INDUSTRY IMMERSION PROJECT

1. Maximum pages for the project:- 25 Pages

2. Index for Project

a. Introduction to the sector

b. Porters 5 forces model of the sector

c. PESTEL Analysis of the sector

d. Value Chain of the sector

e. Top 5 companies of the sectors

f. Financial Analysis

i. Balance sheet analysis

ii. Ratio Analysis

g. Conclusion

3. Title Page for the project is as follows:-

Tourism Sector

Industry Immersion Project

Priyam R. Talpade

PGDM 2015-2017

Contents INTRODUCTION TO THE TOURISM SECTOR .........................................................................................4

PORTERS 5 FORCES MODEL OF THE SECTOR ........................................................................................7

PESTEL ANALYSIS OF THE SECTOR .......................................................................................................9

VALUE CHAIN OF THE TOURISM SECTOR ........................................................................................... 13

TOP 5 COMPANIES OF THE SECTORS ................................................................................................. 15

CONCLUSION ................................................................................................................................... 16

INTRODUCTION TO THE TOURISM SECTOR Since the beginning of time humans have traveled. Food, water, safety or

acquisition of resources (trade) were the early travel motivations. But the idea of

travel for pleasure or exploration soon emerged. Travel has always depended upon

technology to provide the means or mode of travel. The earliest travelers walked or

rode domesticated animals. The invention of the wheel and the sail provided new

modes of transportation. Each improvement in technology increased individuals'

opportunities to travel. As roads were improved and governments stabilized,

interest in travel increased for education, sightseeing, and religious purposes.

Tourism is a collection of activities, services and industries that delivers a travel

experience, including transportation, accommodations, eating and drinking

establishments, retail shops, entertainment businesses, activity facilities and other

hospitality services provided for individuals or groups traveling away from home.

The World Tourism Organization (WTO) claims that tourism is currently the

world’s largest industry with annual revenues of over $3 trillion dollars. Tourism

provides over six million jobs in the United States, making it the country's largest

employer.

INDIAN TOURISM SECTOR SCENARIO

India takes 52nd place overall. T&T already accounts for 5% of India’s

employment and its huge potential for further growth is made visible by comparing

the country’s 7 million international visitors to China’s 55 million. The country’s

natural resources (17th) are vast and diverse and its cultural resources (10th)

include a unique intangible heritage (8th), sports events and a large entertainment

offer. India’s relevance as business travel destination is increasing along with its

economic growth, it remains a price-competitive destination (8th) and recent

changes in its visa regime: not yet reflected in the data rankings—have the

potential to boost international arrivals. However, longstanding infrastructure gaps

remain, especially in tourism-specific infrastructure (109th) and the quality of

roads. Despite some uneven progress, India also lags on health and hygiene (106th)

and ICT readiness (114th). The safety and security situation is unsettling, with a

perceived increase in the impact of crime and violence (97th), and India ranks only

139th for environmental sustainability.

Market Size India’s rising middle class and increasing disposable incomes has continued to

support the growth of domestic and outbound tourism. Total outbound trips increased by 8.7 per cent to 19.9 million in 2015. Inbound tourist volume grew at a

Compound Annual Growth Rate (CAGR) of 6.8 per cent during 2010-15. The number of Foreign Tourist Arrivals (FTAs) has grown at a CAGR of 3.7 per

cent to 5.29 lakh year-on-year in May 2016. Foreign Exchange Earnings (FEEs) during the month of May 2016 grew at a rate of 8.2 per cent year-on-year to Rs

10,285 crore (US$ 1.52 billion). The number of tourists arriving on e-Tourist Visa during June 2016 reached a total

of 36,982 tourists registering a year-on-year growth of 137.7 per cent.

Tourism

Domestic International

Local Regional National level

Excursion Trip Travels

On the basis of

Distance covered

Long Distance Short Distance

On the basis of Purpose

Common Holiday Business

Interest Tourism Tourism

Tourism

Domestic Tourism:

It is concerned with travelling within the country. It does not need a passport and

visa or conversion of one currency into another. Domestic tourism has greater

scope in countries of large dimensions such as India as compared to smaller

countries. From a geographical viewpoint, domestic tourism may range from local

excursion, regional trips to national level travels.

On the basis of purpose of tour or the motives of tourists, tourism is of three types,

viz., (a) common interest tourism, (b) holiday tourism and (c) business tourism. In

case of common interest tourism, the purpose of visiting and the visited persons in

common.

Visiting friends and relatives in this type puts very low pressure on the provision of

tourist facilities at the destination. Holiday tourism is the most popular type. A fine

weather favorable for sightseeing, touring, recreation and going round different

cultural sites are sought after by incoming tourists of this category.

