INDEX

PREFACE………………………………………………………………………………..iACKNOWLEDGEMENT……………………………………………………………...iiEXECUTIVE SUMMARY………………………………………………………….....iiiINDEX…………………………………………………………………………………..01LIST OF TABLES……………………………………………………………………..03

1 . INTRODUCTION TO THE TOPIC……………………………………04

1.1 DEFINITION OF TOURISM............................................................05

1.2 HISTORY OF TOURISM INDUSTRY.............................................051.3 HISTORY OF INDIAN TOURISM INDUSTRY...............................071.4 PURPOSE OF THE STUDY..............................................................111.5 BEAUTY OF INDIA: INTRODUCTION TO INDUSTRY..............121.6 SCOPE OF THE PROJECT...............................................................13

2 . INDIAN TOURISM INDUSTRY……………………………………….14

2.1 INDIAN TOURISM INDUSTRY TODAY.......................................182.2 TOURISM OUTLOOK......................................................................19

3 . BOOM IN TOURISM INDUSTRY………………………………...…..26

3.1 TOURISM CONTRIBUTION TO THE INDIAN ECONOMY........273.2 THE BOOMING TOURISM INDUSTRY........................................273.3 REASONS FOR THIS BOOM...............................................................283.4 RECENT DEVELOPMENT IN TOURISM INDUSTRY………….

….29

4 . TOURISM STRUCTURE…………………………………………...….32

4.1 TOURISM STRUCTURE..................................................................324.2 TYPES OF TOURISM.......................................................................35

5 . MARKETING STRATEGY………..………………………………..…42

5.1 INDIAN TOURISM INDUSTRY RIDES ON THE “THE INCREDIBLE INDIA” CANMAIGN...............................................43

5.2 INDIAN TOURISM LAUNCHED AGGRESSIVE MARKETING CAMPAIGN............................................................................................50

5.3 MEASURES TAKEN FOR TOURISM PROMOTION………….…....56

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6 . ECONOMIC IMPACT OF TOURISM ON THE COUNTRY……….57

7 . INDUSTRY ANALYSIS...………………………..……………….……74

7.1 SWOT ANALYSIS...........................................................................75

7.2 PEST ANALYSIS..............................................................................787.2.1 INTRODUCTION TO PEST ANALYSIS..........................................787.2.2 PEST ANALYSIS OF INDIAN TOURISM INDUSTRY..................797.3 PORTER'S 5 FORCE MODEL……………………………………...….81 7.3.1 INTRODUCTION TO PROTER'S 5 FORCE MODEL.....................817.3.2 FIVE FORCE MODEL FOR TOURISM INDUSTRY…………....…....827.4 PORTER'S SEVEN FORCES MODEL FOR TOURISM………………87

8 . FINANCIAL ANALYSIS……………..……………………..…………94

8.1 BALANCE SHEET............................................................................958.2 PROFIT AND LOSS STATEMENT...................................................988.3 CASH FLOW STATEMENT............................................................1018.4 GROWTH INDICATORS: FINANACE Cos ………………………..104 8.5 RATIO ANALYSIS...........................................................................1058.6 TREND ANALYSIS……………………………………………….…..111

9 . CASE STUDY……….…………………..……………………………..112

10. CURRENT SCENARIO……………………………………………….121

11. CONCLUSION………………………………………………………...126

12. ANNEXURE……………………………………………………………127

13. BIBLIOGRAPHY………………………………………………………132

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1. INTRODUCTION TO THE TOPIC

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1. I NTRODUCTION T O T HE T OPIC______________

1.1 DEFINITION OF TOURISM

One of the earliest definitions of tourism was provided by the Austrian economist in

1910, who defined it as, "some total of operators, mainly of an economic nature,

which directly relate to the entry, stay and movement of foreigners inside and outside

a certain country, city or a region."

Hunziker and Krapf, in 1941, defined tourism as "the sum of the phenomena and

relationships arising from the travel and stay of non-residents, insofar as they do not

lead to permanent residence and are not connected with any earning activity."

In 1976 Tourism Society of England defined it as "Tourism is the temporary, short-

term movement of people to destination outside the places where they normally live

and work and their activities during the stay at each destination. It includes

movements for all purposes."

In 1981 International Association of Scientific Experts in Tourism defined Tourism in

terms of particular activities selected by choice and undertaken outside the home

environment.

1.2 HISTORY OF TOURISM INDUSTRY

Wealthy people have always traveled to distant parts of the world to see great

buildings or other works of art, to learn new languages, to experience new cultures, or

to taste new cuisine. As long ago as the time of the Roman Republic places such as

Baiae were popular coastal resorts for the rich.

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The terms tourist and tourism were first used as official terms in 1937 by the League

of Nations. Tourism was defined as people travelling abroad for periods of over 24

hours

FIG 1.1: View of Machu Pechu, Peru

The history of European tourism can perhaps be said to originate with the medieval

pilgrimage. Although undertaken primarily for religious reasons, the pilgrims in the

Canterbury Tales quite clearly saw the experience as a kind of holiday (the term itself

being derived from the 'holy day' and its associated leisure activities). Pilgrimages

created a variety of tourist aspects that still exist – bringing back souvenirs, obtaining

credit with foreign banks (in medieval times utilising international networks

established by Jews and Lombards), and making use of space available on existing

forms of transport (such as the use of medieval English wine ships bound for Vigo by

pilgrims to Santiago De Compostela). Pilgrimages are still important in modern

tourism - such as to Lourdes or Knock in Ireland. But there are modern equivalents -

Graceland and the grave of Jim Morrison in Père Lachaise Cemetery.

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During the seventeenth century, it became fashionable in England to undertake a

Grand Tour. The sons of the nobility and gentry were sent upon an extended tour of

Europe as an educational experience. The eighteenth century was the golden age of

the Grand Tour, and many of the fashionable visitors were painted at Rome by

Pompeo Batoni. A modern equivalent of the Grand Tour is the phenomenon of the

backpacker, although cultural holidays, such as those offered by Swann-Hellenic, are

also important.

1.3 HISTORY OF INDIAN TOURISM INDUSTRY

Post-Independence, while critical issues like agriculture, infrastructure and power

supply hogged the limelight, travel and tourism received step daughterly treatment, as

it was deemed a ‘luxury’ – affordable by only a few. Not much has changed over the

last four decades, and it seemed every time the industry gained some form of

momentum despite the closed and protected economy, there was something lurking in

the shadows to clip its wings. The introduction of FERA put a serious crimp in

foreign investment in the country and the emergency was yet another deterrent to the

tourism movement. A look at the Five Year Plans shows that in the Third Plan (1961-

1966), tourism got approx 4.001 crores, which was 0.11% of the total Plan outlay. In

the Eighth Plan (1992-1997), it was Rs 272 crores – still 0.11% of the total plan

outlay.

At this time, policy makers, industry representatives and opinion makers equated

tourism with foreign visitors. To their way of thinking, it was the foreign visitor who

occupied hotel accommodation, filled airline seats, frequented bars and restaurants

and used recreation facilities. Plus, given the foreign exchange (forex) shortage, the

foreign tourist was looked upon as Daddy Big-Bucks – with an almost endless supply

of crisp foreign currency. And while key aspects of Indian tourism came to be tailored

to the foreign visitor, the price mechanism too, came to be tied to overseas costs.

Hotel rates, food and beverages in hotels, handicrafts, etc, were priced at a level much

higher than the economic standards prevalent in the country at the time.

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No way could our rupee-toting lads compete. Thus, for our fellow countrymen, travel

was restricted to places of pilgrimage or going to one’s native town to visit the family

once a year. However, other South East Asian countries were on the ball soon enough

when they realized the potential of tourism. Hong Kong, Singapore and Thailand dug

in the infrastructure, developed detailed tourism plans and marketed them in glorious

Technicolor across the world. Ironically, today, Indian outbound tourism provides a

sizeable chunk of tourist inflow into these countries.

Something In 80s to 90s

From the mid-80s to the early 90s, the Indian corporate world underwent a

transformation. The Old Guard - Tatas, Birlas and Godrej – saw the emergence of the

newer dynasties on the block - Reliance, Essar and Mahindra. As new factories

opened and the corporate kingdoms spread across the country, so did the need for

roving executives, with suitably generous travel and entertainment allowances. And

thus was born the corporate traveller. Airlines and hotels didn’t take long to work out

that the man with the tie and briefcase was the man with the corporate expense

account! Airlines introduced business or club class and the hospitality sector set up

executive floors - complete with butlers- geared to cater to this booming segment.

The outbound segment (as we know it today) was still in its nascent stage. The “have-

suitcase-will-travel” high lasted only for so long, as the reality of getting sponsor

letters from friends and family overseas set in, and the forex restrictions of USD$ 500

as one’s basic travel quota (BTQ) once every two years, made travelling abroad more

than a little difficult. Naturally, this being the land of opportunity, the grey market for

forex boomed – practically every large general store in well to-do neighborhoods had

an extra drawer for their greenbacks. Low customs allowances meant that bringing

items into the country from your travels – assuming you went to some place where

US$500 would get you anything – meant the little man in a white uniform welcomed

you on your return to the Homeland, and rubbed his hands in glee. “Red channel

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please” was the helpful direction he gave you as you wearily pushed your trolley

towards a long and tortuous queue!

The Yuppies Of The 90s

The tourism industry began to swing in the mid-90s, with the liberalization of the

economy, and with India ratifying the agreement to set up the WTO unit in India.

Foreign investment in industry, foreign investment in airlines and foreign media got

the country excited about the world “out there” and the guy with 50 channels at his

disposal, found bikini-clad motivation on his 21 inch screen, to get out of his armchair

and check out new destinations. The alphabets ‘MBA’ next to a young person’s name

opened up the road to five-figure salaries, six-figure bonuses and stock options.

Young people were raring to go where they parents hadn’t been and they had the

means to do it! And, more surprisingly, the Indian traveller began to get excited about

touring around his own country and the trend for domestic tourism was firmly set.

The last decade of the last century alone, saw an increase by more than 100 million

travellers in the domestic tourism segment – from 63.8 million visitors in 1990, to 176

million in 1999.

The Number Crunch

On a broader scale though, finding accurate figures and statistics is something of a

problem even today, and in the absence of a centrally appointed and vigilant

monitoring body, one can only make estimates. Immigration figures based on

disembarkation cards are unreliable as they make little distinction between visitors

coming only to India or backtracking from Nepal or other neighboring countries.

Also, a large number of arrivals stay with family or friends and do not contribute

much to the forex kitty Forex earnings have been accepted by the tourism industry,

as being the surer criterion of the quality and number of tourists a country is

attracting.

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A study by FICCI, in 1994, showed that the overall forex earnings from tourism had

been static around US$ 1.2 – 1.4bn. In 1989, our earnings in forex were Rs. 2103

crores, which rose to Rs 3,990 crores in 1993. But if one were to take into account the

devaluation that the rupee had been facing against the dollar at the time, then the net

dollar earnings had virtually remained stagnant. Tracking tourism in the domestic

sector is even more difficult as this is still an unorganized sector, with individuals

making their own arrangements or availing of the services of small outfits.

Here And Now

Post-September 11, the tourism industry in India has shown resilience with Indian

travellers opting to look inwards to domestic tourism or to explore other destinations

such as Australia and New Zealand. The Kargil conflict, the current Iraq war and the

new flu on the loose in South East Asia, have also dealt serious blows to the global

tourism industry. Despite this litany of international crises, today, it is an accepted

fact that tourism is the fastest growing industry in the world; a creator of wealth and

business opportunities, an income multiplier, a catalyst for employment and preserver

of the environment. An investment of Rs 10 lakhs in tourism, creates89 jobs, as

against 45 in agriculture, and 13 in manufacturing for the same investment.

The current budget has finally granted the tourism industry “infrastructure” status and

an increase in plan outlay to Rs 225crore. The international airports in the four metros

are to be upgraded to world-class standards and six comprehensive tourism circuits

will be developed to help promote tourism. The lack of a centralized government apex

body to give it the tourism industry focus and direction is still a cause for serious

concern. At present, the central ministry of tourism’s functions are, limited to

marketing India overseas and providing meager financial support to state governments

for the creation of tourism facilities.

Most of the important issues relating to tourism are deciding elsewhere. The Ministry

of Civil Aviation controls aviation policy as well as the administration of airports. The

Ministry of Home Affairs/External Affairs decides the visa regime, and the Ministry

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of Finance supervises the fiscal policy for investment in the tourism sector and of

course the all important tax structure. It is left to the private sector to run between the

ministries to bring about any radical reforms. The classic Indian bureaucratic

runaround – the death-knell to an industry on the move!

Future-wise

The more significant findings of the many reports done for the international travel and

tourism industry show that the focus of the industry is gradually shifting from Europe

and N America to east/South Asia and the Pacific. A research forecast by the World

Travel and Tourism Council pegs tourism industry grow that 4.5% over the next ten

years. Turkey is expected to be the fastest growing travel and tourism economy over

the next 10 years at a rate of 10.2%, while India will have a growth of 9.7%. This

buoyant outlook also reflects a possibility of the creation of nearly 7 million jobs over

the next 10 years.

1.4 PURPOSE OF THE STUDY

• To obtain a broad overview of the outbound travel patterns (past and future)

amongst the general population in the key target markets.

• To determine the preference for India, as a destination amongst potential target.

• To ascertain the current perception of India and evaluation of India as a destination.

• To ascertain the expectations of India, as a travel destination.

• To obtain an evaluation of India as a travel destination, amongst those who have

visited India in the recent past.

• To ascertain the expected role to be played by India Tourism.

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1.5 BEAUTY OF INDIA: INTRODUCTION TO INDUSTRY

India's amazing diversity offers everything you could ever want in a holiday.

From the moment that you set foot in India to be greeted by a graceful namaste, a

gesture that denotes both welcome and respect, you are on the way to one of the most

rewarding experiences of your life. Bounded by the majestic Himalayan ranges in the

north and edged by a spectacular coastline surrounded by three seas, India is a vivid

kaleidoscope of landscapes, magnificent historical sites and royal cities, golden

beaches, misty mountain retreats, colorful people, rich cultures and festivities.

At any part of the year India can offer you a dazzling array of destinations and

experiences. In summer, when the subcontinent is sizzling, there are spectacular

retreats amidst the heady beauty of the Himalayas or the lush heights of the Western

Ghats with cool trekking trails, tall peaks to conqueror stretches of white water for the

adventure seekers. In the cool of an Indian winter, cities come alive with cultural

feasts of music and dance. The balmy weather is an ideal time for you to go century

hopping in romantic cities studded with medieval forts and palaces. The sun drenched

beaches are inviting and wildlife sanctuaries with their abundance of flora and fauna

are a buzz with the nurture of the young. You can taste the delights of the Indian

monsoon anywhere in the country- on a camel safari in the Rajasthan desert when

nature comes alive and the peacocks dance; along the west coast where the relentless

slanting rain paints the countryside in brilliant greens or even trekking amidst the

stark grandeur of mountain valleys lying in the rain shadow of the Himalayas. 

Experience exotic India   live like a maharaja in the rich ambiance of royal forts and

palaces that are now heritage hotels; luxuriate in the serene beauty of a coral island

with its turquoise lagoon; participate in the exuberance of a village fair or a colorful

festival; day dream on a house boat drifting down the palm - fringed backwaters;

delight in the grace of a dancer or shop till you drop - buying exquisite silks, carved

figurines, brass and silver ware, marble inlaid with semi-precious stone, finely crafted

jewelry, miniature paintings, carpets ....at unbelievable prices. India, always warm and

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inviting, is a place of infinite variety - one that favors you with a different facet of its

fascination every time you come on a visit.

A look at a travel brochure, these days, shows a tendency by travel writers to speak in

superlatives. “Grand colonial architecture”, “sparkling beaches”, “amazing

monuments” and so on; and yet, for a country like India, all these adjectives and

more, are totally appropriate. However, for a country bursting with tourism

opportunities, we have been slightly slow on the uptake, as far as promoting these

destinations goes. A point highlighted by the First Planning Commission way back in

1955, which ranked tourism 269th on their priority list of industries – lower than even

the development of light-houses! At that time, the average number of tourists who

came knocking at our door was around 15,000.

1.6 SCOPE OF THE PROJECT

Management research project on Indian Tourism Industry is being undertaken so as to

know about the Indian Tourism Industry in general. With the help of detailed study

and in-depth analysis of the data gathered, we would be able to identify major players

of the industry and market share etc.

Industry analysis would be done on the basis of SWOT analysis, PEST analysis and

financial analysis.

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2. INDIAN TOURISM INDUSTRY

15

2. I NDIAN T OURISM INDUSTRY

India has significant potential for becoming a major global tourist destination. The

country witnessed foreign tourist arrivals of 2.75 million in 2001.

Travel and tourism is the second highest foreign exchange earner for India,

and the government has given organizations in this industry export house

status. The industry is waking up to the potential of domestic tourism as well,

with an estimated 4.7 billion domestic trips in 2001. Tourism spending within

India in 2001 was US$ 22 billion.

There is considerable government presence in the travel and tourism industry.

Each state has a tourism corporation, which typically runs a chain of hotels

/motels and operates package tours, while the central government runs the

India Tourism Development Corporation. Divestment of these state-run

tourism corporations have either already taken place or are in process.

Incoming foreign tourist arrivals have shown a 6% compounded annual

growth rate over the last 10 years. The government has realized the potential

and has advanced several incentives to promote infrastructure growth in the

tourism sector.

Current investments are likely to see hotel room capacity increase by 20%

over the next three years, with several international hotel chains entering the

hotel industry. Similar growth is anticipated in air travel capacity.

Policy Initiatives

• The New Tourism Policy released in May 2002 has outlined the following policy

initiatives for the tourism sector:

• The new policy is built around the 7-S Mantra of Swaagat (welcome), Soochanaa

(information), Suvidhaa (facilitation), Surakshaa (security), Sahyog (cooperation),

Sanrachnaa (infrastructure) and Safaai (cleanliness).

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• The new policy envisages making tourism a catalyst in employment generation,

wealth creation, development of remote and rural areas, environment preservation and

social integration. The policy also aims to spruce up economic growth and promote

India’s strengths as a tourism destination that is both safe and at the same time

exciting.

• The policy proposes the inclusion of tourism in the concurrent list of the

Constitution so as to enable both the central and state governments to participate in

the development of the sector.

