of Ministry’s objective to move towards E-regime for approvals etc.

4. Market Development Assistance (MDA) Scheme for promotion of Domestic tourism: For long, it has been felt that the existing MDA scheme is silent on promoting India within India itself. It was decided that the scope of the present scheme of Hospitality programme should be modified to also make it inward looking, considering that the country offers vast and unexploited potential for domestic tourists who, along with the foreign tourists, could contribute towards pushing the economic growth further, while providing employment opportunities. The emphasis of this scheme is: i. To motivate travel agents/tour operators, and especially those who are yet to promote 36

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India to include tour packages to various destinations, preferably less popular and unexplored destinations in the country in their marketing programme. ii. To encourage domestic tourists to visit such unexplored tourist destinations in various States and thereby project India as an attractive multi-dimensional tourist destination. To familiarize travel agents / tour operators / hoteliers about new tourism products and latest developments in the field of tourism.

5. Ministry of Tourism: Ministry of Tourism also provides financial assistance to tourism service providers approved by the Ministry of Tourism, or by the State Tourism Departments in case of North Eastern States and Jammu and Kashmir, for participation in travel marts, annual conventions of Indian Association of Tour Operators, Travel Agents Association of India, Association of Domestic Tour Operators of India, Adventure Tour Operators Association, Federation of Hotels & Restaurants Association of India, Hotels Association of India, or any other National level Travel / Tour Association approved / sponsored / recognized by Ministry of Tourism.

Some of the key players in the organised market include: • MakeMyTrip • Thomas Cook • Cox & Kings • Yatra • Kuoni • SOTC • Akbar Travels of India • Clear trip • Expedia Some of the key Industry Associations that regulate the sector include: • Federation of Indian Chambers of Commerce and Industry (FICCI) • PHD Chamber of Commerce & Industry (PHDCCI) • Associated Chambers of Commerce & Industry of India (ASSOCHAM) • Confederation of Indian Industry (CII) • Travel Agents Association of India (TAAI) • Indian Association of Tour Operators (IATO) • Indian Tourist Transport Association (ITTA) • Association of Domestic Tour Operators of India (ADTOI) • Adventure Tour Operators of India (ATOI) 37

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• Federation of Hotel & Restaurant Association of India (FHRAI) • Hotel Association of India (HAI) • Federation of Associations of Indian Tourism and Hospitality (FAITH) • All India Resort Development Association (AIRDA)

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Adventure Tourism

What is Adventure Travel?

ATTA, the global adventure travel body defines an adventure trip as follows

“Adventure Tourism is a trip that includes at-least two of the following three elements, physical activity, natural environment and cultural emersion.” While the definition requires only two of the three components, destinations that offer all three tend to give a truly wholesome experience to the traveller.

Adventure Tourism can be domestic or international and like all tourism it should have atleast one overnight at the destination and should not last beyond one year. (ATTA and UNWTO excerpts)

As compared to normal and cultural tourism, adventure travel offers a lot of competitive benefits over the former. ATTA and UNWTO believe in the following.

Adventure Tourism is Resilient: Adventure tourists are normally passionate and more capable of taking calculated risks as compared to cultural tourists. Adventure tourists do not shy away from travelling to destinations like Kashmir, though high-end cultural tourists will be the first to cancel in case of negative news.

Attracts Hugh Value Tourists: Adventure tourists are willing to pay a premium for exciting and authentic experiences.

Supports local economies: With global airlines, operators and hotel chains grabbing business, the trend shows that incase of cultural tourism the local economy of the destination retains only 20% of total revenue. In the case of adventure tourism because ethe activity spends more time in each area and relies on local resources, it manages to retain close to 65.6% of revenue within the local community.

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Encourages Sustainable Practices: Adventure Tourism policy makers and practitioners adhere to sustainable environmental policies. This is because they know, without pristine natural environment and meaningful cultural experiences, their destination would lose its competitiveness and tourists would go elsewhere.

Adventure Travel Types

1. Recreational Adventure: Just including adventure as an add on. This means that the traveller just wants to try out an adventure activity for the few hours and go back. Classic example is ATV rides, camel rides, a quick day rafting trip etc. 2. Soft Adventure: These are adventure trips or multiple activities that are not very hard to do. Examples of this would be luxury camping, rafting in grade 3 rivers, cycling short distances, mountain biking short distances, zip lines, taking a wildlife park safari, amateur bird watching etc. 3. Hard Adventure: These activities involve more physical fitness and in some cases prior experience. These could include Mountaineering, High altitude and multi day treks, rafting expeditions, long distance cycle and mountain biking rides, off piste skiing, white water kayaking etc.

Customer Profile

Most customers who undertake adventure sports are looking for an experiential and active holiday. Immersing oneself in nature and local communities while taking part in a physically and mentally challenging activity. 1. International and domestic groups 2. International and domestic individual traveller including families. 3. Schools, alumni networks and other education institutes 4. MICE: Corporate MICE excursions and Outbound leadership and team building workshops.

