Tourism is a difficult phenomenon to define, simply because it involves inter-related activities belonging to different industries.
An industry typically has a "number of firms that produce similar goods and services and therefore are in competition with one another"
1.
Tourism then is not necessarily an industry as it constitutes airlines, hotels, restaurants, travel agencies and other attractions that do not compete with one another. Rather, they complement each other in forming a unified system of activities.
A culmination of these activities interacting is what defines tourism. This is supported by the World Tourism Organization (WTO) which defines it as "the activities of persons travelling to and staying in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes not related to the exercise of an activity remunerated from within the place visited."
2While tourism has its positive and negative impacts, it is unarguably a catalyst for the socio-economic progress of a country. More so, for a developing nation, tourism acts as a key driver for the creation of jobs, enterprises, infrastructure development and foreign exchange earnings. The earnings from tourism make it one of the biggest sectors in the world.
The sector's total contribution to the worldwide gross domestic product (GDP) is estimated to be US$5,991.9 billion or 9.1% of global GDP in 2011. In India, travel and tourism contributed `3,680.4 billion or 4.5% of the country's GDP in 2011
3. In addition to tourism's revenue contribution, it also accounted for 7.5%
4 of the total employment in the country in 2011.
India has been a late starter as far as tourism is concerned. Post the country's independence, the government of India focused on developing other industries, such as agriculture, irrigation, power and infrastructure. It was only in 1982, three decades ago, that the first Tourism Policy was drafted and presented in the country.
However, it is only over the past two decades that tourism in India has really taken form. Table 1-1 presents the foreign exchange earnings from tourism and the sector's total contribution to GDP from 1991 to 2011.
As highlighted in the table, foreign exchange earnings and total contribution to GDP has grown by a compounded annual growth rate (CAGR) of 15.5% and 10.5% respectively over the past two decades.
This double-digit growth for both parameters in discussion instantly looks impressive. One would believe that the government has taken several initiatives to promote the sector aggressively in order to have achieved such growth rates.
Unfortunately, the reality is that tourism is a state subject in the Indian Constitution and not a central subject. This leads to drafting of endless uncoordinated policies and schemes within the different states with no governance of actual implementation or execution.
As highlighted by the HVS State Ranking Survey 2011 and reproduced in Table 1-2, no state, with the exception of Sikkim, currently spends even 1.0% of its total expenditure on tourism. Thus, tourism in India, which has grown from 162 million travelers in 1997 to 810 million travelers in 2011 (CAGR of 12.3%), has done so virtually on its own.
Historically, stakeholders of the tourism sector have consistently focused on the foreign traveler as the main area of growth. This is primarily because international travelers, as a segment, have a high propensity to spend, and because a majority of the hotels in India are in the luxury and/or first class segment and have demanded high rates.
However, it is the domestic traveler that has constituted the volume of travel and tourism in the country, both today and historically. Table 1-3 presents the breakdown of domestic and international travel in India from 1997 to 2011.
As Table 1-3 crystallizes, domestic travel has always exceeded international travel in terms of volume. In the past 15 years, the growth in the number of travelers in India has clearly been dominated by the domestic traveler. This is an apparent by-product of economic development within the country.
The domestic traveler today has the propensity and – more importantly – the intent to spend. The hotel industry has, in recent years, woken up to recognize this segment's growth potential and we are now witnessing a host of branded products that vary across the spectrum of positioning entering the market.
Change in international travel to India has irrefutably shadowed events around the globe. The US recession in 2001 caused a 10.5% decline in international visitation to India over a two-year period. This was followed by five years of robust growth, with international visitation increasing by an average of 16.5% annually.
Come 2009, India felt the impact of the global financial melt-down that started in 2008 and the Mumbai terrorist attack as visitation dropped by 2.1%. However, since international travelers amount to less one percent of total travelers, India has not seen a single year of decline in total travel in the country.
India's share in the global travel pie has modestly grown by a CAGR of 2.8% over the past 15 years and today, travel to the country formulates 0.64%
5 of global travel. The government of India has taken some initiatives recently that are intended to promote international tourism to the country and increase India's share in the global travel market.
These include introducing a Tourist Visa on Arrival (T-VOA) scheme for the citizens of eleven countries (Finland, Japan, Luxembourg, New Zealand, Singapore, Cambodia, Vietnam, Philippines, Laos, Myanmar and Indonesia) and a moderately higher budget (by `1.0 billion) than the previous financial year for the development of tourism infrastructure and promotion.
Considering the way in which travel has grown in the past and factoring in the government's unassuming efforts towards growth in the sector, the World Travel & Tourism Council (WTTC) has forecasted India's share of the global travel pie by 2021. WTTC predicts that by 2021, global travel would have reached 1,362 million travelers. India, according to WTTC, is expected to account for 0.8% of those travelers or 11.1 million international travelers.
Notes:1 Wells, A.T. (1989), Air Transportation: A Management Perspective. 2nd ed. Belmont, CA: Wadsworth Publishing Company
2 World Tourism Organization, 2000
3 WTTC, Travel & Tourism Economic Impact, 2011
4 WTTC, Travel & Tourism Economic Impact 2011
5 WTTC, Travel & Tourism Economic Impact 2011
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