• No approval is required for foreign equity of up to 51 per cent in tourism projects.

Enhanced equity is considered on a case-to-case basis. NRI investment is allowed up

to 100%.

• Approvals for Technology agreements in the hotel industry are available on an

automatic basis, subject to the fulfillment of certain specified parameters.

• Concession rates on customs duty of 25% for goods that are required for initial

setting up, or for substantial expansion of hotels.

• 50% of profits derived by hotels, travel agents and tour operators in foreign

exchange are exempt from income tax. The remaining profits are also exempt if

reinvested in a tourism related project.

• Approved hotels are entitled to import essential goods relating to the hotel and

tourism industry up to the value of 25% of the foreign exchange earned by them in the

preceding licensing year. This limit for approved travel agents/tour operators is 10%.

• Hotels located in locations other than the four major metro cities are entitled to 30%

deduction from profit, for a ten-year period.

• The expenditure tax has been waived in respect of hotels located in the hills, rural

areas, and places of pilgrimage or specified place of tourist importance.

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Benefits to customers

Since the economy opened up in 1991, several foreign chains have entered the Indian

market, including Hyatt, Four Seasons, Hilton, Regent, Radisson and Holiday Inn. 

The result is that the quality of service has improved. The overseas players have

brought in efficient systems and service standards from Europe and the US.

Competition has forced Indian hotel groups to improve their standards. The customer

has benefited in many ways. The influx of foreign players has led to major price wars

in the industry. In an attempt to woo customers, Indian hotels have reduced their

tariffs significantly. According to one hotelier, "India has become a normal market -–

like others in the West or in Southeast Asia – with demand and supply determining

the price".

Apart from this, government has taken several other measures for the promotion of

tourism. A multi-pronged approach has been adopted, which includes new mechanism

for speedy implementation of tourism projects, development of integrated tourism

circuits and rural destinations, special capacity building in the unorganized hospitality

sector and new marketing strategy.

The outlook for travel industry in India looks extremely bright. India as a tourism

destination is the toast of the world at the moment. Conde Nast ranked India amongst

the top 10 tourist destinations. JBIC ranked her as the fifth most attractive investment

destination. Besides, India is probably the only country that offers various categories

of tourism. These include history tourism, adventure tourism, medical tourism

(ayurveda and other forms of Indian medications), eco tourism, cultural tourism, rural

tourism, religious/pilgrimage tourism, spiritual tourism, and beach tourism etc.

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2.1 INDIAN TOURISM INDUSTRY TODAY

TECHNOLOGY is set to spur the sagging Indian tourism industry which has

witnessed a 15 per cent decline during the last fiscal, according to industry estimates.

Online reservations, global distribution system (GDS), e-Holiday departments and

implementation of sophisticated security systems such as swipe cards is prodding

growth in the travel sector.

A much needed respite to the tourism sector, if the following facts are considered.

Last year, outbound tourists exceeded inbound tourists (22 lakhs) by 30 per cent,

according to statistics provided by the Department of Tourism.

Coupled with the economic recession and after-effects of the post-September 11

attacks, the travel advisory warnings issued by the U.S. and European Consuls have

jolted the Indian tourism and hospitality sectors.

Travel sector

In 2000-01, the ratio of foreign tourists to Indian tourists was 65:35, with the majority

cornered by foreign tourists. In 2001-02, the balance at 45:55 has tilted towards

domestic tourists, sources said.

To counter declining tourism, tour operators and travel agents have been quick to

adopt technology. "We have earmarked nearly Rs. 20 crores towards technology

upgradation including front office automation and Internet reservation. It is

imperative that the Indian tourism sector adapt technology,'' P. N. S. Nair, Travel

Manager-Bangalore, Thomas Cook India, told The Hindu.

Another leading tour operator, Sita Travels has even commenced a e-Holidays

division to cater to online travel enquiries. GDS providers like Galileo, Sabre and

Amadeus have routed significant business to tour operators, informed Anup D'Souza,

Sales Manager, and Cox & Kings.

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Galileo launched its web services in India to allow its customers direct access to the

GDS provider's travel information and services. "We have a tie up with leading

operators like TCI, Sita, Akbar Travels to service the Indian travel sector. Galileo will

open its offices across 150 cities by next year to expand its presence,'' Vivek Verma,

General Manager, Galileo India said.

Online reservations through the Internet are estimated to increase from a mere 10-12

per cent to nearly 25 per cent over the next five years, according to Rakhee Lalwani,

Area Manager-South, Taj Group of Hotels.

Major players in the Indian Tourism Industry

    1. East India Hotels Ltd.

    2 Thomas Cook India Ltd.

    3. Jet Airways (India) Ltd.

2.2 TOURISM OUTLOOK

TOURISM OUTLOOK: GLOBAL

World Travel & Tourism generated about US$6,477.2 billion of economic activity

(Total Demand) in 2006. As per the estimates the rate of growth in nominal terms,

will take the total industry valuation to US$12,118.6 billion by 2016. Total Demand

(or in other words, 100% of the world market share in Travel and Tourism) is

expected to grow by 4.2% per annum, in real terms, between 2007 and 2016.

Post the period of stagnation triggered by the events of September 11, 2001 coupled

with slow growth of the global economy, conflicts in the Middle East and sporadic

terrorist attacks worldwide, International tourism has rebounded strongly since 2004,

both in terms of arrivals and of receipts.

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World Tourism demand like the global economy continues to exceed expectations,

showing resilience against extraneous factors. The estimated 842 million arrivals in

the year 2006 represent an additional 36 million over 2005 level, making a new record

for the industry. Of the additional 36 million, 17 million were for Europe, 12 million

for Asia and the Pacific, 3 million for Africa and for the Americas, respectively and

nearly 2 million for the Middle East.

Among the various regions, while Africa registered the highest annual growth rate for

international tourist arrivals in both 2006 and 2005 (above 8%), it was followed

closely by Asia and the Pacific – 7.7% in 2005 and 7.6% in 2006.

By sub-regions, South Asia registered the highest annual growth rate in 2006 (10.1%),

followed by Sub-Saharan Africa (9.4%) and South East Asia (9%). Europe and

Middle East showed a growth rate of 4% in 2006. The weakest region was America,

whose estimated growth rate was 2% .

In terms of the future forecast for the year 2007, Africa is forecast to record the

highest growth in the year 2007 at 9%, followed by Asia and the Pacific at 8%.

Americas (+2%), is set to continue growing below the world average, in spite of good

performance of the southern destinations.

Key Findings

- In India, inbound tourist expenditure per head is third highest in the world and even

more than global average tourist spending.

- India has been promoting its healthcare tourism by providing the visitors with

private healthcare facilities. It is expected that the number of tourists visiting India for

the purpose of medical treatment will reach one Million by 2012, representing a

CAGR of 28.09% from 2007.

- Disposable income in past (during 2001-2006) grew at a CAGR of 10.11%, thereby

driving domestic as well as outbound tourism.

- Room rent accounts for more than 50% of revenue earned by Indian hotel industry.

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- Indian outbound tourist flow is expected to increase at a CAGR of 12.79% over the

five-year period spanning 2007-2011.

- Tourist influx to India is expected to increase at a CAGR of 22.65% between 2007

and 2011.

- India’s share in global tourism is expected to reach 1.5% by 2010.

TOURISM OUTLOOK: ASIA

Asia continues to be the world economic powerhouse. According to the United

Nations, by 2020, four of the largest ten economies will be in Asia (China, India,

Japan and the Republic of Korea). Asia will also account for 12 of the 22 mega cities

(urban centers with more than 10 million people) by the same year.

Of the 842 million arrivals in the world for the year 2006, 167.1 million were for

Asia. Within Asia, North-East Asia contributed about 94 million arrivals. 53.8 million

arrivals were for South-East Asia. Oceania and South Asia together accounted for

about 19.3 million arrivals.

Asia and the Pacific was able to maintain its extraordinary growth level (+7.6%,

compared to last year), both due to the recovery of Thailand and the Maldives from

the impact of the December 2004 tsunami, as well as remarkable performances from

emerging destinations in the region. International tourist arrivals in South Asia grew

by 10%, boosted by India, the destination responsible for half the arrivals to the sub-

region.

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TOURISM OUTLOOK: INDIA

Given the Global Tourism perspective, buoyancy in the Indian Economy and growth

in the related ancillary industries like Infrastructure and Aviation, the Tourism

Industry is expected to be on an upswing in India. Foreign Tourist arrivals to India

have been showing an increasing trend, it being estimated at 4.43 million in 2006, up

13% from 2005 (3.92 million). Taking into account the fact that these figures exclude

the NRIs visiting India, the total number of international tourist arrivals in 2006 is

estimated to be over 7 million.

India’s outbound travel is twice the volume of inbound, and destinations in the Asia-

Pacific region are expected to receive continuous growth in tourist arrivals from India.

In terms of the growing travel and tourism economy and the real growth rate of travel

market, India is the number one country in Asia-Pacific region

The Travel & Tourism Industry in India is expected to grow and generate US $ 128

billion by 2016. The Total Demand is expected to grow by 8% per annum, in real

terms, between 2007 and 2016. In the year 2006, India represented 0.8 % of the world

market share.

India’s rich cultural and geographic diversity provides the basis of a wide range of

tourist products and experiences, which include among others - leisure, culture,

adventure, spirituality, eco-tourism and wellness & health. Apart from acknowledging

the traditionally recognized advantages of developing tourism for promotion of people

to people understanding, earning of the foreign exchange, vast employment

generation, it can play a major role in furthering the socio-economic objectives of the

nation.

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TOURISM OUTLOOK: STATE

In recent years, tourism has become a priority sector in the State. This is reflected in

higher budget allocations, growing partnership efforts between the public and private

sectors, increased tourist arrivals, vibrant and vigorous promotion efforts, etc. The

emphasis is to make Tourism a mass movement and a prime mover for promoting

entrepreneurship, poverty reduction and economic development. Provision of well

integrated and world class infrastructure and amenities at tourist spots would continue

to receive attention during the ensuing year.

TOURISM OUTLOOK – FORECAST

The Tourism 2020 Vision forecasts show that international tourist arrivals are

expected to reach over 1.56 billion by the year 2020. This demonstrates an annual

growth rate of 4.1 per cent over the period 1995-2020. Long-haul (interregional)

travel worldwide will grow faster than intraregional travel. In 1995, long-haul travel

accounted for 18 per cent of all international trips; by 2020 this is expected to increase

to 24 per cent.

The 22 destinations9 of the Indian Ocean country grouping are forecast to receive 179

million international tourist arrivals in the year 2020, thus recording an annual growth

rate of 6.3 per cent over the period 1995-2020. Consequently, the Indian Ocean region

is gaining market share of worldwide tourist arrivals and by 2020 one-in-every-nine

(or around 11 per cent) of tourist arrivals will be to an Indian Ocean country. Thailand

will become the leading Indian Ocean destination with a forecast of 36.9 million

arrivals in 2020, an average annual growth between 1995 and 2020 of 6.9 per cent.

South Africa will occupy the second place, third place will be occupied by Indonesia,

Malaysia at number four; fifth and sixth positions will be held by Australia and

Singapore respectively. India will be the seventh largest Indian Ocean country in

terms of arrivals.

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The prospects for the Tourism sector at a global level are very optimistic on account

of the following factors:

The worldwide economic growth is fueling the old source markets of North

America and Europe and simultaneously creating new source markets of Asia.

Travel & tourism has rebounded post the terror incidences and threats to

airlines.

Consumer confidence is up again and not dampened anymore by these events.

INDIA TOURISM – GLOBAL REGONITION

The last few years have been highly successful for India Tourism. The ‘Incredible

India’ campaign has enabled the destination to penetrate global market and reach the

ultimate consumer through electronic, print and internet media.

On account of the spurt that India has witnessed in tourist arrivals in the recent times

and given the unique and immense potential the country has as a ‘vacation

destination’, The World Travel and Tourism Council has identified India as one of the

foremost tourism growth centers in the world, in the coming decade.

Integrated endeavors of the Ministry of Tourism, Government of India have led to

India winning the following international acclaims:-

Conde Nast Traveler, the worlds’ leading travel and tourism journal has

ranked India amongst the top 4 preferred holiday destinations of the world

India amongst the top 5 favorite destinations – Lonely Planet in a survey of

167 countries

ABTA (Association of British Travel Agency) has ranked India as No. 1

amongst top 50 places for 2006

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The Incredible India campaign has been the winner of PATA Gold Award for

best Print Ad Campaign and PATA Gold Award for Best Destination

Marketing Campaign

The Incredible India Campaign has been ranked as the ‘Highest Recall

Advertisement worldwide by Travel and Leisure

World Travel Awards received for

a) Asia’s Leading Destination

b) World’s leading Travel Destination Television Commercial

c) Worlds’ Leading Responsible Tourism Project, for Endogenous Tourism

project

d) Asia's leading tourism and convention bureau

Increasingly, Tourism as a sector seems to be emerging to be one of the main driving

engines of the Indian Economy.

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3. BOOM IN TOURISM INDUSTRY

27

3.B OOM I N T OURISM I NDUSTRY__________________

3.1 TOURISM CONTRIBUTION TO THE INDIAN ECONOMY

It is not hidden that tourism is among India's important export industries. Even with

comparatively low levels of international tourist traffic, tourism has already emerged

as an important segment of the Indian economy Tourism also contributed to the

economy indirectly through its linkages with other sectors like horticulture,

agriculture, poultry, handicrafts and construction.

Foreign exchange earnings from tourism during 2003-04 were US $ 3,533 million

( Rs 16,429 crore). Besides being an important foreign exchange earner, tourism

industry also provides employment to millions of people in India both directly and

indirectly (through its linkage with other sectors of the economy.) It is estimated that

total direct employment in the tourism sector is around 20 million.

3.2 THE BOOMING TOURISM INDUSTRY

The year 2004-05 saw tourism emerging as one of the major sectors for growth of

Indian economy, the foreign exchange earnings increased from Rs. 16,429 crore to

21,828 crore up to December.

Similarly in the last year, tourism industry registered a growth rate of 17.3% in

foreign tourist arrivals, which has been the highest in last 10 years. Foreign exchange

earnings grew at an even higher rate 30.2%.

India's tourism industry is thriving due to an increase in foreign tourists arrivals and

greater than before travel by Indians to domestic and abroad destinations. The visitors

are pouring in from all over the world: Europe, Africa, Southeast Asia and Australia.

At the same time, the number of Indians traveling has also increased. Some tourists

28

come from Middle East countries to witness the drenching monsoon rains in India, a

phenomenon never seen in desert climates.

Domestic tourists are also fueling the industry's revival. Many of them escape from

the summer heat on the plains to resorts in the Himalayan Mountains. One of the

major beneficiaries this year is Kashmir, where a cease-fire between India and

Pakistan has reduced violence, if not completely, at least enough to help revive the

state's sagging tourism industry.

Among the most favoured tourist destinations in India, Kerala for its scenic beauty,

Agra for Taj Mahal, Khujraho for its sculptures and temples, Goa for its beaches and

some pilgrimages are the most important.

Interesting feature of this growth is that it has come even as global tourism has

dropped, due to the September 11 terrorist attacks in the United States, the outbreak of

Severe Acute Respiratory Syndrome in East Asia, and the Iraq war. Even the

disastrous tsunami didn't affect India's tourism industry, as tourist arrivals in India

rose 23.5 percent in Dec 2004 and tourist arrivals crossed 3 million marks for the first

time in 2004. The disaster was expected to have a negative impact on India's tourism

in terms of large-scale cancellations of tourists to India but nothing of that sort was

seen.

3.3 REASONS FOR THIS BOOM

There could be several reasons for the buoyancy in the Indian tourism industry. First,

the upward trend observed in the growth rate of Indian economy has raised middle

class incomes, prompting more people to spend money on vacations abroad or at

home. Also, India is booming in the information technology industry and has become

the IT center. Aggressive advertising campaign "Incredible India" by the government

has also had contribution in changing India's image from that of a land of snake

charmers, and sparking new interest among overseas travellers.

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3.4 RECENT DEVELOPMENT IN TOURISM INDUSTRY

India Tourism office at Tokyo won two International Awards in Tour Expo held at

Daegu in Korea for excellent tourism promotion. Indian Pavilion won the Best Booth

Design Award as well as Best Folklore Performance Award competing with major

players in tourism such as China, Japan, Thailand, Malaysia and Canada.

The theme of pavilion was the Buddhist pilgrimage in India. Multi promotional

activities undertaken by Tokyo office drew a large crowd to India Pavilion, which

added colours to the entire travel show. The Korea’s leading newspapers published on

the front page the Incredible India booth’s photographs highlighting various aspects.

The live Yoga performance and Indian traditional snacks at the pavilion were enjoyed

very much by the visitors.

TOURISM POLICY

In order to develop tourism in India in a systematic manner, position it as a major

engine of economic growth and to harness sits direct and multiplier effects for

employment and poverty eradication in an environmentally sustainable manner, the

National Tourism Policy was formulated in the year2002.Broadly, the “Policy”

attempts to:-

Position tourism as a major engine of economic growth;

Harness the direct and multiplier effects of tourism for employment

generation, economic development and providing impetus to rural tourism;

Focus on domestic tourism as a major driver of tourism growth.

Position India as a global brand to take advantage of the burgeoning global

travel trade and the vast untapped potential of India as a destination;

30

Acknowledges the critical role of private sector with government working as

a pro-active facilitator and catalyst;

Create and develop integrated tourism circuits based on India’s unique

civilization, heritage, and culture in partnership with States, private sector and

other agencies; and

Ensure that the tourist to India gets physically invigorated, mentally

rejuvenated, culturally enriched, spiritually elevated and “feel India from

within”.