Broadly divided into:

1. Inbound: International clients arriving on Indian shores to take part in adventure activities 2. Domestic: Indians taking part in adventure activities within India. 3. Outbound: Indians travelling Globally to try out adventure activities

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Adventure Travel Verticals

1. Mountaineering Expeditions 2. Trekking Expeditions 3. Day Hikes 4. River Rafting: Day Trips and Multi day expeditions 5. White Water and Flat Water Kayaking 6. Mountain Biking and Cycling 7. Skiing & Snow Boarding 8. Fixed and moving camps 9. Bungy Jumping 10. Zip Lines 11. Ropes & Challenge Courses 12. Wild Life 13. Nature Walks & Bird Watching 14. Angling 15. Scuba Diving & Snorkeling 16. Para Sailing 17. Para Gliding 18. Para Trike 19. Hot Air Ballooning 20. Sky Diving 21. River Cruising 22. ATV and Snow Mobile riding 23. Off Road driving 24. 25. Jeep Safaris 26. Camel and Horse Safaris 27. Rock Climbing & Abseiling 28. Walking holidays

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History

The Indian adventure travel industry started in late 50s when some passionate mountaineers started to undertake mountaineering expeditions to climb the world’s highest mountains. Even though the in the early years the domestic Indian Mountaineering survived on Government sponsorship and funding, our Himalayas slowly started to gain popularity in the global market. Big Indian mountains like Nanda Devi, Kanchenjunga, Trishul etc started to get very popular with international climbers.

The success story of the mountains slowly led to the birth of the Indian trekking industry. In late 60s and 70s this activity was driven again by international (inbound) travellers coming to India to do a multiday trekking expedition that could ranges from 12 days to 40 days walking in the mountains.

Trekking and Mountaineering were the two activities to fuel the growth of adventure tourism in India. In the mid-80s some companies started rafting on the Ganga river in India. This activity again was mainly supported by international travellers undertaking rafting trips and expeditions in India. However, it did not take long for this activity to take on a life of it’s own and boom into one of the largest and most popular adventure activities in India.

Early to mid-90’s and interesting thing happened. The Indian traveller became more globally aware and as the income levels rose, they took on to adventure travel in a big way. The first boom came in the fixed camping and white-water rafting industry. The Ganga river became immensely popular with Indians wanting to experience a weekend of camping and a thrilling adventure.

Also, in the 80’s in Gulmarg started gaining popularity. However, when disturbances hit this region it also gave an opportunity for other ski areas like Auli and Solang to develop. Having said that, till date Gulmarg remains the most organised and accessible ski resort in India.

From late 90s till now, the Indian adventure travel industry has boomed, we not only have almost 30 verticals of adventure travel in India, adventure travel is now become an year round activity.

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This growth however has come with a price

• There is immense pressure on the Natural Heritage from over tourism. Thousands of campers, trekkers and mountaineers have stretched these destinations to the limit. • Non bio-degradable garbage heaps in remote wilderness areas has now become a common site. • Over tourism in the remotest of Indian wilderness has created challenges so severe that the Indian courts have had to step in and put restrictions in place. • In areas where the local administration or Government has not been proactive, some local communities have put in restrictions and even closed areas for tourists. • The boom in the industry has led to an immense shortage of skilled manpower. This has further led to the growth of the unorganised and unrecognised sector with low quality and safety standards. • Training standards and certifications are almost non-existent in this industry and that is strange as this is one area where you cannot afford to be risk averse. • There is also a huge problem of massification of the industry which now believes that it is OK to move 100s of people into a ecologically fragile area. This obviously has led to a price war of low quality and unsafe operations across the country.

Statistics 16

• The Tourism and hospitality industry in India is an employment generating industry and every USD 1 Mn invested in tourism creates 78 jobs.

• The Tourism industry in India is the 3rd largest foreign exchange earner after gems, jewellery and readymade garments.

• India ranks 14th in terms of absolute Foreign Exchange Earnings (FEE) and 122nd in terms of share of visitor exports in total export.

• Foreign Exchange Earnings (FEEs) during 2019 were US$29.962 Bn (Provisional estimates) with a growth of 4.8% from previous year.

• Foreign Tourist Arrivals (FTAs) during 2019 were 10.89 Mn (Provisional) with a growth of 3.2% from previous year.

• The cumulative FDI equity inflow in the Hotel and Tourism industry in India is USD 15.28 Bn during the period April 2000 to March 2020. 27

Reference:

16 https://www.makeinindia.com/sector/tourism-and-hospitality 43

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COVID 19 Impact on Tourism and Hotel Industry:

The Covid-19 pandemic has impacted the underlying principles of ‘Service with Human Touch’ and ‘Service with a Smile’. Touch is not a preferred practice or term anymore and a smile gets hidden behind the mask.

While the larger hotels are trying to create alternatives to stay alive, the independent smaller hotels are finding it difficult to stay alive.

The drop in travel and utilisation of accumulated (to whatever extent) cash reserves, has made it almost impossible for them to keep operations alive. While more than 40% of hotels are on shut down as of now, the question for them is when to start or open as the slow pick up of travel may bring in meagre occupancies, keeping them not viable. Smaller hotels will only be able to commission their operations, once the market demand has the potential to provide about 40% ++ occupancy. They will be able to bring the employees back on board and get going. Let us not forget the economy of the nation must get on wheels first before travel begins.17

The term New Normal for these hotels will be clearly defined by:

• New market realities

• Health & Hygiene protocols

• Seeking the advisory and technical services from a pool, such as

• Health & Hygiene Guidelines and execution

• Training the employees (Preferably) on line

• Once a quarter, quality audit

• Marketing and distribution Technology

• Sales Network

• Common HR services

• Guest feedback Management

Indian hospitality and its practices for hygiene and wellness are well understood by the world. Yoga is understood well by the world as an immunity booster. It must be taken on reverse

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References:

17 https://hospitality.economictimes.indiatimes.com/news/speaking-heads/impact-covid-19-on-the-hospitality- industry/75772491

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