Business tourists travel to boost their business, attend trade fairs and conferences

pertaining to commerce or professions. They combine business with recreation

using same facilities as provided for holiday tourists.

International Tourism:

An international tourist crosses the boundaries of many countries, uses different

currencies, faces different languages and meets different types of people. Usually

international tourism involves longer distances although crossing small countries

or travelling in the neighborhood of international borders may involve short

distances.

Tourist Attraction

Attractions are the primary motivation for traveling. They may be a primary

destination such as Ladak or secondary destination which are interesting places to visit on the way to your primary destination. Attractions usually focus on natural

resources, culture, ethnicity or entertainment.

PORTERS 5 FORCES MODEL OF THE SECTOR

THREAT OF EXISTING RIVALRY

Organized players would barely have 40-50% of market place.

Most of organized players are present in metros and mini metros

As the growth of tourism industry is growing faster the threat of existing

rivalry is Medium to High

Threat of Existing Rivalry

Threat of new

entrance

Bargaining Power of Buyers

Threat of Substitutes

Bargaining Power of Suppliers

THREAT OF NEW ENTRANCE

Threats of new entrance in tourism industry in Medium to High

Major determinants of the market environment can be changed by new

entrants.

Online channels are growing rapidly.

Government regulations

BARGAINING POWER OF BUYERS

Bargaining Power of buyers is Medium to High

Switching Cost for buyers is not high as brand loyalty is low

Better facilities are available in other countries

Luxury segments are brand conscious to and willing to pay a premium for

great experience and service quality

BARGAINING POWER OF SUPPLIERS

Power of suppliers in Indian tourism industry includes airlines, hotels,

transportations, travel agency etc.

The bargaining power depends on the product which are supplied by

suppliers. Thus bargaining power is Medium to Low

PESTEL ANALYSIS OF THE SECTOR

POLITICAL FACTOR

In India, one can never over-look the political factors which influence each and

every industry existing in the country. Like it or not, the political interference has

to be present everywhere. Given below are a few of the political factors with

respect to the tourism industry:

TERRORISM & SECURITY: Terrorism has an adverse effect on the growth

and progress of any country. Terrorism has also bad effect on the tourism

industry if India. It is the big political problem to the governing party of the

country. With the rise in terrorism the growth of tourism industry in the

disturbed parts of country has been at slew rate. The states like Jammu and

Kashmir, Assam etc. have a bad tourism output, which intern effects the

country's growth.

The govt. of India is taking steps in regard to tackle the terrorism by

providing more security to the tourists who are visiting such terrorist prone

areas.

POLITICAL INSTABILITY: Political instability also has effect on tourism

industry. Sometimes frequent change of parties at state or central level have

an impact on tourism policies and upliftment of tourist sites, as the different

parties have different approach to tourist industry.

INFRASTRUCTURE: Infrastructure development depends mainly upon the

government or ruling political party. There has been a great infrastructure

development from last 20 years in India. The better infrastructure has

attracted more and more tourist in India.

RELATIONS WITH NEIGHBOURING COUNTRIES: Relationship with

the adjoining countries have also a direct relationship with the tourism

industry. The political relationship of India with most of adjoining countries

is good, but the tourist from near countries are not frequently visiting the

country.

LACK OF INTERNATIONAL REPRESENTATION: One of problem that

is because of political factor is the lack of international representation of the

country. Indian government does not give much preference to representation

of country internationally because of which tourism rate does not increase by

any surplus amount. Countries like Malaysia are representing their country

internationally which is giving boost their tourism.

ECONOMICAL FACTOR

The Tourism sector of Indian economy is at present experiencing a huge growth.

The Tourism sector of Indian economy has become one of the major industrial

sectors under the Indian economy. India's foreign exchange earnings from the

tourism sector are likely to reach US $26 billion in 2015 from the current level of

about $20 billion.

GDP (GROSS DOMESTIC PRODUCT): Gross domestic product also plays

major part in the upliftment of tourism industry. The contribution of travel

and tourism to the country's GDP is rise by 7.5 per cent to Rs 2, 34,145 crore

2015 year. Better growth of GDP has helped to attract more and more

tourist. The tourism will also help to raise the GDP of India as if more and

more tourist arrive they will spend more money which inturn raise the GDP

of country.

RISE IN NATIONAL INCOME: The Indian tourism is one of the major

contributors in increasing national income and improving the economic

conditions of India. US $ 295.7 billion were generated in year 2015 alone

from tourism industry and it has increased upto 30% from previous year

2014.