Keeping is view the basic principles and guidelines of the Tourism Policy, the

Ministry of Tourism has been broadly implementing the following

schemes/programmes during the 10th Five Year Plan:

1. Scheme for Product/ Infrastructure Development and Destination &

Circuits

2. Scheme for Integrated Development of Tourist Circuit

3. Scheme of Assistance for Large Revenue Generating (LRG) Projects

4. Scheme of Capacity Building for Service Providers (CBSP)

5. Scheme of Rural Tourism

6. Scheme of Financial Assistance to States for Organization Tourism

Related Events

7. Scheme of Central Financial Assistance for Information Technology

(IT) Projects

8. Scheme for support to Public Private Partnership in Infrastructure

Development (Viability Gap Funding)

9. Scheme of Market Development Assistance (MDA)

10. Capital Subsidy

11. Time Share Resorts (TSR)

12. Market Research- Professional Services

Publicity Information Material

31

As part of its marketing / publicity activities, the Ministry of Tourism brings out

brochures, leaflets, maps, films, CDs, etc. on various topics. Each heading given

below details the theme on an All-India basis based on availability of the respective

products. In case of the destination folders, the leaflet / folder / brochure gives the

information about the place or the destination with various facets of the facilities

available, sight seeing around the place, important telephone numbers and the contact

points of India tourism officers. Similarly, the films deal with the subject in its

entirety covering all destinations of the country.

Incredible India Theme Brochures

Destination Leaflets

Heritage Destination Leaflets

North East Brochures

Maps

Films

Indian history dates back to 3000 BC. Excavations in Punjab and Gujarat reveal that

the Indus Valley civilization was a highly developed urban civilization. In fact the two

cities of Harappa and Mohenjodaro, situated on two sides of the river Ravi, are known

to have been built on a similar plan. But that only meant a new wave of urbanization

was taking place along the Ganges around 1500 BC. This has been recorded in the

Rig Veda - the earliest known literary source composed in this period that sheds light

on India's past.

India is one of the popular tourist destinations in Asia. Bounded by the Himalayan

ranges in the north, and surrounded on three sides by water (the Arabian Sea, Bay of

Bengal, and the Indian Ocean), with a long history and diverse culture, India offers a

wide array of places to see and things to do. In 2004, foreign tourists visiting India

spent US$ 15.4 billion - the ninth highest in the world. From that time, India is also

ranked among the top 3 adventure tourism destinations.

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4. TOURISM STRUCTURE

33

4. T OURISM S TRUCTURE

4.1 TOURISM STRUCTURE

The tourism industry is classified into outbound, inbound & domestic and there are

different opinions about the size of the industry.

INBOUND TOURISM

Inbound tourism is concentrated largely in the North and Rajasthan. Industry sources

say that even today, the South accounts for only about 25 per cent of inbound tourism.

"The first time traveler will invariably go to Agra and Rajasthan and not venture to

other locales.'' However, "With the thrust given by Kerala, it is an exotic option and

Gujarat too is a destination of the future.''

DOMESTIC TOURISM

Domestic tourism needs to be buoyed up. "Domestic tourists are looking at 3-4

holidays in a year in India and the concept of booking through a hotel directly is

moving away and customers are increasingly coming to travel and tour agencies''

avers an industry insider. The most favored destinations continue to be the hill

stations, Rajasthan and now, with the marketing thrust, Kerala is the largest

destination for people in the West and South.

OUTBOUND TOURISM

INDIA AS A MICE DESTINATION

India is in a continual process of upgrading its MICE (Meetings, Incentives, and

Conferences & Exhibitions) facilities. There are multiple plans on the anvil for more

world-class convention centers, airports that contest with the best in the world and

efforts to team the famous Indian hospitality with customization as per a visitor’s

requirement. You could also offer the credit to the world class incentive programs, her

ability to heal spiritually, her unmatched offering as a health destination or

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continually improved infrastructure facilities that over 3 million foreign tourists

thronged her this year generating over US $30 billion as revenue, even as most other

preferred hotspots marked a decline in their tourism graphs.

INDUSTRY PLAYERS

Among the leading players, Kuoni Travel (India) (KTIL) is the country’s biggest,

fully owned by the Zurich-based Kuoni Travel Holding. The company acquired Tour

Club which caters to the outbound segment from West Asia to India. Inbound travel

from West Asia has been growing at 15 per cent, among the highest growth rates in

the segment. KTIL had already spent Rs. 200 crores in earlier acquisitions, which

included travel majors SOTC (Kuoni's route to an Indian presence) and SITA World

Travel.

Cox & Kings India too have an open mind on acquisitions both in the domestic and

overseas markets. "We will look at niche companies overseas as well which we feel

we can develop.'' The company claims the second largest share of the domestic pie

after Kuoni in inbound and outbound travel. "What separates us is the charter segment

which, for example, comes into Goa. We set up a subsidiary- Far Pavilions - to cater

to this segment and that has made a fair amount of progress.''

Thomas Cook (India) Limited (TCIL) says increased investment in marketing leisure

travel and expansion of distribution network is expected to yield significant benefits

in the peak traveling period between May and July. There has also been continued

investment in building businesses in Sri Lanka and Mauritius along with completion

of back-office implementation of SAP, call centre infrastructure and

telecommunication network. Earlier, TCIL was mainly in the business of forex

dealing and travel and tours. "The domestic sector needs more focus and we realize

that the customer wants quality service. Reliability is a major issue. A focus area for

us is A/C rail charters where we book and pay for an A/C railway coach and tourists

can visit different cities/ locations."

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4.2 TYPES OF TOURISM

1. HEALTH TOURISM

Health tourism has always existed, but it was not until the eighteenth century that it

became important. In England, it was associated with spas, places with supposedly

health-giving mineral waters, treating diseases from gout to liver disorders and

bronchitis. The most popular resorts were Bath, Cheltenham, Buxton, Harrogate, and

Tunbridge Wells. Visits to take 'the waters' also allowed the visitors to attend balls

and other entertainments. Continental Spas such as Carlsbad (Karlovy Vary) attracted

many fashionable travellers by the nineteenth century.

It could be argued that Britain was the home of the seaside holiday. In travelling to

the coast, the population was following in the steps of Royalty. King George III made

regular visits to Weymouth when in poor health. At the time, a number of doctors

argued the benefits of bathing in sea water, and sea bathing as a widespread practice

was popularised by the Prince Regent (later George IV), who frequented Brighton for

this purpose.

2. LEISURE TOURISM

Leisure travel was associated with the industrialisation of United Kingdom – the first

European country to promote leisure time to the increasing industrial population.

Initially, this applied to the owners of the machinery of production, the economic

oligarchy, the factory owners, and the traders. These comprised the new middle class.

Cox & Kings were the first official travel company to be formed in 1758. Later, the

working class could take advantage of leisure time.

The British origin of this new industry is reflected in many place names. At Nice, one

of the first and best-established holiday resorts on the French Riviera, the long

esplanade along the seafront is known to this day as the Promenade des Anglais; in

many other historic resorts in continental Europe, old well-established palace hotels

have names like the Hotel Bristol, the Hotel Carlton or the Hotel Majestic - reflecting

the dominance of English customers.

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3. WINTER TOURISM

Winter sports were largely invented by the British leisured classes, initially at the

Swiss village of Zermatt (Valais), and St Moritz in 1864. The first packaged winter

sports holidays took place in 1902 at Adelboden, Switzerland. Winter sports were a

natural answer for a leisured class looking for amusement during the coldest season.

The Fun Ski & Snow Festival, which has been organized annually by Korea tourism

organization since 1998 and participated by about 10,000 tourists from Asia, is one of

the most successful winter tourism products in Asia. The festival provides a variety of

events such as ski and sled competitions, ski and snow board lessons, performances

and recreational activities. Majority of the event participants are foreign visitors who

come from countries with a warm climate that have no snow. The event offers them

opportunities to enjoy winter and winter sports in Korea. In addition, southern South

American countries making up the Patagonia region in Chile and Argentina attract

thousands of tourists every year. Skiing is extremely popular in the mountainous

areas.

4. MASS TOURISM

FIG 3.1 Tourists at the Trevi Fountain, Rome, Italy.

Mass travel could only develop with improvements in technology allowed the

transport of large numbers of people in a short space of time to places of leisure

interest, and greater numbers of people began to enjoy the benefits of leisure time.

37

In the United States, the first great seaside resort, in the European style, was

Atlantic City, New Jersey, and Long Island.

In Continental Europe, early resorts included Ostend (for the people of Brussels), and

Boulogne-sur-Mer (Pas-de-Calais) and Deauville (Calvados) (for Parisians).

5. MEDICAL TOURISM

India, touted as the favorite destination for information technology majors, is

currently emerging as a preferred destination for medical or health tourism. The

Government of India, State tourism boards, travel agents, tour operators, hotel

companies and private sector hospitals are exploring the medical tourism industry for

tremendous opportunities. They are seeking to capitalize on the opportunities by

combining the country’s popular leisure tourism with medical tourism.

What makes India attractive?

The Indian medical tourism industry, growing at an annual rate of 30 percent, caters

to patients chiefly from the US, Europe, West Asia and Africa. Although in its

nascent stage, the industry is outsmarting similar industries of other countries such as

Greece, South Africa, Jordan, Malaysia, Philippines and Singapore. In 2004,

1, 50,000 medical tourists have visited India.

What makes it so attractive?

Foremost is the cost factor. The medical costs in India are one-tenth of the costs in

western countries. For instance, a heart surgery costs $6,000 in India as against

$30,000 in the US. Similarly, a bone marrow transplant costs $26,000 in India as

compared to $2, 50,000 in the US.

Secondly, foreign patients throng Indian hospitals to pass up the long waiting lists and

queues in their native countries. Indian hospitals provide immediate attention to

patients rather than asking them to wait for several months like in most western

38

countries. Further, foreign patients need not tackle insurance and national medical

systems in India as they have to in their native lands.

India offers the best treatments in modern medicine and in every medical division

such as cardiology, orthopedic surgery, eye care, gynecology, cosmetic surgery and

dental surgery. It also provides traditional methods of treatment such as Ayurveda,

Homeopathy, Naturopathy and Yoga.

India’s private hospitals have gained international recognition for their state-of-the-art

facilities and diagnostic centres besides unsurpassed skills. Their technology and

procedures are on par with hospitals in developed nations.

Foreign patients can get package deals including flights, transfers, hotels, treatment

and post-operative vacation for their medical visits to India.

Many foreign patients prefer to combine their leisure and relaxation visits to India

with healthcare.

The Government of India has declared that treating of foreign patients is legal. It is

encouraging medical tourism in the country by offering tax breaks and export

incentives to participating hospitals. In addition, the Government has cleared medical

visas.

Who’s in it?

The chief cities attracting foreign patients to India are Mumbai, Bangalore,

Hyderabad, Kolkata and Chennai. Similarly, the specialty hospitals excelling in the

medical tourism industry in the country are:

Escorts Heart Institute and Research Centre Limited, New Delhi

All India Institute of Medical Sciences, Delhi

Manipal Heart Foundation, Bangalore

B. M. Birla Heart Research Centre, Kolkata

Breach Candy Hospital, Mumbai

Wockhardt Hospitals

Christian Medical College, Vellore

39

Asian Heart Institute, Mumbai

PD Hinduja National Hospital and Medical Research Centre, Mumbai

Jaslok Hospital, Mumbai

Apollo Hospital, Delhi

Apollo Cancer Hospital, Chennai

How can the trend be further encouraged?

The medical tourism industry in India is presently earning revenues of $333 million.

Encouraged by the incredible pace of growth exhibited by the industry, the

Confederation of Indian Industry (CII) and McKinsey have predicted that the industry

will grow to earn additional revenue of $2.2 billion by 2012.

With a view to facilitating the medical tourism industry to achieve the targets and to

give greater momentum for its growth, the Ministry of Health and Family Welfare

together with the Ministry of Tourism of the Government of India has set up a Task

Force. The Task Force will evaluate the opportunities in the industry and formulate a

policy for accrediting healthcare institutions in the country. The accreditation

programme is aimed at classifying health service providers on the basis of

infrastructure and quality of services offered. It is expected to standardize procedures

and facilitate foreign patients in selecting the best hospitals.

Meanwhile, several hospitals in the country are seeking to take advantage of the

booming medical tourism industry. They are investing largely in acquiring

equipments, size and skills.

To provide for brighter prospects for the industry, the hospitals can also acquire

international accreditation, integrate traditional and clinical treatments and offer end-

to-end value added services by tying up with tour operators, airline carriers and hotel

companies. Hospitals can also allow foreign patients to pay through credit and ensure

proper support services to foreign patients after they return to their native countries.

Lastly, the Government of India can also reinforce its support through quick visa

processing, improved flight connectivity and infrastructure development.

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6. PILGRIM TOURISM

Pilgrims are another major group of tourists visiting India. They visit places of

worship according to their faith. But, at times they also visit places of worship of

other religions.

7. HERITAGE TOURISM

Tourists visiting heritage centres are normally made up of people who would like to

visit historical monuments.

8.ADVENTURE TOURISM

Tourists in search of adventure constitute mostly youngsters. They like to whet their

appetite for adventure through trekking, air/water sports, etc.

9.BUSINESS TOURISM

Top executives who arrive in India on business trips or to attend seminars,

conferences, conventions, general body meetings, etc. combine tourism with their

business trips.

10. FAIRS/ FESTIVEALS TOURISM

Large inflow of tourists is usually seen during the major festive seasons like

Deepavali, Christmas, Ramzan, Pongal, etc. The exhibitions, fairs etc. also draw

significant number of tourists.

11. SOCIAL FUNCTIONS

People visit their friends and relatives in connection with social functions like

marriage, dedication of new house, ear-boring ceremony, etc. and visit tourist places

either before or after the function.

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12. ACADEMIC TOURISM

Students from educational institutions visit tourist spots as part of their curriculum.

During such trips they combine studies with Tourism. Tourist attractions like

Government Museum, Fort Museum, Snake Park, Planetarium, etc. act as places of

education for students.

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5. MARKETING STRATEGY

43

5. M ARKETING S TRATEGIES

5.1 INDIAN TOURISM INDUSTRY RIDES ON THE “THE

INCREDIBLE INDIA” CAMPAIGN

According to figures released by the Ministry of Tourism (MoT), Government of

India, in April 2007, around 1.42 million foreign tourists had visited India in the first

quarter of 2007 (Q1 2007). This marked a 14.4% growth when compared to the

corresponding period in 2006.

The foreign-exchange earned in Q1 2007 was Rs.910.24 million, a growth of 16.8%

over the same period of the previous year.

These strong growth numbers had raised the hope of another good year for the

tourism industry in India. The year 2006 had also been a good year for the Indian

tourism sector as around 4.43 million tourists had visited India, which was a 13.3%

growth over 2005. More significantly, India was attracting more upmarket tourists,

which was in sync with the objectives of the 'Incredible India' campaign that the MoT

had initiated in 2002.

The 'Incredible India' campaign was a multifaceted campaign aimed at increasing

tourist inflow in India by promoting India as an attractive destination. The campaign

was a refreshing change from the earlier campaigns that invariably revolved around

44

the Taj Mahal. Moreover, unlike the previous campaigns, the positioning and

communication was kept the same in all the countries.

This campaign focused on aspects that made India unique in the world. The campaign

showcased the different aspects of India's rich cultural heritage and history like yoga,

spirituality, etc. Efforts to promote medical tourism and rural tourism were also

intensified. As a part of the campaign, a national social awareness program called

Atithi Devo Bhavah (Guest is God) was launched in 2005.

This program was aimed at sensitizing key stakeholders and creating awareness

among them about the benefits of tourism. Renuka Chowdhury, the Minister of State

for Tourism, said, "Atithi Devo Bhavah is the symbolic representation of India's age

old hospitality and with this campaign, we are trying to re-instill in the stake holders a

sense of pride and responsibility towards tourists, while positioning India as a popular

“tourist destination worldwide.”.

The MoT had also spent heavily on the marketing and publicity campaigns carried out

in the domestic and international market. For 2006-07, the MoT had spent Rs.2.35

billion for the marketing and publicity efforts. The marketing and publicity for

'Incredible India' campaign in overseas markets had cost Rs.534.9 million in 2006-07.

This global campaign had attracted the attention of tourism industry observers as well

as tourists. Tourist inflow had increased from 2.38 million in 2002 to 4.43 million in

2006. Foreign-exchange earning from tourism too jumped from Rs.141.95 billion in

2002 to around Rs.296.0 billion in 2006.

The 'Incredible India' campaign had also won various awards for advertising

excellence including the PATA Gold Award for 'Best Print Ad Campaign', and the

PATA Gold Award for 'Best Destination Campaign' in 2005. In 2006, India won four

awards at the 2006 World Travel Market, including the 'Best Asian Destination', 'Best

TV Commercial', 'Best Responsible Tourism' and the 'Best MICE (Meeting,

Incentive, Convention and Exhibition) Destination'.

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According to the World Travel and Tourism Council, Indian tourism was expected to

grow annually at 8.8% till 2015. This was one of the highest growth rates among

various tourist destinations across the world. The MoT expected foreign-exchange

earnings to cross US$12 billion by the end of 2012.

However, some industry experts were skeptical and believed that there were still

many challenges that prevented India from realizing its full potential in tourism.

These included poor connectivity, high taxes, visa problems, unsanitary conditions,

and shortage of affordable, good quality accommodation.

According to experts, building the necessary tourism infrastructure was critical to the

future success of the industry. They opined that India should have developed the

infrastructure prior to launching such a high-profile marketing campaign. Some even

argued that the future of the industry was more dependent on solving the

infrastructure problems rather than on having costly marketing campaigns.

What is Atithi Devo Bhavah?

A pioneer initiative by Ministry of Tourism, Government of India that will help tap

into the full potential of tourism in India. Ministry of Tourism, Government of

India has introduced “Atithi Devo Bhavah Program”- A nation wide campaign

that aims at sensitising key stakeholders towards tourists, through a process of

training and orientation. The endeavour is to boost tourism in India, which in turn

would act as a catalyst for India’s economic growth. To launch a national level

initiative that works at many levels to address all the above issues.

Atithi Devo Bhava aims at creating awareness about the effects of tourism and

sensitizing people about preservation of our rich heritage & culture, cleanliness and

warm hospitality. It also re-instills a sense of responsibility towards tourists and re-

enforces the confidence of foreign tourist towards India as a preferred holiday

destination.

The entire concept is designed to complement the ‘Incredible India’ Campaign.

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Why Atithi Devo Bhavah?

Last year we had 3.3 million visitors, but when you consider that Singapore gets 7

million a year. Thailand 9.6 million a year. Malaysia 11.5 million.

There is no reason why we can’t aim to increase our numbers by 100%. And that too

would be just a beginning. However to do this we need to change our attitude towards

those who visit us. Often tourists are Mistreated, Cheated and rudely dealt with.

