Indian Hospitality's Steady Transformation

By Piyush Tiwari, Director-Commercial & Marketing, India Tourism Development Corporation (ITDC)

Piyush Tiwari, Director-Commercial & Marketing, India Tourism Development Corporation (ITDC)

Headquartered in New Delhi, India Tourism Development Corporation is a Public Sector Undertaking reporting to Ministry of Tourism, Government of India. The entity works for developing and supporting the hospitality industry in India.

Given the tourism and hospitality sector’s immense potential in generating jobs and revenues, the Centre has been undertaking many initiatives to boost the industry. For millennia, travellers from far-flung nations have been visiting India, considered the Land of Knowledge, Tradition and Diversity in ancient times. The travel and tourism industry as we know it presently, however, has only evolved during recent decades. Indian tradition always accorded the highest status to a guest and ‘Atithi Devo Bhava’ (the guest is akin to God) summarises the Indian concept of hospitality. This is also evident from the fact that most invaders who came to India, barring some like the British, were completely amalgamated in Indian society, never to go back.

Till some years ago, tourism in India was considered a leisure activity, limited only to financially secure sections of society. But increasing income levels, better infrastructure, improved means of communication and the ease of planning travel and stay has given a big boost to even domestic tourism in India. Today, Tourism and Hospitality is the country’s largest service industry and among the top 10 fastest-growing ones. But voicing a slogan and living it in real life are two different things. While most people from the industry are courteous to guests, there are more than a few who don’t really treat them as akin to God. For them, a tourist is merely a prospective source of one-time income. This is testified by tourists who have had unhappy experiences while travelling across the country. Although rare and exceptional, such incidences do occur and are highlighted by the media more than required, bringing disrepute to the country as a tourist destination.

It is therefore important all Indians keep this slogan in mind when interacting with tourists – be it domestic or overseas ones. At all times, no distinction should be made between domestic and foreign tourists, with each being treated with utmost respect.

Livelihoods & Investments

It’s important that each and every Indian understands the industry’s immense potential to generate employment and support livelihoods, given its tremendous forward and backward linkages. There can be no greater incentive for people to change their attitude towards others if their own interests are interlinked. Today, the business volume of tourism equals or even surpasses that of oil exports, ‎food products or automobiles. Tourism is now one of the largest, fastest-growing economic sectors in the world.

In the Indian context, this is evident from the fact that tourism contributes around 8 percent of the total GDP (versus the world average of about 10 percent) and approximately 9 percent of total employment directly and indirectly (against the world average of around 11 percent). This gap clearly shows the potential of further growth in tourism as an industry in the country.

In India, the industry is likely to witness tremendous growth this year because of new government policies such as visa reforms, according to a report by the World Travel and Tourism Council. India’s travel and tourism economy is expected to grow more than 10 percent in 2016 over last year’s trends, exceeding the 6.9 percent growth that the global forum has predicted for the South Asian region.

In 2014-15, the travel industry contributed Rs7.6 trillion and 36.6 million jobs to the Indian economy. By end 2016, the travel and tourism sector will contribute more than Rs10 trillion or 8 percent of India’s GDP and 37 million jobs, almost more than 9 percent of India’s total employment, as per the report. Moreover, tourism earns significant foreign exchange for India.

While India’s foreign tourist arrivals had been stagnating more than a decade ago, the numbers have shown a steady rise during the past decade. Its growth potential notwithstanding, the industry has continued to face a shortfall of skilled human resources over the years. Although there are courses for the hospitality industry, demand always outstrips supply. Despite such shortcomings, the country has jumped 13 ranks from 65 to 52 in the Tourism & Travel Competitive Index with the help of the Government’s proactive involvement in taking measures such as visa on arrival, help desks for foreigners, improving maintenance and upkeep of monuments. However, India still attracts only about 8 million out of the total 1,184 million international tourists representing a share of less than 1 percent. This extremely low market share offers immense scope to increase the number of foreign tourists in India.

Along with inbound tourism, the nation’s outbound tourism too has been growing, thanks to the rising middle-class numbers and growing disposable incomes that are increasingly driving domestic and outbound tourism. The emergence of the Internet and smart-phones has contributed in some measure to the rising numbers, considering the sheer convenience of making hotel and other travel bookings online or via phone. As per data disseminated by DIPP (Department of Industrial Policy and Promotion), tourism and hospitality is among India’s top 10 sectors in attracting foreign direct investments. During the April 2000-March 2016 period, the hotel and tourism industry attracted about $9.23 billion in FDI.

As India is the world’s fastest-growing major economy, these increasing investments are no surprise. Many foreign five-star hotel chains have also been expanding their footprints across India, seeking to cater to the ever-increasing numbers. Overseas investors are also making investments in hotels across India, banking on the country’s robust GDP growth to drive higher business.

Positive Policies

Even budget hotels are making their mark and attracting discerning travellers who seek clean, hygienic hotel rooms at affordable rates. Some credit for making this possible goes to a renowned start-up, which has revolutionised and raised benchmarks for budget hotels, with attention being paid to ensure clean linen and hygienic washrooms, among other items on the checklist. The success of the new entrant in emerging as the country’s largest network of branded hotels has led to stable players tying up with the newbie to offer standardised stay options to train travellers via its convenient booking platform.

The Government of India has also been undertaking various positive measures that seek to promote India as a global tourism hub. The e-Tourist Visa scheme has been extended to 37 additional countries, raising the total numbers of nations under this scheme to 150. The Central Government is also working on ‘Project Mausam’, which proposes to set up cross-cultural tie-ups and revive historic maritime cultural and economic links with 39 Indian Ocean nations. Specific and targeted measures are being implemented by Government to make tourism in the country hassle free and a memorable experience for all tourists, with special focus on foreign tourists.

The other heartening news for the sector is passage of the GST Bill. After GST is implemented, a nation of multiple markets will come closer to emerging as a common market with a streamlined tax structure. Once this happens, effective taxes for most verticals are expected to fall from 30% or thereabouts to 20 percent or so. The decades-long bane of double taxation will then be eliminated, making things more affordable and simple to understand. The Government understands the importance of the hospitality industry and will hopefully take note before finalising tax rates to benefit the tourism and hospitality industry and the nation at large.

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