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Travel and Tourism Sector: Potential, Opportunities and Enabeling

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Travel and Tourism Sector: Potential, Opportunities and Enabeling Travel and tourism sector: Potential, opportunities and enabling framework for sustainable growth December 2013 © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Travel and tourism sector: Potential, opportunities and enabling framework for sustainable growth Theme Paper © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Message The Indian tourism and hospitality industry has emerged as one of the key drivers of growth among the services sector in India. Tourism in India is a potential game changer. It is a sun rise industry, an employment generator, a significant source of foreign exchange for the country and an economic activity that helps local and host communities. India is a tourism product which is unparalleled in its beauty, uniqueness, rich culture and history has been aggressively pursuing the promotion of tourism both internationally as well as in the domestic market. Arjun Sharma Indian tourism industry is thriving due to an increase in foreign tourist arrivals and Chairman, CII Tourism Fest 2013 greater number of Indians travelling to domestic destinations than before. In the past few years the real growth has come from within the domestic sector as around 30 Co-Chairman, CII National Committee on Tourism and million Indians travel within the country in a year. Managing Director, Le Passage India’s demographic dividend of a younger population compared to developed countries to India is leading to greater expenditure on leisure services. Travel and tourism sector’s contribution to capital investment is projected to grow at 6.5 per cent per annum during 2013-2023, above the global average of five per cent. The Ministry of Tourism promotes the country’s various tourism products through its tactile campaigns under the Incredible India brand- both for international as well as domestic markets. The budget allocated for the Domestic Promotion & Publicity and Overseas Promotion & Publicity including Marketing Development stood at INR 1.1 billion (USD 17.73 million) and INR 3.5 billion (USD 56.41 million) for the financial year 2013-14. The ministry has set up a Hospitality Development and Promotion Board, which will monitor and facilitate hotel project approvals. The allocation for Ministry of Tourism in the Union Budget 2013-14 has been increased by INR 876.6 million (USD 14.13 million) to INR 12,976.6 million (USD 209.30 million). There is a need to take steps to improve the present scenario of tourism that includes extending facility of visa-on-arrival to tourists from more countries, simple tax rules and ensuring safety of tourists. There is a need for better marketing and brand strategies to promote the sector. The cost of obtaining an Indian visa is prohibitive and we need to take a relook at it. Creation of an enabling environment for the sector’s growth would lead to rise in foreign tourists’ inflows and foreign exchange earnings, thus, contributing to economic growth. This would also lead to creation of additional jobs in the sector, which would create opportunities for all sections of the society and in turn lead to attaining an all-inclusive development. Set against this backdrop, CII is organising a mega event ‘CII Tourism Fest’ from 5 to 7 December 2013 in Chandigarh to bring all critical stakeholders like policy makers, officials of Ministry of Tourism, State Governments, International Tourism Boards, hoteliers, hospitals, tour operators and travel agents on one platform. I hope that the deliberations not only reflect true voice of the industry, but also bring all stakeholders together to think alike to kick off a new campaign to create & establish roadmap for inclusive and seamless tourism. © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Foreword The travel and tourism industry has emerged as one of the largest and fastest growing economic sectors globally. Its contribution to the global Gross Domestic Product (GDP) and employment has increased significantly. Increasingly, travel and tourism is emerging as an important category of services exports worldwide. With increasing tourist inflows over the past few years, it is a significant contributor to Indian economy as well. As per Jaideep Ghosh forecasts by the World travel and tourism Council its total Partner contribution to GDP is expected to witness a growth rate Management Consulting of 12 per cent per annum during 2013-2023. Rising income KPMG India levels and changing lifestyles, development of diverse tourism offerings and policy and regulatory support by the government are playing a pivotal role in shaping the travel and tourism sector in India. However, the sector is facing challenges such as lack of good quality tourism infrastructure, global concerns regarding health and safety of tourists, disparate passenger/road tax structures across various states and shortfall of adequately trained and skilled manpower. While several plans and programmes have already been devised for tackling these challenges, successful implementation would be critical to accelerate growth. Concerted efforts by all stakeholders such as the central and state governments, private sector and the community at large are pertinent for sustainable development and maintenance of the travel and tourism sector in the country. © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Table of contents Executive summary 01 Introduction 03 1.1 Global tourism industry 04 1.2 Indian tourism industry 05 1.2.1 Growth in number of tourists 05 1.2.2 Impact of tourism sector on GDP 06 1.2.3 Impact of tourism sector on employment 07 1.2.4 Capital investment in tourism sector 07 1.2.5 Growth of tourism in India – Key drivers & trends 08 Performance of tourism sector in various states of India 09 2.1 Comparative assessment of major tourist states of India 10 2.2 Northern states in India 15 2.2.1 Growth of tourists in northern states 15 2.2.2 Profile of tourists in northern states 16 2.2.3 Role of government and private sector 18 2.2.4 Key tourism circuits in northern states 21 Seamless travel 23 3.1 Benefits of seamless travel 24 3.2 Case study: Seamless travel in European Union countries 24 3.3 Passenger/road tax structure in India 25 Key issues in tourism sector in India 27 4.1 Training and skill development 28 4.2 Safety and security of tourists 30 4.3 Healthcare for tourists 31 4.4 Infrastructure 32 Recommendations 34 About KPMG in India 35 About CII 36 © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 01 Travel and tourism sector: Potential, opportunities and enabling framework for sustainable growth Executive summary The travel and tourism industry has emerged as destinations of Delhi and Maharashtra enjoy good one of the fastest growing sectors contributing quality transport and accommodation infrastructure, significantly to global economic growth and states of Jammu & Kashmir, Uttarakhand, Himachal development. While traditionally Europe and America Pradesh, Rajasthan and Jharkhand may need have remained among the tourism markets, new significant improvements in their rail, road and airport emerging markets are expected to witness high infrastructure. growth in international tourist visits over the next decade. Tourist visits in the northern states of India witnessed a growth rate of 10.2 per cent during India has significant potential to become a preferred 2008-2012 compared to the national average growth tourist destination globally. Its rich and diverse rate of 16.3 per cent during the same period. U.S.A. cultural heritage, abundant natural resources and and U.K. accounted for the maximum number of biodiversity provides numerous tourist attractions. foreign tourist visits in the northern states of India The total tourist visits in India have been growing at in 2012. Fair share of tourists were received from a steady rate of about 16 per cent over the past five non English speaking countries like Germany, Japan years. The travel and tourism sector in India provides and UAE necessitating the availability of tourist significant socio economic benefits. While the direct information in multiple languages. While tourists visit contribution to GDP is estimated at INR 2222 billion states of Punjab, Haryana and Delhi for commercial in 2013, the total contribution is estimated at INR and business related purposes, states of Himachal 7416 billion in the same year. These have further been Pradesh, Uttarakhand, Jammu and Kashmir, forecasted to rise at a growth rate of 12 per cent Rajasthan and Punjab are preferred as leisure over the next decade. While the sector supported 25 destinations. For religious tourism, they prefer states million direct and 40 million total jobs in 2012, these of Rajasthan, Uttar Pradesh, Uttarakhand and Jammu have been forecasted to increase at a growth rate of and Kashmir. While multiple tourism circuits based 2.1 per cent by 2023. Several industry drivers such on diverse themes exist across northern states, as government initiatives, diverse product offerings, low level of stay durations by both domestic and growing economy, increasing disposable income international tourists indicates the need for more levels and marketing initiatives along with key trends entertainment and leisure activities.
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