It’s simple logic, if someone in a house is rude to you, as a guest, you don’t encourage

your friends and relations to go there.

This is perhaps the reason why in spite of an incredible wealth of Tourist spots,

Cultural Attractions, Natural Wonders and Destinations for the soul, India still isn’t

amongst the top 15 tourist destinations Of the world. The time has definitely come to

get together to change this.

To change our attitude.

We’ve lost touch with the hospitality we were famous for. Now it’s a time that we

make an effort to make it a part of us again.

Inspiration behind Atithi Devo Bhavah ?

Respect has always been an integral part of the Indian soul. From time immemorial

we have always respected - Our teachers, our elders, our parents And our guests

Perhaps this is why a great Indian Emperor once observed

'In Hindustan our manner is very respectful and our hearts are always open'

In many ways, at that time India was the ultimate destination for the enlightened

travelers. Now, thousands of years later, we can bring that golden age back again.

This inspired us to go back to those years, when Indian hospitality set the standard for

the world And we found the keystone of what we want to do Or guest is blessed.

47

Our visitor is God. That how we arrive at our mission called

'Atithi Devo Bhavah'

The seven point Atithi Devo Bhavah Program

Atithi Devo Bhavah is a 7 point program of hospitality and training.

Samvedan Sheelta or Sesitisation- Here we will sensitise the various sections of the

tourism industry about how each of them to contribute for the growth of the tourism

industry and how they will benefit from it.

Prashikshan or Training and Induction -This involves explaining to them the needs

and expectation of the tourist, how they should respond and behave in order to satisfy

them needs and meet those expectations.

Prerna or Motivation -This is motivation to participate in this program through

various measures e.g. awards for the best worker in the segment. Because when you

are enthused you can do wonders.

Pramani Karan or Certification -Certification to ensure standards shall be done at

an appropriate stage in the training program

Pratipushti or Feedback -Feedback shall be obtained from tourists about the Service

they have received and the experience they had, in order to improve the training

program on a continuous basis.

Samanya Bodh or General Awareness -The mass media communication campaign

will be undertaken to create general awareness among the public about the necessity

and the benefits of the Atithi Devo Bhavah programme.

Swamitwa or Ownership-The Atithi Devo Bhavah programme is a movement we

will urge all segments of the Indian society to adopt, and look upon as their own.

The Charter of Atithi Devo Bhavah Training Program

Hygiene & Cleanliness :Hygiene & Cleanliness shall cover the areas of product for

e.g. vehicles like taxies, hotel rooms, restaurants, shops, etc., personal hygiene &

cleanliness of the person providing the service and cleanliness of the monuments /

places of tourist interest.

48

Conduct and Behavior:The person concerned for e.g. the taxi driver / hotel

employee shall behave in courteous and polite manner towards tourists.

Integrity and Honesty :The person providing service to the foreign tourists should

display honesty and integrity.

Safety and Security:The safety and security of the tourists shall be ensured.

Components of the Atithi Devo Bhavah Program

Training - In this we are going to train key stakeholders (of the tourism industry) in

terms of changing their attitude and behaviour towards foreign tourists. The

programme shall cover 4 areas.

Hygiene - This include personal hygiene of the person and also that of the product /

service.

Conduct and behaviour - Politeness and basic courtesies in interacting with the

foreign tourists.

Integrity - This implies that the person does not cheat the tourists and charges him a

fair price for the service.

Safety and security - Person look after safety and security of the foreign tourists.

Key stakeholders being covered in the training include taxi drivers, baggage handlers

at airport, tourist guides, hotel staff, employees of tour operators, immigration and

customs officials etc..

Since these segments have diverse backgrounds, education and levels of

sophistication, the training are divided into 2 categories:

Level 1: Covers taxi drives, tourist guides and baggage handlers and porters.

Level 2: The tour operators, shop owners / staff, hotel staff, immigration and customs

officials.

This training program is initiated at the following places - Delhi, Mumbai,

Hyderabad, Jaipur, Agra, Aurangabad, and Goa. In the next financial year this

programme will be rolled out to other important cities in India.

PR Road Shows

49

Besides training we are also undertaking PR Road shows with the tourism trade in

order to get their active participation and ownership of the Atithi Devo Bhavah

programme. Right now the contact programmes are being conducted in 7 cities

mentioned earlier. After April 2005 contact programmes will be conducted in other

cities in conjugation with the roll out of the training programme.

Mass Media Communication

We shall also be carrying out mass media communication in newspapers, TV, cinema

and outdoors to create general awareness about the Atithi Devo Bhavah programme

and to communicate to key stakeholders as to how it is in their own interest that

foreign tourists be treated well and should go back happily from our country.

Role of the India Tourism Offices

The India Tourism offices of Delhi, Jaipur, Agra, Mumbai, Aurangabad, Goa and

Hydrabad have a crucial role to play in the campaign. They act as nodal agencies to

facilitate and coordinate the essential part of the program ie. Training. The nodal

offices as we term it will have the following roles:

a)  Provide their cooperation and support to make the training programs run in an

effective manner

b)  Registering the stakeholders who are contacting them for the purpose of training

and deciphering the information to us, so that they can be contacted and made a part

of the training program

c)  Re-registration of the stakeholders who underwent a training program after six

months, the stakeholders will approach them for the purpose of re-training and re-

certification

From the Minister

'Atithi Devo Bhavah' is a Social Awareness Campaign aimed at providing the inbound

tourist a sense of being welcomed to the country. The campaign targets the general

public as a whole, while focusing mainly on the stakeholders of the tourism industry.

The main components of the campaign are training and orientation to taxi drivers,

guides, immigration officers, tourist police and other personnel directly interacting

with the tourists, while simultaneously creating a brand equity for the trained persons.

50

"Atithi Devo Bhavah" involves Sensitisation, Screening, Induction, Training &

Orientation, Certification and Feedback of key stakeholders of the Tourism industry

in India.

As Smt. Renuka Chowdhury, the Minister of State for Tourism (Independent charge)

says 'Atithi Devo Bhavah' is a nationwide campaign aimed at sensitising people about

India's rich cultural heritage, its preservation, cleanliness, hospitality and bringing out

an attitudinal shift among the masses towards tourists. It is a symbolic representation

of India's age old hospitality and with this campaign, we are trying to re-install in the

stakeholders a sense of pride and responsibility towards tourists, while positioning

India as a popular tourist destination worldwide."

The Ministry of Tourism is thus looking at both the macro and micro perspective by

promoting destinations on the one hand and bringing about a sea change in the

mindset and behaviour of people, on the other.

5.2 INDIA TOURISM LAUNCHED AGGRESSIVE MARKETING

CAMPAIGN

Department of Tourism has planned a number of measures and events to boost

tourism in the country. Since tourist season in the county is about to set in and most of

the countries have withdrawn or diluted travel advisories regarding travel to India

issued May/June this year after 11th September 2001, these measures will help to

project India as an absolutely safe, secure, warm and friendly destination and lead to

increased arrivals

ITTM-2002 The 4th International Travel and Tourism Mart is schedules to be held

during September 27-29, 2002 at Pragati Maidan. About 400 buyers and sellers

representing various streams of tourism, travel and trade from all over the world are

expected in the mart. So far, 250 registrations have been made for the participation.

The mart will offer an opportunity to showcase various aspects of India tourism and to

sell various destinations. Simultaneously, it will also be an occasion for foreign

51

buyers to tap the Indian tourism market. The mart will also be followed by a similar

event in Kerala. Foreign participants will also be able to attend the Kerala mart.

Andhra Pradesh, Goa and Uttaranchal are participating as partner States in the ITM

while Rajasthan and Tamil Nadu are participating as focus States. As many as 30

States and Union Territories are participating in the Mart. Tafcon Projects is the Event

Manager for the mart and it has the support from premier tourism bodies like PATA,

WTTC, FHRAI, HAI, TAAI, IATO and IAAPI etc. The ITM will also coincide with

celebrations of World Tourism Day on 27th September and the annual convention of

the Federation of Hotel and Restaurants Associations, one of the largest bodies of the

hospitality industry. Thus, these three days will provide an opportunity to tourism

experts to discuss various issues related with tourism.

ECO TOURISM PROMOTION World Tourism Organisation has declared 2002 as

the Year of Eco Tourism and Mountains. In view of this, Department of Tourism has

taken up various activities to create awareness about eco-tourism which include on the

spot painting competitions for children in each State capital. The Department of

Tourism has provided Rs. 50,000 to each State for this purpose. In Delhi, such

competitions will be organized at the Delhi School of Art by Delhi Tourism

Development Corporation.

As a unique experiment, the Department of Tourism in collaboration with Uttaranchal

Government has invited 22 well known artists from all over the country to paint

'Different Moods of Himalayas' and their perceptions about mountains, during their

one week stay at Ananda Resort in the Garhwal in Uttaranchal. Later these paintings

have been displayed at the tea lounge of Ashok Hotel Lobby.

INDIAN INTERLINE GOLF CHAMPIONSHIP Golf is an eco-sport, popular the

world over. To project India as an ideal Golf destination as the Department of

Tourism is organizing a 2-day Golf tournament on 28-29 September for senior

executives of International Airlines and major tour operators around the world. So far,

61 confirmations have been made for the participation. Most of the expenditure for

this activity will be borne by various sponsors from trade and industry.

52

GLOBAL MEDIA PRESENTATION In a significant initiative, Department of

Tourism has invited about 250 foreign media travel writers and tour operators to see

for them selves that India is safe, secure and friendly destination and to let them have

its first hand experience. These travel writers and tour operators will get an

opportunity to see various Indian destinations which ultimately lead to better

marketing of these destinations. The Indian hospitality industry along with the

Department of Tourism will host these guests. Most of the guests are being provided

hospitality includes hotel stay by the industry.

UNION BUDGET 2007-2008, TOURISM

India is becoming an attractive tourist destination. According to a recently released

PATA report, India’s inbound arrivals peaked at a new record level of 4.4 million in

2006.Besides earning foreign exchange; tourism industry generates employment in

large numbers. The Tourism players should be given incentives in the form of tax

reductions but sadly nothing was done in this union Budget 2007-08 to support this

booming industry in India.

Union Budget presented on February 28, 2007 has dashed the hopes of tourism

Industry. There was nothing much to talk about except an increase in allocation for

development of tourism infrastructure from Rs.423 crore to Rs. 520 crore and the

five- year tax holiday to 2,3 and 4 star hotels in Delhi and NCR, 20,000 more hotels

for the 2010 Commonwealth Games in Delhi, private importers of aircraft: 3% import

duty to be levied including helicopters, ATF (Aviation Turbine Fuel) benefit extended

to all small aircraft, 5-year tax holiday for 2,3, and 4-star hotels and convention

centers with a seating capacity of 3000 in NCT (National Capital Territory of Delhi—

New Delhi, Old Delhi, and Delhi Cantonment).

53

TABLE 5.1: FOREIGN TOURIST ARRIVALS & FOREIGN EXCHANGE

EARNINGS IN INDIA DURING 2007 AND CORRESPONDING FIGURES

FOR 2005 & 2006.

FOREIGN TOURIST ARRIVAL (Nos.) PERCENTAGE CHANGE

MONTHS 2005 2006* 2007* 2006/05 2007/06

January 385977 444260 514453 15.1 15.8

February 369844 407198 462578 10.1 13.6

March 352094 390824 443976 11.0 13.6

April 248416 309775 334558 24.7 8.0

May 225394 258527 271454 14.7 5.0

June 246970 278370 310104 12.7 11.4

Total 1828695 2132174 2386887 16.6 11.9

Source: Ministry Of Commerce

54

TABLE 5.2: FOREIGN EXCHANGE EARNINGS IN INDIA DURING 2007 AND CORRESPONDING FIGURES FOR 2005 & 2006

FOREIGN EXCHANGE EARNINGS (IN RS. CRORES)

PERCENTAGE CHANGE

MONTHS 2005 2006* 2007* 2006/05 2007/06

January2326.20 2722.07 3299.51 17.0 21.2

February2343.18 2635.98 3003.95 12.5 14.0

March2210.62 2434.32 2798.96 10.1 15.0

April1649.96 2127.44 2341.18 28.9 10.0

May1452.72 1673.91 1858.51 15.2 11.0

June1637.29 1937.38 2111.74 18.3 9.0

Total 11619.97 13531.10 15413.85 16.4 13.9Source: Ministry Of Tourism

TABLE 5.3: FOREIGN EXCHANGE EARNINGS IN INDIA DURING 2007 AND CORRESPONDING FIGURES FOR 2005 & 2006

FOREIGN EXCHANGE EARNINGS ( IN US $ MILLION)

PERCENTAGE CHANGE

MONTHS 2005 2006* 2007* 2006/05 2007/06

January 532.19 632.43 744.58 18.8 17.7February 536.07 594.64 680.41 10.9 14.4

March 505.74 547.17 636.05 8.2 16.2April 378.38 473.44 554.66 25.1 17.2

May 333.15 368.56 455.64 10.6 23.6June 375.47 420.80 518.49 12.1 23.2

Total 2661.00 3037.04 3589.83 14.1 18.2

: Source: Ministry Of CommerceTABLE 5.4: STATEMENT OF RECEIPTS AND DISBURSEMENTS

55

Statement of Receipts and Disbursements for the year 2007-08

  (Rs. in Crores)

S.No. HEAD/ITEM Actuals' uptoJune '07

COPPY* % VARIATION

            RECEIPTS        Consolidated Fund of India      Revenue Receipts        TAX REVENUE 0.16 0.44 -63.64   NON-TAX REVENUE

0.260.20 30.00

  Grants in Aid & Contributions  

  

  CAPITAL RECEIPTS  

  

  Recoveries of Loans 0.03 0.03 0.00

  Other Non Debt Capital receipts

     

  Public Debt        Contingency Fund        Public Accounts 0.95 0.65 46.15 A TOTAL RECEIPTS 1.40 1.32 6.06

           DISBURSEMENTS        Consolidated Fund of India

     

  Grant No.92    

 

  Revenue Expenditure        Plan 14.72 21.38 -31.15   Non-Plan 6.20 5.18 19.69   Capital Expenditure

        Plan 36.97 36.09 2.44   Non-Plan 0.00 0.00 0.00  TOTAL Grant No. 92 57.89 62.65 -7.60   Plan 51.69 57.47 -10.06   Non-Plan 6.20 5.18 19.69   Grant No. 34 0.00 0.00 0.00   Grant No. 36

     

  Loans & Advances 0.00 0.18 -100.00   Grant No. 39 0.63 0.01 6200.00            Contingency Fund      

56

  Public Accounts 19.32 18.86 2.44 B TOTAL Disbursements 77.84 81.70 -4.72 C Net Cash Flow ( A-B) -76.44 -80.38 -4.90

Source: Ministry Of Commerce

5.3 MEASURES TAKEN FOR TOURISM PROMOTION

Recently, Indian government adopted a multi-pronged approach for promotion of

tourism, which includes new mechanism for speedy implementation of tourism

projects, development of integrated tourism circuits and rural destinations, special

capacity building in the unorganized hospitality sector and new marketing strategy.

A nation wide campaign, for creating awareness about the effects of tourism and

preservation of our rich heritage & culture, cleanliness and warm hospitality through a

process of training and orientation was launched during 2004-05. The aim was to

rebuild that sense of responsibility towards tourists among Indians and re-enforces the

confidence of foreign tourist towards India as a preferred holiday destination. More

than 6500 taxi drivers, restaurant owners and guides trained under the programme.

Government also took several other initiatives to promote Indian tourism industry and

increased the plan allocation for tourism i.e. from Rs 325 crore in 2003-04 to Rs. 500

crore in 2004-05. Road shows in key source markets of Europe, Incredible India

campaign on prominent TV channels and in magazines across the world were among

the few steps taken to advertise Indian tourism. In addition a task force was set up to

promote India as prominent health tourism destination.

However, in order to attract more visitors, India still needs to upgrade its airports,

roads and other infrastructure to global standards. Even with the recent surge, tourist

arrivals are just a mere percentage of those in such popular Asian destinations like

Bangkok and Thailand.

57

6. ECONOMIC IMPACT OF TOURISM ON

THE COUNTRY

58

6. E CONOMIC I MPACT O F T OURISM O N T HE

C OUNTRY

TABLE 6.1 FOREIGN TOURIST ARRIVALS IN INDIA,1996-2006

Source: Bureau of Immigration

59

FIG 6.1: FOREIGN TOURIST ARRIVALS IN INDIA, 1996-2006

TABLE 6.2: MONTH-WISE FOREIGN TOURIST ARRIVALS IN

INDIA (JAN-JULY) 2005-07

60

FIG 6.2: MONTH-WISE FOREIGN TOURIST ARRIVALS IN

INDIA (JAN-JULY) 2005-07

TABLE 6.3: FOREIGN EXCHANGE EARNINGS (IN

US$MILLION) FROM TOURISM IN INDIA, 1996-2006

61

FIG 6.3: FOREIGN EXCHANGE EARNINGS (IN US$MILLION)

FROM TOURISM IN INDIA, 1996-2006

Source: Reserve Bank Of India

TABLE 6.4: FOREIGN EXCHANGE EARNINGS (IN RS. CRORE)

FROM TOURISM IN INDIA, 1996-2006

62

FIG. 6.4: GRAPHICAL REPRESENTATION

Source: Reserve Bank Of India

TABLE 6.5: MONTH-WISE FOREIGN EXCHANGE EARNINGS

63

FIG 6.5: MONTH-WISE FOREIGN EXCHANGE EARNINGS

TABLE 6.6: TOP 10 SOURCE COUNTRIES FOR FOREIGN

TOURIST ARRIVALS TO INDIA IN 2006

Source: Bureau Of Immigration

64

FIG 6.6: TOP 10 SOURCE COUNTRIES FOR FOREIGN

TOURIST ARRIVALS TO INDIA IN 2006

TABLE 6.7: OUTBOUND VISITS OF INDIAN NATIONALS, 1996-

2006

Source: Bureau Of Immigration

65

FIG 6.7: OUTBOUND VISITS OF INDIAN NATIONALS, 1996-

2006

TABLE 6.8:DOMESTIC TOURIST VISITS TO ALL STATES/UTS

IN INDIA, 1996-2006

Source: State/UT Tourism Depts.

