Travel and Tourism

Indian tourism on a roll

With increasing disposable incomes and a flourishing economy, holidaying remained a popular trend driving travel and tourism. Indian travellers continued to spend lavishly on travel and were keen to explore newer destinations. Travel is further promoted by addition of capacity by airlines which are offering value fares to the booming population of Indian travellers. Domestic tourism also grew in a big way with increased holidaying.

Ministry of tourism engages in further promotional activity

Ministry of Tourism, in efforts to tap the potential markets, extended the facility for Visa on Arrival (VoA) to a further six countries, in addition to the existing five in 2011. On top of the Incredible India campaigns, the government continued to raise interest in India by conducting trade shows in many countries including Cambodia, Vietnam, Bangkok, Los Angeles, New York, and Port of Spain. State governments are planning to promote each state as a destination for different form of niche tourism. In line with this, the North-east region would be promoted as a destination for adventure tourism and Jammu and Kashmir would be promoted as a destination for pilgrimage tourism.

Medical tourism strengthens

Medical tourism, of all forms of niche tourism, grew at a rapid pace and is expected to maintain double-digit growth over the forecast period. With qualified Indian doctors and advanced equipment, India also benefited from offering cheaper medical services compared with other competing destinations including Singapore, Malaysia, and the Philippines. Indian medical tourism attracts many tourists from US, Europe and Middle Eastern regions where medical treatment remains more costly. Medical tourism in India is likely to be one of the key niche tourism growth areas for in India throughout 2011 and 2012.

Travel accommodation players increase capacity at a faster rate

In anticipation of huge demand driven by inbound and domestic travel, and current scarcity of rooms, hotels continued to add capacity at a fast rate. In 2011, travel accommodation witnessed the entry of many foreign players who foresaw huge demand for budget hotels, and subsequently planned to launch their brands in India. A few leading foreign chains and domestic players including Starwood Capital and Carlson Hotels are adding capacity to increase supply in the budget segment. Addition of huge capacity is likely to create a supply demand mismatch resulting in intensive competition in the near future. However, a few regions including Maharashtra and Karnataka are likely to absorb capacity due the increasing demand driven by business and luxury travellers. Luxury hotels also added capacity and have launched new outlets in 2011 and quite a few hotels are in pipeline.

Low-cost carriers outperform competition

Indian aviation underwent intense competition throughout 2011 and share of throat continued to gradually shift hands towards low-cost carriers. Low-cost carriers including SpiceJet and IndiGo witnessed growth at a much faster rate than scheduled airlines, and continued to gradually eat into the share of other major players. With such growth, low-cost airlines are expected to account for the major share over the forecast period. Low cost leaders including IndiGo and SpiceJet have launched international flights and are offering value fares. The move would create even stiffer competition for other international and Indian players which operate international flights. With budget airlines offering international flights, outbound travel is going to get cheaper to further drive Indian tourists to make international trips.