66

FIG 6.8: DOMESTIC TOURIST VISITS TO ALL STATES/UTS IN

INDIA, 1996-2006

TABLE 6.9: FOREIGN TOURIST VISITS TO ALL STATES/UTS

IN INDIA,1996-2006

Source: State/UT Tourism Depts.

67

FIG 6.9: FOREIGN TOURIST VISITS TO ALL STATES/UTS IN

INDIA,1996-2006

TABLE 6.10: TOP 10 STATES/UTS OF INDIA IN DOMESTIC

TOURIST VISITS IN INDIA, 2006

Source: State/UT Tourism Depts.

68

FIG 6.10: TOP 10 STATES/UTS OF INDIA IN DOMESTIC

TOURIST VISITS IN INDIA, 2006

TABLE 6.11: TOP 10 STATES/UTS OF INDIA IN FOREIGN

TOURIST VISITS, 2006

Source: State/UT Tourism Depts.

69

FIG 6.11: TOP 10 STATES/UTS OF INDIA IN FOREIGN

TOURIST VISITS, 2006

TABLE 6.12:SHARE OF INDIA IN INTERNATIONAL TOURIST

ARRIVALS IN INDIA, 1996-2006

Source:Tourism Market Trends 2005 Edition(WTO) for the years upto 2003,WTO

Barometer June, 200 7 for other years

70

FIG. 6.12: SHARE OF INDIA IN INTERNATIONAL TOURIST

ARRIVALS IN INDIA, 1996-2006

TABLE 6.13: SHARE OF INDIA IN INTERNATIONAL TOURISM

RECEIPTS IN WORLD, 1996-2006

Source:Tourism Market Trends 2005 Edition(WTO) for the years upto 2003,WTO

Barometer June, 200 7 for other years

71

FIG. 6.13: SHARE OF INDIA IN INTERNATIONAL TOURISM

RECEIPTS IN WORLD, 1996-2006

TABLE 6.14:TOP 10 COUNTRIES OF WORLD AND INDIA IN

INTERNATIONAL TOURIST ARRIVALS, 2006

Source: WTO Barometer June, 2007

72

FIG. 6.14: TOP 10 COUNTRIES OF WORLD AND INDIA IN

INTERNATIONAL TOURIST ARRIVALS, 2006

TABLE 6.15: TOP 10 COUNTRIES IN WORLD AND INDIA,2006

SHARE (IN US$ BILLION)

Source: WTO Barometer June, 2007

73

FIG. 6.15: TOP 10 COUNTRIES IN WORLD AND INDIA,2006

SHARE (IN US$ BILLION)

TABLE 6.16: ECONOMIC BENEFITS OF TOURISM TO INDIA

74

7. INDUSTRY ANALYSIS

75

7. I NDUSTRY A NALYSIS

7.1. SWOT ANALYSIS

STRENGTHS

Hospitable people

Scenic beauty and salubrious climate with wide variety of flowers- orchids,

anthuriums, liliums etc.

An array of festivals and range of colourful handlooms and handicrafts.

Mingling of racial, religious and linguistic diverse people.

The region provides varied tourism options.

Adventure Tourism- River rafting, mountaineering, trekking virgin unexplored

terrain.

Demand–supply gap

Government support

WEAKNESSES

Inadequacy of transport facilities

Funds constraining the development of regions.

Inadequacy of information channels.

Overcrowding of popular tourist centres.

Some places are inaccessible, especially in winter.

Marketing still not well-developed and well penetrated.

Lack of adequate infrastructural support still at some places such as connectivity,

transport facilities, good facilities and tourist resorts.

Security concerns especially in northern regions.

Inadequate community participation and private sector initiatives and investments.

OPPORTUNITIES

76

The concept of holidaying is gaining popularity in India among various classes of

people.

Increased disposable incomes of the Indian middle class.

Adventure sports and trekking.

Eco- tourism is gaining popularity.

A multi-crore branch of Tourism industry is waking up.

Tourism Infrastructure Development : Roads, Flyovers, Hotels & Communications

etc.

Development of new tourist destinations.

Promotion of Eco, Adventure, Spiritual and Leisure tourism, Heli-taxi services,

Charters, Ropeways, New Ski Resorts, Theme and Safari parks, Spas.

Medical Tourism

Budgeted Hotels

Online Tourism

Commonwealth Games - 2010 & Cricket World Cup - 2011

Outbound & Domestic Tourism

Open sky benefits: Airports

New business opportunities

     

THREATS

Threat of the naxalist attacks and terrorist attacks in the northern regions of India.

Foreign places in various countries more attractive and more promoted by those

countries.

Tourists being cheated by the local people who come to see tourist spots and being

cheated for different necessary things which they buy.

Kashmir is being opened up and could divert a large portion of tourists to itself.

Environmental factors also impose a threat.

To preserve the fragile eco-systems and cultural diversity.

CHALLENGES

To preserve the fragile eco-systems and cultural diversity.

77

Tourism to serve as a key GDP driver

To provide the local host communities increased employment / livelihood

opportunities

To create unique and authentic tourism products with high visitor satisfaction

To encourage the private sector to play a key role in promoting responsible

tourism

CONCLUSION

The outlook for the hospitality market in India is optimistic and will continue to

remain so, in our opinion. The economy’s buoyancy, initiatives to improve

infrastructure, growth in the aviation and real estate sectors and easing of

restrictions on foreign investment will fuel demand for hotels across star categories

in the majority of markets. India’s hotel industry is increasingly being viewed as

investment-worthy, both within the country and outside, and several international

chains are keen to establish or enhance their presence here. We anticipate that, over

the next three to five years, India will emerge as one of the world’s fastest growing

tourism markets and will be hard to ignore.

7.2. PEST ANALYSIS

78

7.2.1 INTRODUCTION TO PEST ANALYSIS

PEST analysis stands for "Political, Economic, Social, and Technological analysis"

and describes a framework of macroenvironmental factors used in environmental

scanning.

PEST analysis is a useful strategic tool for understanding market growth or decline,

business position, potential and direction for operations.

Political factors include areas such as tax policy, employment laws, environmental

regulations, trade restrictions and tariffs and political stability.

The economic factors are the economic growth, interest rates, exchange rates and

inflation rate.

Social factors often look at the cultural aspects and include health consciousness,

population growth rate, age distribution, career attitudes and emphasis on safety.

The technological factors also include ecological and environmental aspects and can

determine barriers to entry, minimum efficient production level and influence

outsourcing decisions. It looks at elements such as R&D activity, automation,

technology incentives and the rate of technological change. Technological can also

affect hoovers in the business.

7.2.2 PEST ANALYSIS OF INDIAN TOURISM INDUSTRY

POLITICAL

79

The Terrorist Threat

Precautions against terrorist attacks have been stepped up since the events of

11th September 2001, and there is strong demand for security services and

equipment in the public sector for tourists.

Stability of government

Stability of government is also an important political factor and in country like

India which is politically unstable the rules and regulation regarding to any

industry may be change within short period of time.

ECONOMIC

Most of economic factors such as economic growth, interest rate etc are in

favor of India but now a days the main point of concern is appreciation in

Indian Rupee with respect to American Dollar. As a result of this now a days

1$ = Rs. 39 approx which was once upon a time about Rs 45 as a result

income earned by tourism sector decreases.

SOCIAL

In India guests are treated as God (Atithi Devo Bahv) and all the foreigners are

treated well in our country and due to this reason most of the foreigner want to

visit India. Along with this in India there are many places which are very

beautiful such as Taj Mahal, Ajanta, etc.

TECHNOLOGICAL

Currently lots of information available on internet about tourist places in India. With

the aim of providing standardized, world class services to the tourists, the ministry of

tourism is providing lots of services along with this they are also running campaign

such as Incredible India.

80

TECHNOLOGY is set to spur the sagging Indian tourism industry which has

witnessed a 15 per cent decline during the last fiscal, according to industry estimates.

Online reservations,

Global distribution system (GDS),

e-Holiday departments and implementation of sophisticated security systems

such as swipe cards is prodding growth in the travel sector.

7.3. PORTER’S 5 FORCES MODEL

7.3.1 INTRODUCTION TO PORTERS FIVE FORCES MODEL

The Five Forces model of Porter is an Outside-in business unit strategy tool that is

used to make an analysis of the attractiveness (value) of an industry structure. The

Competitive Forces analysis is made by the identification of 5 fundamental

competitive forces:

81

1. Entry of competitors. How easy or difficult is it for new entrants to start

competing, which barriers do exist.

2. Threat of substitutes. How easy can a product or service be substituted,

especially made cheaper.

3. Bargaining power of buyers. How strong is the position of buyers. Can they

work together in ordering large volumes.

4. Bargaining power of suppliers. How strong is the position of sellers. Do

many potential suppliers exist or only few potential suppliers, monopoly?

5. Rivalry among the existing players. Does a strong competition between the

existing players exist? Is one player very dominant or are all equal in strength

and size.

Sometimes a sixth competitive force is added:

6. Government.

Porter's Competitive Forces model is probably one of the most often used

business strategy tools. It has proven its usefulness on numerous occasions.

Porter's model is particularly strong in thinking Outside-in.

82

7.3.2 FIVE FORCES MODEL FOR TOURISM INDUSTRY

The five forces, according to Michael Porter, which every industry must take care

of, are as follows:

Customers

Competition

Suppliers

Substitutes

New entrants

(A) Customers

Customers are the most important force to any industry. The industry exists

because of them. The industry must therefore try to achieve maximum customer

satisfaction. But today’s customer is far more difficult to please and even more so

in the tourism industry, it being a service. Today’s customers have more options

to choose from, they are more knowledgeable, more information is available to

them, and so on. Hence it is necessary that their needs and preferences are

understood so that the tourism industry can understand as to where it stands in

providing satisfaction to the tourists.

Concentration of buyers : As there are lot of domestic and foreign tourist and

very less service provider, tourists have less option but they can easily bargain

because there number is more and if supplier does not follow there terms they

can easily manage there tour.

Differentiation. Are products standardized? : No product are not standardized

along with this there is low transparency in packages provided by the

suppliers.

Switching costs. Is it easy for buyers to switch their supplier? : Yes due to

information technology now it is easy for buyers to switch their suppliers.

(B) Competition

India faces various levels of competition in the tourism industry. At the

international mountain tourism level there are big players like:

83

• Switzerland

• New Zealand

• Alaska

To counteract these various levels of competition, India must find ways to

differentiate itself from others with its unique offerings and position itself

uniquely in the minds of the people. For this it must build a unique selling

proposition (USP). To match international competition it must first benchmark

itself with them.

The structure of competition: Rivalry will be more intense if there are lots of

small or equally sized competitors; rivalry will be less if an industry has a

clear market leader. Here no one is clear market leader

The structure of industry costs. Industries with high fixed costs encourage

competitors to manufacture at full capacity by cutting prices if needed.

Degree of product differentiation: Here product differentiation is not possible

thus Intensity of Rivalry is less.

Switching costs: Here the switching cost for suppliers is very high thus

intensity of rivalry is less.

Exit barriers : Here barriers to leaving industry are high.

(C) Suppliers

Suppliers in the tourism indicate all the service providers like:

• Airline industry

• Railways

• Travel agents

• Locals

• Hotel industry

• Government

Service, unlike a product, has different characteristics like intangibility,

inseparability, variability, perishability, etc. To manage these, the use of the

following “3 P’s” will come in handy-

Physical evidence

People

84

Place

Concentration of suppliers: Are there many buyers and few dominant suppliers?:

Yes this case is true for Indian circumstances as the population of country is more

and along with this number of foreign visitors is also increasing, but the service

providers are less. Thus bargaining power of supplier is less.

Branding: Is the brand of the supplier strong?: No in India the brand of the

supplier is not strong only few supplier have worldwide presence such as Thomas

Cook.

Profitability of suppliers: Are suppliers forced to raise prices?:To raise the price is

not possible in India because here The per capita income is very less and as a

result disposable income is also low thus if service provider will charge more they

will prefer to travel at there own.

Role of quality and service: Quality of service play important role in tourism

industry as the tourist go for tourism service providers because the need comfort

of all types.

Switching costs: Is it easy for suppliers to find new customers?: No it is difficult

for supplier to find new customer but the customer can switch between supplies

easily.

(D) Substitutes

The substitutes to India tourism are any other options that a person would like to

do on a holiday like:

• Religious gatherings is gaining ground

• Internet

• Television

• Video games

• Parks

These substitutes although do not directly effect tourism, they can still be a

deterrent to it. Instead of traveling to far off distances for a holiday, today’s man

finds easy entertainment from the above. Also the concept of an annual holiday is

yet to catch up in India. They must therefore be used to one’s own advantage by

making them available at the tourist spots.

85

Threat of substitutes is mainly not applicable to tourism industry, but up to very

little extent we can consider shopping malls and multiplexes as a substitutes of

tourism because they provide shopping material of almost all type and in India an

important motive of tour and travel is also shopping. Television can also be

consider as a substitute because now a days Discovery, National Geographic

Channel, Travel and living and many other channels showing various tourist

places on television.

(E) New Entrants

New places should be found out as tourist spots and they should be promoted well

and create curiosity among the tourists and attract them. It will attract them as a

new place to see and to know about it. New products of tourism should be found

out to promote tourism India. Each state in India is now beginning to realize the

potential of tourism and thus are uniquely positioning themselves like:

• Temples in Tamil Nadu

• Wild life in Assam

• Ayurveda in Kerala

Also there are indirect threats from other entertainments like:

• Theme parks

• Shopping malls

• Internet

The internet can be used to its advantage for advertising and communication.

Economies of scale: As tourism is a service industry the economy of scale is

not effecting but we can consider that how many places and hotels are

available. If any other firm has more of these assets than it can enter in this

industry and give competition to existing firms.

Capital / investment requirements: As in this field vast amount of capital /

investment is required it is very difficult to enter in this industry. Thus in this

case threat from new entrants is very less.

Customer switching costs: In case of tourism customer switching cost is very

low that is any customer can go to any tourism service provider easily as a

86

result of spreading of internet user can easily know the features provided by

all the tourism service provider in market.

Access to industry distribution channels: In case of access to industry

distribution channels which is difficult because already all the channels are

taken by existing service provider and if any new entrant want to come in this

channel they have to pay more and in case of new entrant this is very difficult.

Access to technology: In case of tourism access to technology is very easy

because now a days all tourism service providers are using internet for there

operation and internet is one of the cheapest method of doing business.

Brand loyalty. Are customers loyal?: In case of tourism there is very less

chance of loyal customers because customer only uses this service provider for

getting good place to visit with proper transport and accommodation and any

service provider give better customer will move to there side.

7.4 PORTER’S SEVEN FORCES MODEL FOR TOURISM

INDUSTRY

1. Barriers to Entry: Low Attractiveness.

Sub FactorsAttractiveness

Low High1 2 3 4 5

Economies of Scale √Product Differentiation √

87

Brand Identity √Switching Cost √Access to Channels of Distribution √Access to Technology √Capital Requirement √Government Protection √

Average = 18/8 = 2.25 = 2

Remarks:

The private players if enter this industry then they can earn much as this

industry is booming like anything. So this makes entry more attractive for the

new entrant. (High)

The new players that will enter the industry will have to provide some new

service which the old players are not providing, then only the consumers will

get attracted towards them. So there has to be high product differentiation,

which leads to unattractiveness. (Low)

The new entrant has to spend a lot on establishing the brand identity in the

market. (Low)

The customer is very reluctant to shift from one service provider to another if

they are not satisfied from the present service provider as the switching cost is

very low.(High)

Need to establish a good network, which incurs high cost.(Low)

Access to technology is very easy because now a days all tourism service

providers are using internet for there operation and internet is one of the

cheapest method of doing business.(Low)

The capital requirement is high.(Low)

Government protection includes areas such as tax policy, employment laws,

environmental regulations, and political stability. This makes the industry less

attractive.(Low)

2. Rivalry among Competitor: Low Attractiveness.

88

Sub FactorsAttractiveness

Low High1 2 3 4 5

Number of Competitors √Industry Growth √Fixed Cost √Switching Cost √Differentiation √Openness of Terms of Sales √Strategic Stakes √

Average = 15/7 = 2.14 = 2

Remarks:

There are large number of competitors leading to increase in competition.

(Low)

The market is growing but the competition is also increasing simultaneoulsy,

nullifying the effect.(Moderate)

There are high fixed cost, which is a hindrance for sustaining in the market

place.(Low)

The switching cost for suppliers is very high thus intensity of rivalry is less.

The new entrants will have to differentiate their services, which increases the

competition.(Low)

The information is disclosed to the customers and nothing is hidden, hence

less attractiveness.(Low)

Strategic stakes can take place which will increase the competition.(Low)

3. Bargaining Power of Buyers: Low to High Arrtactiveness.

Sub FactorsAttractiveness

Low High1 2 3 4 5

89

Number of Buyers √Availability of Substitutes √Switching Cost √Contribution to Quality √Contribution to Cost √Buyer’s Profitability √

Average = 19/6 = 3.16 = 3

Remarks:

Buyers can easily bargain because there number is more and if supplier does

not follow there terms they can easily manage there tour. (Low)

The substitutes to India tourism can be religious gatherings, internet,

television, video games, and parks. These substitutes although do not directly

effect tourism; they can still be a deterrent to it.(Low)

Switching cost for the buyers are less hence again a weak point for the firms.

(Low)

Buyers won’t bargain much as they get what they want.(High)

Firms upto a certain level reduce their costs to retain the customers.(High)

Buyers get value for the money they spend which is good for the company.

(High)

4. Bargaining Power of Suppliers: High Attractiveness.

Sub FactorsAttractiveness

Low High1 2 3 4 5

Number of Suppliers √Switching Cost √Contribution to Quality √

90

Contribution to Cost √

Average = 13/4 = 3.25 = 3

Remarks:

The buyers are more and the suppliers are less. Thus bargaining power of

supplier is less. (Low)

It is difficult for supplier to find new customer but the customer can

switch between supplies easily. (High)

Quality of service play important role in tourism industry as the tourist go

for tourism service providers because the need comfort of all types.(High)

To raise the price is not possible in India because here The per capita

income is very less and as a result disposable income is also low thus if

service provider will charge more they will prefer to travel at there own.

(High)

5. Threat from Substitute: Low Attractiveness.

Sub FactorsAttractiveness

Low High1 2 3 4 5

Availability of Close Subsitutes √Switching Cost √Substitutes Price Value √

Average = 5/3 = 1.67 = 2

Remarks:

91

Up to very little extent we can consider shopping malls and multiplexes as a

substitute of tourism because they provide shopping material of almost all type

and in India an important motive of tour and travel are also shopping. (Low)

The customers can switch from present product to other substitute product

without much cost.(Low)

The substiture products can have the value for the price spent by the buyer, in

case of cost conscious customers.(Low)

6. Barriers to Exit: Low to Moderate Attractiveness.

Sub FactorsAttractiveness

Low High1 2 3 4 5

Asset Specialization √Cost of Exit √Government Restrictions √

Average = 7/3 = 2.33 = 2

Remarks:

Here barriers to leaving industry are high.(Low)

Government exerts very less restrictions if a firm wants to go out of the

business hence no more legal formalities.(High)

92

7. Government Actions: High Attractiveness.

Sub FactorsAttractiveness

Low High1 2 3 4 5

Industry Protection √Industry Regulation √

Average = 10/2 = 5.

Remarks:

The government is protecting the industry. (High)

There are fewer regulations, which makes the industry attractive.(High)

93

8.FINANCIAL ANALYSIS

8. F INANCIAL A NALYSIS_______

94

The following financial data about the Indian Tourism Industry we have abtained

from PROWESS software.

8.1 BALANCE SHEET

Per cent (Non-Annualised)Mar-

00Mar-

01Mar-

02Mar-

03Mar-

04Mar-

05Mar-

06Composition of total assets               NFA 20.39 19.44 25.32 22.35 21.6 18.82 16.32 Investments 4.5 6.16 4.65 4.33 6.11 5.04 6.41 Deferred tax assets 0 0 0.59 0.87 0.9 1.17 0.86 Stock in trade 0.89 0.82 0 0 0 0 0 Cash & bank balance 34.29 27.77 26.71 27.29 25.03 24.35 22.44 Receivables 39.11 45.24 42.32 44.84 45.88 49.2 52.97 Intangible assets 0.82 0.58 0.41 0.31 0.47 1.42 1               Composition of GFA               Leased assets 2.54 0 0 0 0 0.22 0 Leased plant & M/c 0 0 0 0 0 0 0 Owned assets 97.46 100 100 100 100 99.78 100Composition of investments               In group / associate cos. 68.04 40.98 43.96 22.39 15.25 17.66 18.11 In mutual funds 0 0 0 0 50.51 49.86 66.51 In govt. securities 0 0 0 0 0 16.75 0 Others 31.96 59.02 56.04 77.61 34.24 15.74 15.38               Composition of current assets               Cash & bank balance 46.16 37.62 38.69 37.83 35.3 33.11 29.76 Stock in trade 1.19 1.11 0 0 0 0 0 Account receivables 31.9 36.35 38.58 44.74 45.67 51.86 53.23 Loans to corporate bds. 2.22 0.09 0.01 0.29 0.2 0.33 0.46 Other receivables 18.52 24.84 22.73 17.13 18.83 14.7 16.56               Composition of total liabilities               Net worth 41.26 42.66 55.02 52.1 53.65 48.54 46.97 Capital 7.76 8.83 10.83 10.98 11.12 8.91 7.34 Reserves & surplus 33.5 33.84 44.19 41.12 42.53 39.63 39.62 Free reserves 29.13 29.88 39.2 37.17 39.01 37.29 37.84 Borrowings 30.66 23.74 13.21 15.34 8.48 13.33 11.02 Deferred tax liabilities 0 0 3.38 2.95 2.84 2.66 2.14

Current liabilities & 28.08 33.59 28.39 29.61 35.03 35.47 39.87

95

provisions Unmatured finance

charges 0 0 0 0 0 0 0Compostion of borrowings               Bank borrowings 54.28 72.9 78.65 57.53 84.88 89.04 92.03 Short term bank

borrowings 32.06 71.77 72.59 37.49 44.75 51.09 52.42Financial institutional borrowings 21.68 0 0 0 0 0 0Borrowings from corporate bodies 0.21 0.24 0 0 0 1.16 0.27

Group / associate cos. 0.21 0.24 0 0 0 0 0.27 Debentures / bonds 0 0 0 0 0 0 0 Fixed deposits 0 0 0 0 0 0 0 Other borrowings 23.84 26.86 21.35 42.47 15.12 9.81 7.7                Secured borrowings 50.43 46.8 85.38 56.6 78.13 96.35 99.1               No of companies 5 4 3 4 5 6 7

INTERPRETATION:

The above tables show the last seven years data of the Indian Tourism Industry. The

major highlights are as follows:

From the above balance sheet of the Tourism Industry of India for the

financial years 2000 to 2006, we can analyse that the net fixed assets were

increasing only in the year 2002 that to 77% compared to 2001. And in the

remaining years it is closely decreasing. This is because the current liabilites

have been continuously increasing in successive years.

Moreover cash and bank balances have been decreased by 29.76% in the year

2006 which was 33.11% in 2005 and the effect of that we can see on the

continously increased borrowing.

As borrowings are increasing the industry has to pay interest and dividend

amount which is paid from reserves and surplus so it is decreased by 39.63%

in 2005 and 39.62% in 2006

Net worth goes down by 46.97% because compared to current assests current

liabilities are increasing. However we can see that in 2004-06 again the capital

is decreasing and hence the net worth is decreasing.

96

8.2 PROFIT & LOSS STATEMENT

Rs. Crore (Non- Mar- Mar- Mar- Mar- Mar- Mar- Mar-

97

Annualised) 00 01 02 03 04 05 06               Income 110.91 139.27 110.39 149.6 171.39 203.84 279.01 Leasing & hire services 0 0 0 0 0 0 0 Security transactions 0 0 0 0 0 0 0 Dividend income 0.19 0.52 0.46 0.02 1.54 0.84 1.14 Interest income 1.92 3.56 1.57 1.58 1.61 0.88 1.11 Others 111.93 137.95 109.19 149.02 169.08 203.24 279.07Other income 7.59 8.93 3.94 3.74 4.85 6.04 7.31Non-recurring income 1.19 9.16 3.34 6.86 1.54 3.82 13.65Expenditure               Loss on security transactions 0 0 0 0 0 0 0 Other operating expenses 1.32 9.61 10.24 12.22 17.04 18.4 22.24 Personnel cost 27.43 35.9 31.3 39.45 45.7 53.03 78.79 Other expenses 46.51 56.6 41.49 52.8 59.89 68.22 103.98 Finance charges 10.33 12.08 6.79 8.68 7.64 7.9 9.87 Lease rent 0.53 2.93 2.61 1.53 1.24 0.96 1.34Non-recurring expenses 0.59 0.79 3.39 1.12 1.63 1.66 4.85               Profits / losses              PBDT 33.51 42.38 24.47 45.94 45.88 64.49 80.64 Depreciation 7.91 9.72 7.54 8.73 8.77 10.51 17.2PBT 25.6 32.66 16.93 37.21 37.11 53.98 63.44 Tax provision 7.38 9.66 7.49 13.78 13.96 18.57 24.51PAT 18.22 23 9.44 23.43 23.15 35.41 38.93               Appropriation of profit               Dividends 4.9 8.85 5.3 7.06 7.52 8 8.52 Retained earnings 13.32 14.15 4.14 16.37 15.63 27.41 30.41               No of companies 5 4 3 4 5 6 7               

INTERPRETATION:

The above facts and figures of profit and loss account show the last seven year’s data

of the tourism industry. Its major highlights are as follows:

98

As compared to the financial years of 2000 to 2006, the incomes and

expenditures have been analysed.

As we look into the past years, it is seen that the Tourism Industry was not

developed very much and was not paid much attention by the Government.

Slowly and gradually, much importance was drawn by the Tourism Industry

and now we can see that the investments and expenditures are continuously

increasing but since the Tourism Industry is new and new destinations are

coming up, the income of the Tourism Industry is not so developed.

Until 2000, income was not considerable, gradually the industry is coming up

and the income is increasing steadily. Consequently the personnel expenditure,

other expenses are also increasing as the industry is at the developing stage

and more personnel is required. Apart from the categorised prominent

incomes, other income category forms a substantial part of the income.

The net income of the industry is grown by 36.88% in 2006 and in 2005 it was

18.93%

PAT is growing year by year from last four years. It was increased by 9.94%

in 2006.

8.3 CASH FLOW STATEMENT

99

Rs. Crore (Non-Annualised)Mar-

00Mar-

01Mar-

02Mar-

03Mar-

04Mar-

05Mar-

06Net profit before tax & extra ord. items 25.91 29.91 17.52 39.25 39.16 52.23 63.14Add: depreciation 6.86 8.88 7.04 8.33 8.39 10.16 17.21 Interest payable 7.02 6.7 1.96 4.18 3.01 2.47 4.89

Gain or loss on forex transactions -1.15 -1.15 -0.02 -0.03 -0.01 -0.02 -0.04

Write offs / amortisation 0 1.29 1.19 0.87 0.51 0.08 0.86 Profit on sale of investments -0.01 -6.73 0 -4.09 0 0.08 -0.02 Profit on sale of assets 0.42 0.28 -0.46 -0.21 0.44 0.65 0.43 Interest income -1.84 -3.39 -1.46 -1.43 -1.56 -0.88 -1.1 Dividend income -0.15 -0.52 -0.44 0 -1.54 -0.84 -1.14

Other income / provision adjustments -2.24 4.27 4.27 0.98 -1.26 0.55 0.99

               Cash flow before working cap. changes 34.82 39.54 29.6 47.85 47.14 64.48 85.22

Trade receivables -19.53 -31.14 13.41-

23.19 -6.27-

43.98 -42.97 Inventories 2.03 -0.28 0 0 0 0 0

Trade payables -2.61 25.13-

11.04 16.07 13.95 30.05 26.49 Others 0 0 0 0 0 0 0               Cash flow from operations 14.71 33.25 31.97 40.73 54.82 50.55 68.74 Interest paid -7.04 -6.7 -1.84 -4.29 -3.02 -2.46 -4.89

Direct taxes paid -9.6 -7.77 -4-

12.59-

11.51-

19.82 -21.04 Dividend tax paid 0 0 -0.04 0 0 -0.7 -0.71               Cash flow before extra ord. items -1.93 18.78 26.09 23.85 40.29 27.17 39.95 Extraordinary items 0.02 0 -0.61 0.11 1.18 0.02 0.12               Cash flow from operating activities -1.91 18.78 25.48 24.63 42.16 27.59 44.96               Net cash used in investing activities -6.57 -4.85 -4.07 -6.46

-16.29

-22.41 -31.67

Purchase of fixed assets -8.84 -8.84-

10.44-

13.99-

14.55-

25.75 -22.84 Sale of fixed assets 0.27 1.41 2.74 2.71 1.59 2.78 3.51 Acquisition / merger of cos. 0 0 0 0 0 0 0

Purchase of investments 0 -10.31 0 -3.59-

46.05 -79.5-

132.05 Sale of investments 0.01 9.53 1.69 6.65 39.1 79.01 117.97

100

Project expenses 0 0 0 0 0 0 -0.21 Loan to group / subsidiary co. 0 0 0 0 0 0 0

Loan to other cos. 0 0 0 0 0 0 0 Other cash from investing activities 0 0 0 0 0 0 0 Interest received 1.84 2.83 1.64 1.62 2.08 0.64 0.89 Dividend received 0.15 0.53 0.3 0.14 1.54 0.87 1.06 Other income 0 0 0 0 0 -0.46 0               Net cash used in financing activities 3.54 -25.84

-35.67 -3.97

-27.96 14.85 -16.31

Proceeds from share issues 0 0 0 0 0 0 3.5 Total proceeds from borrowings 9.36 0 1.39 7.14 5.31 28.6 8.97

Proceeds from long term borrowings 0.86 0 1.39 6.6 3.96 28.6 8.97 Proceeds from short term borrowings 8.5 0 0 0.54 1.35 0 0

Repayment of long term borrowings 0 -16.59 0 -1.71 -2.84 -5.2 -7.15 Repayment of short term borrowings -1.05 -1.05

-29.21 -2.24

-21.42 -1.73 -1.58

Share issue expenses 0 0 0 0 0 0 0 Dividend paid -5.25 -6.26 -5.24 -4.87 -7.06 -6.8 -8 Other cash from financing activities 0.48 -1.94 -2.61 -1.53 -0.89 0 0

Net cash flow -4.94 -11.91-

14.26 13.53 -2.78 20.03 -5.76               Opening cash balance 105.64 100.64 76.34 62.94 78.41 76.67 111.67Closing cash balance 100.7 88.73 62.08 76.47 75.63 96.7 105.91No of companies 5 4 3 4 5 6 7

INTERPRETATION

Indian tourism industry has 44.96 crore as net cash from its operating activities in

2007. it was 27.59 crore in the year 2005.it has been increased by 62.96 % compare to

101

last year. The reason for this increment is as cash generated from before change in

working capital, cash flow from operations, cash flow before extra ordinary items has

been increased compare to previous years.

The net cash used for financing activities is a negative figure that is -31.67 in the year

2006 where as it was -22.41 in the year 2005. It is due to cash generated form sale of

fixed assets is less compare to purchase of fixed assets. Same in case of investment

the purchase of investment is more.

The Net cash used in financing activities is decreasing from 2005 to 2006

respectively from 14.85 to -16.31 as cash proceeds from short term borrowings and

long term borrowings is decreasing. Moreover repayment of long term or short term

borrowings is also decreasing.

The Net cash flow of tourism industry from its operating, financing, investing activity

is decreasing from 20.03 to -5.76 as the net cash used for financing and investing

activity is negative figure. Overall cash outflow is more than cash inflow fro al the

three activities in the year 2006 which shows that financial position of tourism

industry is not strong compare to last year.

8.4 GROWTH INDICATORS: FINANCE Cos.

Per cent (Non- Mar- Mar- Mar- Mar- Mar- Mar- Mar-

102

Annualised) 00 01 02 03 04 05 06               Operating income -2.62 26.49 -16.76 26.59 9.94 18.59 5.37Fund based income -27.49 112.5 73.5 -21.18 95 -45.4 9.88

Fee based income -54.15 317.53 66.67 -18.95 45.45 -93.75-

416.67Interest earned -21.63 105.78 53.92 0.64 0 -45.34 -4.55Dividend received -58.7 173.68 206.67 -95.65 7600 -45.45 25               Total cost -1.78 33.52 -10.78 20.44 7.56 15.05 8.21Interest expended 4.37 -9.23 -52.82 54.78 -17.06 6.72 13.69Personnel cost -2.04 32.13 15.12 21.15 10.09 15.38 9.32               PBDT 10.74 26.66 -46.08 84.63 -1.28 40.58 7.19PBT 8.52 27.73 -53.12 116.89 -1.02 45.49 1.72PAT 11.17 26.37 -65.62 143.54 -1.45 53 -2.6               Gross fixed assets (excl. reval. & WIP) 8.99 10.11 0.82 6.81 5.76 12.41 6.47 Leased assets -42.07 -100 -100 Error Error Error -100 Leased plant / machinery Error Error Error Error Error Error Error Leased other assets -42.07 -100 -100 Error Error Error -100               Investments -0.07 48.68 97 14.77 54.45 5.56 69.43               Total assets 5.98 11.45 -10.64 17.74 5.15 26.62 8.88               No of companies 5 4 3 4 5 6 7

8.5 RATIO ANALYSIS

1. PROFITABILITY RATIOS

103

Per cent (Non-Annualised)Mar-

00Mar-

01Mar-

02Mar-

03Mar-

04Mar-

05Mar-

06Margins ratios (%)              As % of operating income               PBDT 30.21 30.43 22.17 30.71 26.77 31.64 28.9 PBT 23.08 23.45 15.34 24.87 21.65 26.48 22.74 PAT 16.43 16.51 8.55 15.66 13.51 17.37 13.95Corporate tax as per cent of PBT 28.83 29.58 40.93 34.78 35.95 32.62 34.62Returns ratios (%)              As % of total assets               PBDT 11.78 14.02 10.16 17.56 15.14 17.94 16.77 PBT 9 10.81 7.03 14.23 12.25 15.02 13.19 PAT 6.41 7.61 3.92 8.96 7.64 9.85 8.1 Operating cash flow 5.17 11 13.28 15.57 18.09 14.06 14.29               As % of net worth               PBDT 28.23 32.05 19.07 32.12 28 34.4 34.3 PBT 21.56 24.7 13.19 26.02 22.64 28.79 26.98 PAT 15.35 17.39 7.36 16.38 14.13 18.89 16.56 Operating cash flow 12.39 25.14 24.91 28.48 33.45 26.96 29.24               As % of capital employed               PBDT 21.77 25.71 15.71 29.35 25.4 30.92 30.59 PBT 16.63 19.81 10.87 23.77 20.54 25.88 24.06 PAT 11.84 13.95 6.06 14.97 12.82 16.98 14.77 Operating cash flow 9.56 20.17 20.52 26.02 30.35 24.24 26.07               Appropriation of profits (as % of PAT)               Dividends 26.89 38.48 56.14 30.13 32.48 22.59 21.89 Equity dividends 26.89 38.48 56.14 30.13 32.48 22.59 21.89 Preference dividends 0 0 0 0 0 0 0 Retained profits 73.11 61.52 43.86 69.87 67.52 77.41 78.11               Dividends / net worth 4.13 6.69 4.13 4.94 4.59 4.27 3.62Equity dividends / equity capital 20.99 33.97 22.99 24.16 21.97 21.93 21.56Equity dividends / equity cap. & sh. prem. 13.92 23.34 15.18 17.18 16.32 16.55 16.59               No of companies 5 4 3 4 5 6 7

INTERPRETATION

From the above table we can see the profatibility ratios of tourism industry of

the above mentioned years.

104

We can see that the profit after tax as a percentage of operating income is

fluctuating every year.

Since the operating income is fluctuating every year it has a great impact on

this ratio.

The percentage of total assets is increasing as the industry is growing and

more investment is needed.The net worth ratio is decreasing as the PAT is

decreasing.

2. LIQUIDITY RATIOS

Times (Non-Annualised)Mar-

00Mar-

01Mar-

02Mar-

03Mar-

04Mar-

05Mar-

06               

105

Quick ratio 1.38 0.99 1.37 1.51 1.54 1.52 1.43Medium to long term liquidity               Current ratio 1.781 1.382 1.821 1.861 1.905 1.795 1.739 Solvency ratio 1.737 1.784 2.502 2.282 2.371 2.116 2.012 Debt equity ratio 0.743 0.557 0.24 0.294 0.158 0.275 0.235               Interest incidence (%) 10.62 11.74 13.2 15.76 23.32 12.56 13.52Interest cover                              PBIT / interest 3.67 4.89 5.67 6.42 6.99 8.92 8.59(Rs. Crore)              Current assets 220.88 243.43 165.74 213.28 239.39 314.83 454.46Current liabilities 124.03 176.12 91.03 114.58 125.65 175.38 261.33Working capital 96.85 67.31 74.71 98.7 113.74 139.39 193.07Net worth 124.14 140.01 131.89 154.13 173.63 201.34 268.89Reserves & surplus 100.8 111.04 105.92 121.65 137.65 164.37 226.84

INTERPRETATION:

The standard ratio for quick ratio is 1:1 means .The industry shows higher

ratios.as this industry is a service industry inventories are not the part of

buisness and the indusry is able to meet its obligations successfully.

The higher the current ratio the greater the margin of safety. The larger the

ammount of current assets in relation to current liablity the more the industrys

ability to meet its current obligation. The current ratio of the industry is more

close to the standard ratio.

Moreover the solvency ratio is also very good in these six years which proves

the stable liquidity position of the industry.

Debt to equity ratio shows that the proportion of debt is decreasing in the

successive years that is the industry can easily employ more debt at lower rate

of interest and lenders will be interested to lend the money for growth.

1) Current Ratio

Current Ratio = Current Assets

Current Liability

106

Particulars Mar 00 Mar 01 Mar 02 Mar 03 Mar 04 Mar 05 Mar 06Current ratio 1.781 1.382 1.821 1.861 1.905 1.795 1.739

Analysis: Generally, the current assets should be at least twice the

current liability for a comfortable liquid position i.e. current ratio should

be 2:1. From the year 1999-2000 to 2005-06, the ratio is nearly similar

except in the year 2000-01, when the ratio was low 1.382. It shows that

industry’s receivables, outflows are not competently managed compared

to previous years. The industry has always maintained below 2:1. The

higher the current ratio the greater the margin of safety. The larger the

ammount of current assets in relation to current liablity the more the industrys

ability to meet its current obligation. The current ratio of the industry is more

close to the standard ratio.

2) Quick Ratio

Acid Test Ratio = Quick Assets

Liquid liabilities

Particulars Mar 00 Mar 01 Mar 02 Mar 03 Mar 04 Mar 05 Mar 06 Quick ratio 1.38 0.99 1.37 1.51 1.54 1.52 1.43

Analysis: Generally, the quick assets should be at least twice the current

liability for comfortable liquid position i.e. Quick ratio should be 1:1. It can be

seen that the ratio has been maintained more than 1. Only in the year 2000-01,

the ratio is low. The industry shows higher ratios.as this industry is a service

industry inventories are not the part of buisness and the indusry is able to meet

its obligations successfully.

3) Debt Equity Ratio

Debt-Equity Ratio = Long term Liabilities

107

Net Worth

Particulars Mar 00 Mar 01 Mar 02 Mar 03 Mar 04 Mar 05 Mar 06 Debt equity ratio 0.743 0.557 0.24 0.294 0.158 0.275 0.235

Analysis: The ratio indicates that Torrent Power has lower amount of debt. Debt

to equity ratio shows that the proportion of debt is decreasing in the successive

years that is the industry can easily employ more debt at lower rate of interest

and lenders will be interested to lend the money for growth.

4) Interest Coverage Ratio

Interest Coverage ratio = PBIT+DEP.

Fin. Cost

DEP = Depreciation

Particulars Mar 00 Mar 01 Mar 02 Mar 03 Mar 04 Mar 05 Mar 06 PBIT / interest 3.67 4.89 5.67 6.42 6.99 8.92 8.59

Analysis: Here it can be seen that interest coverage ratio is higher and has

been continuously increasing year on year. This is because the industry has

relatively lower debt component in capital structure which results in lower

interest burden on the industry and hence funds easily available to meet this

interest obligation would be higher.

3. ASSET UTILISATION RATIOS

Times (Non-Annualised)Mar-

00Mar-

01Mar-

02Mar-

03Mar-

04Mar-

05Mar-

06               

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Efficiency ratios                             Operating cash flow / total assets 0.05 0.11 0.13 0.16 0.18 0.14 0.14Operating cash flow / gross fixed assets 0.11 0.24 0.24 0.27 0.33 0.28 0.3Operating cash flow / capital employed 0.1 0.2 0.21 0.26 0.3 0.24 0.26               Operating income / total assets 0.39 0.46 0.46 0.57 0.57 0.57 0.58Operating income / GFA / leased assets 1.32 1.52 1.24 1.52 1.59 1.72 1.93Operating income / capital employed 0.72 0.84 0.71 0.96 0.95 0.98 1.06               PBDT (NNRT) / total assets 0.12 0.11 0.1 0.15 0.15 0.17 0.15PBDT (NNRT) / gross fixed assets 0.39 0.37 0.28 0.41 0.43 0.52 0.5PBDT (NNRT) / capital employed 0.21 0.21 0.16 0.26 0.25 0.3 0.27               PBT / total assets 0.09 0.08 0.07 0.12 0.12 0.14 0.11PBT / gross fixed assets 0.3 0.27 0.19 0.32 0.34 0.44 0.38PBT / capital employed 0.16 0.15 0.11 0.2 0.21 0.25 0.21               PAT / total assets 0.06 0.05 0.04 0.07 0.08 0.09 0.06PAT / gross fixed assets 0.21 0.16 0.11 0.18 0.22 0.28 0.21PAT / capital employed 0.11 0.09 0.06 0.11 0.13 0.16 0.11               No of companies 5 4 3 4 5 6 7

INTERPRETATION:

These ratios show the efficiency of the industry and from these ratios it can be

interpreted that there is fluctuating performance of the industry and the operating

cash and operating income with respect to total assets, gross assets and capital

employed show an increase for three years and then a decrease in 2005-06. Thus

the performance is fluctuating as the external factors affect the industry very much

and the industry is growing slowly and gradually.

8.6 TREND ANALYSIS

109

Particulars Mar-02 Mar-03 Mar-04 Mar-05 Mar-06(TIMES)

RESULTS FOR THE YEARIncome 110.39 149.6 171.39 203.84 279.01Index 1.0 1.36 1.55 1.85 2.53

Expenditure 95.82 115.8 133.14 150.17 221.07Index 1.0 1.21 1.39 1.57 2.31PBDT 24.47 45.94 45.88 64.49 80.64Index 1.0 1.88 1.87 2.64 3.30PBT 16.93 37.21 37.11 53.98 63.44

Index 1.0 2.20 2.19 3.19 3.75PAT 9.44 23.43 23.15 35.41 38.93

Index 1.0 2.48 2.45 3.75 4.12Dividend 5.3 7.06 7.52 8 8.52

Index 1.0 1.33 1.42 1.51 1.61

POSITION AT THE END OF THE YEAR

Gross Fixed Assets 93.57 106.21 115.69 127.71 166.85Index 1.0 1.14 1.24 1.36 1.78

Current Assets 64.13 80.88 81.09 101.07 128.5Index 1.0 1.26 1.26 1.58 2.00

Net Worth 132.32 154.68 173.92 201.58 269.07Index 1.0 1.17 1.31 1.52 2.03

Long Term Borrowing From Bank 1.92 9.09 11.01 20.97 24.99Index 1.0 4.73 5.73 10.92 13.02

Current Liabilities & Provisions 68.04 87.58 113.37 147.14 228.26

Index 1.0 1.29 1.67 2.16 3.35Total Assts/Liabilities 240.13 296.36 323.93 415.02 572.7

Index 1.0 1.23 1.35 1.73 2.38

INTERPRETATION:

Results for the year:

Consistent rise in the income and expenditure at an increasing pace.

PBDT is also growing but it is decreasing in March-04 compare to March-03.

PBT and PAT is also growing.

Dividend paid to the shareholder is also increasing.

110

Position at the end of the year:

The actual gross fixed assets are increasing.

The current assets of the industry is increasing still the borrowing of the

industry is increasing year by year.

The net worth of the industry is also increasing.

The long term borrowing from bank is also increasing. This might be

increasing because the industry is at developing stage.

The current liabilities and provisions are also increasing.

9. I NDIA A ND C HINA : A C OMPARISON

CHINA

111

China’s international tourism industry is the outcome of the implementation of

economic reform and opening to the outside world. Along with the changes in

Chinese political and economic systems, it has grown out of nothing, and experienced

progress from small to large, from rapid growth to steady development, heading

toward its maturity. This industry is playing an increasingly significant role in the

country’s national economy. Go with the entry of the WTO, it is confronted with

much opportunities and challenges.

China's flourishing tourism provided great vitality to the growth of its economy.

Statistics show that tourism revenue has grown 12.7 percent annually in recent years,

higher than the national average gross domestic product (GDP) growth rate of 7.4

percent. Tourism has quickly become a major new growth area for the domestic

economy.

The sound performance of China's tourism is in sharp contrast to the sluggish

international tourism, and has drawn worldwide attention. China has become the

world's sixth-largest tourist destination and is expected to become both the largest

tourist market and tourist destination in the world in the near future. The World

Tourism Organization has predicted that China is to be the world's largest tourist

market by 2020. China has mapped out its 20-year tourism development plan which

estimates that by 2020, the country's tourism revenue will skate past 3.3 trillion yuan

(US$398.7 billion), equal to 8 percent of the country's total GDP.

China obviously has what it takes to reach the goal, with its unique tourism resources

and the world's biggest domestic tourism market. According to the plan, by 2020, the

number of overseas tourists to China will reach between 135 million and 145 million,

up 1.1-1.3 times over the figure from 1998. More than 73.34 million overseas tourists

visited China during the first 10 months of 2001, an increase of 5.66 percent on the

same period of 2000. The amount spent by the overseas tourists in the 10 months was

estimated at US$14.8 billion, up 9.28 percent. The number of tourists from South

Korea, Thailand, Russia and Japan maintained double-digit growth. China's major

tourist source countries include Japan, South Korea, the United States, Russia,

112

Malaysia, Mongolia, Singapore, the Philippines, Britain, Thailand, Germany, Canada,

Indonesia, Australia and France.

There are now 8,993 travel agencies and more than 33.35 million tourism employees

in China. China will focus on the comprehensive development of tourism by

combining sightseeing with holiday-spending and special traveling so as to turn China

into one of the world's leading tourist destinations. China now expects 90 million

arrivals in 2002.

Important changes during the past 20 years

The major changes which have taken place in China¡¯s international tourism industry

in the past 20 years are as follows

1. From nowhere to one of the top ten world destinations

In the area of world international tourism development, China is a late comer. China

did set up in the early 1950s some special institutions handling the business of travel

arrangements; however, until the end of the 1970s, this business was only a part of

foreign affairs and nothing to do with commercial operations. Therefore, in the early

1980s, China was a mere nobody on the large world tourism stage, both in terms of

international tourist arrivals and of international tourist receipts, ranking lower than

40th among the major world destination countries. Since the beginning of the 1990s,

China’s position on the world destination list has been climbing, and has become one

of the top ten since 1994. According to the WTO figures of 1998, with 24 million

international arrivals with overnight stay, China ranked the world’s sixth, accounting

for 3.85 per cent of the world’s total. With international revenue from tourism of over

US$12.5 billion, China ranked seventh, accounting for 2.8 per cent of the world’s

total. As is showed in the Travel times that in 2004 the number of the whole

international arrivals is 16.93 million which is increased by 48.49% than in 2003. The

success of China’s international tourism has drawn wide attention throughout the

world.

2. From a seller’s market to a buyer’s market

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China is a nation with a long history, the largest population and distinct political and

economic systems, playing an increasingly important role in world affairs. All this, in

addition to long being close to the outside world, has made China more mysterious to

the world. With the open policy implemented in 1978, visitors from abroad flooded in

all of a sudden. China was unable to deal properly with the influx. Owing to the

serious shortage of necessary infrastructure, service facilities and competent

personnel, China had to impose some limits on intended visitors to China. Hence, in a

rather long period after the reform, China enjoyed a sheer seller’s market in the field

of international tourism. However, with the change in international tourist demand

and increase in domestic supply, China’s international tourism has turned from a

seller’s market to a buyer’s market. This has become obvious since the early 1990s,

and the growth in international arrivals has lagged far behind the actual increase in

domestic tourist supply

3. From one-way to two-way flow

For a long period before the reform and opening China developed only inbound

tourism; and outbound tourism was tightly restricted. Besides the business journeys

made by government officials and leaders of state-own enterprises, there was hardly

any outbound travel in a real sense. As a result, until the mid-1980s, China¡¯s

international tourist flow was one-way, inbound only. With the implementation of its

opening policy and an increase in the disposable income of the Chinese people,

frontier tourism (cross-border travels in the frontier regions) featuring a combination

of trade and sightseeing visits has been flourishing since the mid-1980s along the

borders between China and Russia, Mongolia, Vietnam, DPRK, Laos and Myanmar.

Since the early 1990s, travel to Hong Kong, Macao and SE Asian countries has been

booming, these places are becoming fashionable locations for Chinese citizens to

spend their holidays. This new form of tourism has increased rapidly, although the

size and destination of Chinese outbound travel are still limited by the policies of

China and destination countries. Therefore, Hong Kong, Macao, some of the ASEAN

(Association of Southeast Asia Nations) countries, Australia and South Korea have

made China their major target market, setting up a variety of promotion campaigns

aimed at China.

4 From state monopoly to decentralization

114

In the transition from the planned economy to the market economy, the operating

system of international tourism has changed greatly. The situation where a handful of

state-own companies monopolized the international tourism business under the

planned economy has ended, the tourist industry has become more open, and

investment in the trade has multiplied. The international tourist business has been

opened domestically not only to different economic sectors, but also to overseas

investors and developers. The opening of hotel, catering, transportation and retailing

and other related industries has gained obvious success. The hotel industry, the main

component of the tourist industry, has become a vanguard in the use of foreign funds

and in the introduction of overseas management, gaining good results. This has not

only speeded up the development of international tourism and received sizable foreign

exchange, but also trained a good many personnel, paving the road of openness to the

outside world for other industries in both theory and practice. The famous names of

world hotel groups and chains such as Holiday Inn, Sheraton, Hilton, and Shangri-La

can be found in many cities in China.

INDIA

The dynamics of the Indian travel scene has changed with the coming of the low-cost

airlines. The low fares have changed the way people look at air travel. Air travel is no

longer considered a luxury but a necessity.

The advent of low-cost carriers has created a new boom in the Indian travel scene

offering more options for the Indian traveller, who now has access to better and

cheaper air connectivity plus attractive package deals for new destinations.

Leisure traffic to India is yet to pick up in a big way. A Federation of Hotel and

Restaurant Association survey shows that more than 50 per cent of the occupancy in

hotels comes from corporate travellers. The average room rate (ARR) from corporate

occupancy is higher than that of the leisure travellers.

India ranks 50th in the global growth ranking by the World Travel and Tourism

Council, below Malaysia which is ranked third and China which is ranked 11th.

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To fall in line with internationally benchmarked tourism models, India needs at least

90,000 more rooms (in the five star segment) and therefore an investment of Rs

80,000 crore. India also needs to increase inbound traffic from 3.3 million to at least

10 million in the next six to seven years.

STRENGTHS

INDIA CHINA Hospitable people

Scenic beauty and salubrious climate

An array of festivals and range of

colourful handlooms and handicrafts.

Diversified culture and languages.

Natural attractions well promoted

rather than man made.

Hospitable people

Scenic beauty and salubrious climate

An array of festivals

Transport facilities well developed.

Easy availability of funds

Information channels well developed

Overcrowding led to the development

of China for tourism

Adequate infrastructural support such

as connectivity, transport facilities,

good facilities and tourist resorts.

Well developed hospitability

Greater investments.

Man made attractions based on science

and technology more promoted.

China's "10th Five-Year Plan"

designates development of the tourism

industry as a top priority.

WEAKNESSES

116

INDIA CHINA Inadequacy of transport facilities

Funds constraining the development of

regions.

Inadequacy of information channels.

Overcrowding of popular tourist

centres.

Some places are inaccessible, especially

in winter.

Marketing still not well-developed and

well penetrated.

Lack of adequate infrastructural support

still at some places such as

connectivity, transport facilities, good

facilities and tourist resorts.

Security concerns especially in northern

regions.

Inadequate community participation

and private sector initiatives and

investments.

Late entry into WTO

Late comer in the tourism industry

Some parts still not developed.

117

OPPORTUNITIES

INDIA CHINA Increased disposable incomes of the

Indian middle class.

Eco- tourism is gaining popularity.

A multi-crore branch of Tourism

industry is waking up.

Tourism Infrastructure Development :

Roads, Flyovers, Hotels &

Communications etc.

Development of new tourist

destinations.

Promotion of Eco, Adventure, Spiritual

and Leisure tourism, Heli-taxi services,

Charters, Ropeways, New Ski Resorts,

Theme and Safari parks, Spas.

Medical Tourism

Budgeted Hotels

Online Tourism

Commonwealth Games - 2010 &

Cricket World Cup - 2011

Outbound & Domestic Tourism

Open sky benefits: Airports

New business opportunities

     

Great potential of an international

market

Steady growth of China’s economy

Unique attractions and improved

facilities

Joined World Trade Organizations

Capability of holding many great

activities

Tourism Infrastructure Development :

Roads, Flyovers, Hotels &

Communications etc.

Development of new tourist

destinations.

A preferential policy for the strategic

development of e-tourism.

Development of China's western

regions

Develop the economy of less

developed areas and increase

employment opportunities.

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THREATS

INDIA CHINA Threat of the naxalist attacks and

terrorist attacks in the northern regions

of India.

Foreign places in various countries

more attractive and more promoted by

those countries.

Tourists being cheated by the local

people who come to see tourist spots

and being cheated for different

necessary things which they buy.

Kashmir is being opened up and could

divert a large portion of tourists to

itself.

Environmental factors also impose a

threat.

To preserve the fragile eco-systems and

cultural diversity.

Increasingly fierce international

competition

Sharp contradictions between mature

tourists and premature market

mechanism

Impacts of entry into the WTO

Low ability of the reception

ANALYSIS

From the above SWOT analysis for India and China we have concluded that India and

China both have vast potential to develop. Since China entered before India in

Tourism Industry, it has been able to develop rapidly and because it has no shortage

of funds and because it has adopted certain successful strategies, China is able to

succeed. In India, Tourism Industry has gained more attention and popularity for the

past few years only and there is vast potential for it. India has now become serious in

case of Tourism. The reason for the success of China is some of the strengths

mentioned in the strengths column above. India has got the membership of WTO from

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the beginning even then it has not been able to make its mark in the World Tourism.

Similarly, China entered very late in WTO, even then it has developed so much and it

is assumed to be the world’s best in 2020.

So by adopting certain footholding strategies and effective marketing campaigns and

availability of adequate funds, India should start and continue to excel.

10. C URRENT S CENARIO

120

10.1 Full Steam Ahead For International Tourism

International tourist arrivals continue sustained growth rate reaching 5.6%

610 million international tourist arrivals from January to August

32 million more arrivals already counted for 2007

International tourist arrivals for the first eight months of 2007 point to a continuation

of the sustained growth rate experienced over the past years. According to the latest

UNWTO World Tourism Barometer, this trend is likely to continue through the

remainder of 2007, with year-end growth estimated at 5.7%, which would put

international arrivals to 880-900 million.

2007 is set to be the fourth year of growth above the long-term average of 4.1% and is

well on track to become the third consecutive year with a differential of about 1.5%

above this long-term rate.

On a month-by-month basis, growth was fairly constant:

March showed the best growth overall (+9%) – no doubt boosted by the fact

that Easter fell in that month rather than in April as in 2006.

Strength was maintained during the Northern Hemisphere high season months

of July and August, both showing growth over 5% and for the first time ever,

both July and August topped over 100 million arrivals each .

Regional trends

Emerging destinations in Asia and the Pacific, Africa and the Middle East have been

the main growth drivers. Although well above their respective long-term averages, the

more mature regions of Europe and the Americas showed a more moderate pace.

While regional trends may vary as new data becomes available, Asia and the Pacific

is currently the star regional performer, recording an increase through August of 10%,

ahead of the Middle East and Africa, both with +8%.

121

Growth for both Europe and the Americas currently stands at +4% – one percentage

point down on 2006’s level in the case of Europe, but twice the rate of growth of last

year for the Americas.

10.2 Outbound tourism - emerging markets stand out in international

tourism expenditure

Travel expenditure figures continue on the rise, in line with the increase in

international arrivals, with strong growth coming again from emerging markets:

Brazil (+33%), Argentina (+24%), the Republic of Korea (+18%) and the Russian

Federation (+16%) have recorded strong double-digit growth in spending.

Of the top five outbound markets, Germany (+6%), the USA (+4%) and the UK

(+4%) have recorded reasonable rises during the first six to eight months of 2007,

while available data for France and Japan point to stagnation. Among the more mature

source markets, Italy and Spain (7th and 12th largest spenders, respectively) report the

fastest growth so far this year at +9% each.

10.3 Global context

The continued growth in international tourism has been supported by a strong global

economy expanding at around 5% for the fourth consecutive year. The world’s

emerging market and developing economies registered particularly strong GDP

growth. The recent turbulence in the financial markets has not had any notable impact

in tourism results so far. At the same time, this state of affairs may not continue

indefinitely in a context oil prices approaching US$ 100 a barrel, so that momentum

for general price hikes might with a.

The preliminary 2007 results confirm the resilience of tourism demand regarding

external factors, ranging from the turbulence in financial markets to security and

health issues, rising fuel prices and increased taxation of air transport, inflationary

risks and higher interest rates.

122

However, these factors already started to weaken consumer confidence in some

markets. This might spread wider and affect, at some point, the overall demand for

international travel.

10.4 Gujarat to become a hot destination for business tourism

The Gujarat Govt. is planning to make Gujarat a hot destination for Tourism

conducted for business since business trips are increasing day by day. Since the

number of business trips are increasing in Gujarat the Govt. is planning to make it

very attractive and better hospitality and all other facilities so that the number of

tourists increases every year.

10.5 Strong rupee likely to hurt inbound tourism

Mumbai: Strong rupee coupled with overpricing of tours in the Indian tourism

industry is bound to affect the inbound travel and tourism in the country, feel industry

experts.

Experts say that though inbound tourism has increased by about 20 per cent, it has,

however, not done as well compared to the outbound travel.

Some of the travel companies, which usually quote the entire trip in dollars for

travelers across the globe, are now planning to shift to a rupee tariff to moderate the

effect of rupee appreciation.

Experts point out that though there has been no immediate impact on individual

travelers it might soon start pinching them. “Travelers who have already booked their

tours will surely go ahead and travel but will not spend as much as they would have

spent,” said a senior official with the tourism industry.

123

RISING RUPEE

Tour operators organizing overseas trips are the ones who are bound to get hurt by the

appreciating rupee, said Madhavan Menon, Managing Director, Thomas Cook India

Ltd. “We will, therefore, quote a rupee tariff wherever possible,” he said.

“The weak dollar is bound to affect the inbound travel, which can become less

attractive for travelers,” said Himmat Anand, Chief Operating Officer-India & South

Asia, SITA Destination Management. “It is time that we started quoting in rupee,” he

added.

Anand also felt that not only the appreciating rupee but also the overpriced tourism

sector could be a reason for the poor performance of inbound tourism.

“Hotels have become 5-10 per cent more expensive,” he said. A lot of hotels, which

used to follow a dual tariff structure, have now shifted to the single tariff structure

following rupee appreciation.

CONSTRAINTS

Though the business from the US is growing at a rapid pace, there is a marked change

in the trend of travel. “A lot of US tour operators who used to book deluxe category

hotels are now settling down for first class hotels, which are a little less expensive,”

he said.

Infrastructure and availability of rooms is also a major constraint for inbound

travelers. Winter, which is usually a peak season for such travelers, might not be as

attractive, say industry experts.

GOVT MEASURES

However, they feel that the Government is taking adequate measures in order to make

India an attractive tourist destination. The Ministry of tourism has done a number of

road shows. Moreover, the ‘Incredible India’ campaign has also gone a long way in

wooing tourists, said an official.

124

“Some States like Kerala, Madhya Pradesh and Rajasthan have taken proactive

measures to promote niche tourism,” she said. She also pointed out that the railways’

effort to provide trains with specific themes will go a long way in attracting tourists.

125

11. C ONCLUSION

From the whole study we have concluded that Tourism Industry of India is a growing

industry. The Government has started paying attention to the industry just past few

years only. Now, its time to execute effective strategies and monitor the performance.

As such it is started by the “Incredible India” campaign. It’s a very big marketing

campaign focusing on various states and their specialty and which places are worth

visit. Also the private players are taking interest and they should participate in

promoting the national wealth.

It can be said, a lot of efforts have been made and various strategies applied. But in

the interior parts where some places are not reachable there is a big problem.

Moreover, new places in the country which are really attractive and have got history

enclosed with it and are worth visit are coming up.

Only the main task is to arrange adequate funds for promoting the tourism industry

and building proper and cheap infrastructure. Moreover our historical places which

now need repairs and maintenance should be paid attention otherwise our wealth can

be destroyed.

The financial data proves that the profits from this industry are increasing year on

year and also the content of debt is less which provides better prospects for the

efficient working and easily availability of funds with interest rates. Thus from the

various financial data analyzed provides better prospects for the industry. Moreover,

from the comparison between India and China we can see that China has adequate

funds and infrastructure as it is really developed in these aspects but we have more

opportunities and threats lying ahead and we have to overcome those threats.

Thus, finally we conclude that the industry has to go a long way in finding better

prospects and a lot of opportunities lie ahead.

126

A NNEXURE

1. PROFIT & LOSS STATEMENT (INCOME/FINANCE CO.)

Tourism              Rs. Crore (Non-Annualized)

Mar-00

Mar-01

Mar-02

Mar-03

Mar-04

Mar-05

Mar-06

Income 110.91 139.27 110.39 149.6 171.39 203.84 279.01 Leasing & hire services 0 0 0 0 0 0 0 Security transactions 0 0 0 0 0 0 0 Bills discounted 0 0 0 0 0 0 0 Dividend income 0.19 0.52 0.46 0.02 1.54 0.84 1.14 Interest income 1.92 3.56 1.57 1.58 1.61 0.88 1.11 Gain on forex transactions 3.13 2.76 0.83 1.02 0.84 1.12 2.31 Others 108.8 135.19 108.36 148 168.24 202.12 276.76               Other income 7.59 8.93 3.94 3.74 4.85 6.04 7.31               Non-recurring income 1.19 9.16 3.34 6.86 1.54 3.82 13.65No of companies 5 4 3 4 5 6 7

127

2. LIABILITIES

Rs. Crore (Non Annualized)

Mar-00

Mar-01

Mar-02

Mar-03

Mar-04

Mar-05

Mar-06

Net worth 127.46 142.05 132.32 154.68 173.92 201.58 269.07 Authorized capital 40 39 35 42.5 46 47 52.5 Issued equity capital 23.35 28.98 25.98 32.49 35.99 36.98 42.06 Paid-up equity capital 23.34 28.97 25.97 32.48 35.98 36.97 42.05 Preference capital 0 0 0 0 0 0 0Bonus equity capital 10.1 15.93 15.93 15.93 15.93 15.93 17.39Buy Back amount 0 0 0 0 0 0 0Buy Back shares (nos.) Error Error Error Error Error Error ErrorReserves & surplus 104.12 113.08 106.35 122.2 137.94 164.61 227.02 Free reserves 91.62 100.1 94.4 111.06 131.76 155.64 217.54 Share premium reserves 11.86 11.86 11.86 11.86 11.86 11.86 11.86 Other free reserves 79.76 88.24 82.54 99.2 119.9 143.78 205.68 Specific reserves 12.34 12.16 11.95 11.71 11.41 9.69 10.2 Revaluation reserves 0.82 0.82 0 0 0 0 0 Accumulated losses -0.66 0 0 -0.57 -5.23 -0.72 -0.72Borrowings 92.27 77.92 31.67 45.37 27.44 55.27 63.09 Bank borrowings 50.08 56.8 24.91 26.1 23.29 49.21 58.06 Short term bank borrowings 29.58 55.92 22.99 17.01 12.28 28.24 33.07 Long term bank borrowings 20.5 0.88 1.92 9.09 11.01 20.97 24.99 Financial institutional borrowings 20 0 0 0 0 0 0 Govt. / sales tax deferral borrowings 0 0 0 0 0 0 0 Debentures / bonds 0 0 0 0 0 0 0 Fixed deposits 0 0 0 0 0 0 0 Foreign borrowings 2.64 0 4.57 3.1 0 0 0 Borrowings from corporate bodies 0.19 0.19 0 0 0 0.64 0.17 Group / associate cos. 0.19 0.19 0 0 0 0 0.17 Hire purchase borrowings 1.19 2.76 0.79 0.11 0 0 0.92 Borrowings from promoters / directors 3.31 3.31 0 1.58 1.19 0.8 0 Commercial paper 10 10 0 10 0 0 0 Other borrowings 4.86 4.86 1.4 4.48 2.96 4.62 3.94Secured borrowings 46.53 36.47 27.04 25.68 21.44 53.25 62.52Unsecured borrowings 45.74 41.45 4.63 19.69 6 2.04 0.58Current portion of long term debt 52.34 0.24 0.82 2.3 3.33 6.53 6.87

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Total foreign currency borrowings 2.64 2.35 4.57 3.1 0 0 0Deferred tax liabilities 0 0 8.1 8.73 9.2 11.03 12.28Current liabilities & provisions 84.49 110.25 68.04 87.58 113.37 147.14 228.26 Current liabilities 76.59 96.86 54.5 73.98 98.8 128.46 207.34 Sundry creditors 71.39 86.06 48.94 66.38 85.33 113.56 176.78 Unmatured financial charges 0 0 0 0 0 0 0 Interest accrued / due 0 0.03 0 0 0 0.02 0.01 Other current liabilities 5.2 10.77 5.56 7.6 13.47 14.88 30.55 Share application money 0.04 0.05 0 0.01 0 0 0 Provisions 7.9 13.39 13.54 13.6 14.57 18.68 20.92 Tax provision 2.86 4.64 3.08 1.41 1.44 4.35 6.6 Dividend provision 4.37 5.72 4.88 6.81 6.67 7.07 7.47 Dividend tax provision 0.48 1.18 0.42 0.26 0.85 0.93 1.05 Prov. for diminution in investment 0 0 0 0 0 0.06 0.06 Other provisions 0.19 1.85 5.16 5.12 5.61 6.27 5.74Total liabilities 304.22 330.22 240.13 296.36 323.93 415.02 572.7Contingent liabilities               Bills discounted 0 0 0 0 0 0 0 Disputed taxes 3.1 1.85 1.85 1.85 2.49 2.49 7.76 Letters of credit 0 0 0 0 0 0 0 Total guarantees 32.04 24.44 2.9 2.23 14.86 14.82 10.87 Future lease rent payable 0.72 7.77 4.45 0 1.15 1.37 4.04 Liabilities on capital account 0.7 1.16 3.12 5.28 1.65 1.66 1.94No of companies 5 4 3 4 5 6 7

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3. ASSETS

Rs. Crore (Non-Annualized)

Mar-00

Mar-01

Mar-02

Mar-03

Mar-04

Mar-05

Mar-06

Gross fixed assets 90.53 99.17 93.57 106.21 115.69 127.71 166.85 Land & building 32.76 32.79 31.32 30.8 33.16 33 41.78 Plant & machinery 1.32 22.52 22.24 40 40.54 26.92 32.46 Other fixed assets 54.43 41.53 39.57 33.14 38.06 65.84 89.17 Capital WIP 2.02 2.33 0.44 2.27 3.93 1.95 3.44 Less: cumulative depreciation 27.85 34.32 32.76 39.97 45.71 49.62 73.4Net fixed assets 62.68 64.85 60.81 66.24 69.98 78.09 93.45Revalued assets 0.82 0.82 0 0 0 0 0Leased out assets 2.3 0 0 0 0 0.28 0 Leased plant & machinery 0 0 0 0 0 0 0Investments 13.64 20.28 11.17 12.82 19.8 20.9 36.73 In group / associate cos. 9.28 8.31 4.91 2.87 3.02 3.69 6.65 In other companies 2.55 7.01 3.11 3.31 3.26 3.06 2.2 In mutual funds 0 0 0 0 10 10.42 24.43 In government securities 0 0 0 0 0 3.5 0 Other investments 1.81 4.96 3.15 6.64 3.52 0.23 3.45 Marketable investment 0.52 0.65 0.13 0.13 10.13 10.56 24.57 In group / associate cos. 0 0.13 0.13 0 0 0 0Quoted investment 0.52 0.65 0.13 0.13 10.13 0.14 0.14Market value of quoted investment 0.53 0.95 0.2 0.29 5.72 0.61 0.53Deferred tax assets 0 0 1.41 2.59 2.9 4.86 4.93Stock-in-trade 2.69 2.69 0 0 0 0 0 Shares / securities 0 0 0 0 0 0 0 Hire purchase assets 0 0 0 0 0 0 0 Others 2.69 2.69 0 0 0 0 0Cash & bank balance 104.05 91.47 64.13 80.88 81.09 101.07 128.5 Cash in hand 73.08 60.87 39.63 49.54 49.35 78.98 78.33 Bank balance 30.97 30.6 24.5 31.34 31.74 22.09 50.17               Housing loans 0 0 0 0 0 0 0Receivables 118.66 149.01 101.62 132.9 148.63 204.21 303.36 Sundry debtors 71.91 88.39 63.94 95.65 104.91 158.31 229.86 Debtors exceeding six months 5.27 6.71 3.24 3.8 2.15 3.73 9.22 Lease receivables 0 0 0 0 0 0 0 Advances / loans to corporate bodies 5 0.21 0.01 0.62 0.46 1.01 1.97 Group / associate 5 0.21 0.01 0.62 0.46 0 0

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cos. Other companies 0 0 0 0 0 1.01 1.97 Deposits with govt. / agencies 0 0 0 0 0 2.56 3.02 Accrued income 0.01 0.04 0.64 0.78 0.54 0.04 0.1 Exchange fluctuations receivable 0 0 0 0 0 0 0 Advance payment of tax 8.23 9.56 6.48 5.93 7.42 12.11 13.39 Other receivables 33.51 50.81 30.55 29.92 35.3 30.18 55.02Future lease rent receivable 0 0 0 0 0 0 0Intangible / DRE not written off               Intangible assets (goodwill, etc.) 0 0.7 0.56 0.38 1.24 5.65 5.55 DRE not written off 2.5 1.22 0.43 0.55 0.29 0.24 0.18 VRS expenses not written off 0 0 0 0 0 0 0 Issue expenses not written off 0 0 0 0 0 0 0 Other misc. expenses not written off 2.5 1.22 0.43 0.55 0.29 0.24 0.18Total assets 304.22 330.22 240.13 296.36 323.93 415.02 572.7No of companies 5 4 3 4 5 6 7

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B IBLIOGRAPHY

BOOKS

1. Malhotra, Naresh, K.; Marketing Research: An Applied Orientation; Delhi; Pearson

Education; Fifth Edition; 2007; 106-112 pp.

2. Fischer. Jordan; Security Analysis and Portfolio Management; New Delhi; Prentice

Hall of India; Sixth Edition; 2005.

WEBOLOGY

1. http://en.wikipedia.org/wiki/Tourism

2. http://www.equitabletourism.org/tourpolicy.htm

3. www.tourism.gov.in

4. http://minister.industry.gov.au/index.cfm

5. www.travel.mapsofindia.com

6. http://www.fhrai.com/publist.asp

7. http://www.bharatbook.com/bookdetail.asp?bookid=9736&publisher

8. http://meaindia.nic.in/ indiapublication/tourism.htm

9. http://www.investmentcommission.in/tourism.htm

10.http://www.itopc.org/travel-requisite/outbound-tourism-statistics.html

11.http://sify.com/finance/fullstory.php?id=14539928

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