BETTER ECONOMIC CONDITIONS: If we talk about the Indian tourism

industry, the rise in the output is not only because if the foreign tourists but

the domestic tourism has also been spreading its wings and adding much

more to tourism industry. As the economic conditions has been getting better

from last decade and so people are now spending much on tours and

travelling.

SOCIAL FACTOR

Social factors have more or less a significant impact on Indian tourism industry.

Some of the social factors that I have analyzed, that effect tourism industry of India

are:

DEMOGRAPHIC CHANGES: Demographic trends describe the changes in

demographics in a population over time. In India majority of the population

is of the young people, who are willing to spend and to visit different parts

of the country, thus one of this social factor has helped in development of

tourism industry majority of population i.e, 50% is under the age of 23

years.

VAST CULTURE: As we all know that the India is country of various

religion and has oldest culture. India is often called subcontinent. The Indian

culture drives more and more foreigners to visit the country. The is so much

vastness in Indian culture and demographics that the tourists find it better to

visit country like India as compared to any other country as they find various

and vast cultures in India.

HEALTHIER LIFESTYLE: India provides trends to the healthier lifestyle,

one of the biggest example is of YOGA. Most of the foreign tourist also visit

India because of this purpose as they find new and better ways that could

keep them healthy in their day to day lifestyle.

LANGUAGE: The Indian population is also good at speaking English

language, so this factor plays an indirect part in the upliftment of the tourism

industry. The foreigners do not find it much difficult to convey themselves

to the people.

MEDICAL TOURISM: Medical tourism has emerged in India from 1995,

the medical industry is driving more and more foreigners to come to India

for their treatment. India is cheap at medical procedures and technologically

advanced than the other countries. Around 1.5 lacs of tourist visited India

just for medical purposes, which generated $300 million alone .Thus this one

technological factor is attracting more and more crowd to India.

TECHNOLOGICAL FACTOR

Technology always plays a vital role in any sector, so it has also played its part in

tourism industry. Some of the major technological factors that affect the industry if

tourism are as under:

IT SECTOR: IT sector is one of the sector in which India is getting

advanced day by day. It is driving more and more foreign nationals and

tourist to our country as its providing some job opportunity to them, which

in turn makes rise in growth of the tourism sector. There are many IT parks

in India and many IT hubs which techno savvy people from abroad visit to

learn new things.

ENVIRONMENTAL FACTOR

Environment is the main part of our lives that affect us directly. Environment

analysis is necessary for tourism industry as it’s dependent on environment.

Environment factor that has impact on tourism industry of India are:

GO GREEN IDEOLOGY: Go green ideology is one of the major steps taken

by our government for the preservation of environment. This ideology states

that more and more trees should be planted and less consumption of fuel

should be done. This affects tourism industry directly as better environment

will drive more crowd to the country.

GLOBAL WARMING: Global warming is one of the issues of concern of

the whole world. Global warming is effecting the tourism of India as glaciers

of Himalaya and the various hill stations in the Jammu and Kashmir and in

Himachal Pradesh are facing trouble because of global warming as the

temperature and weather conditions are changing their dramatically.

SAVE TIGERS INITIATIVE: Tiger saving initiatives are also taking a pace,

because royal Bengal tiger is world famous. People come from different

countries to visit the national parks like KAZIRANGA etc, the tigers are the

main attraction to the tourists, so government is taking initiative to save

tigers.

LEGAL FACTOR

Legal factors of any country have an impact on its tourism. Various laws and acts

have direct relationship with the rise and fall in the rate of tourism. Some of the

legal factors that have impact on our tourism industry are given as under:

TAX EXEMPTION: The scheme and laws like tax exemption help to

develop the tourism industry. The tax exemption laws like, 50% of profit

derived by travel agents and tours operators will only be taxed. Such legal

schemes are helping a lot in betterment of tourism.

INCREDIBLE INDIA: One of the aggressive advertisement campaign by

tourism department is the INCREDIBLE INDIA, it is a advertisement

scheme for which the government pays the money. Many banners and

advertisement on various channels are shown, by this the ministry of tourism

tries to show various great places which can be visited in India.

LOW SPENDERS: Apart from the above stated schemes one of the legal

drawbacks is that Indian government does not spend much on the

development and upliftment of tourism because of which tourism industry is

not getting the utmost best channel for performing the best.

FARES: Government also provides the facilities of the partly low fare to the

foreigners in the railways as well as in other services to show the kind

treatment and hospitality to the foreigners, this will generate the word of

mouth publicity of the tourism industry which inturn is the positive sign of

legal factors.

VALUE CHAIN OF THE TOURISM SECTOR

Identified the following correspondences the supporting activities & primary

activities in the tourism company:

SUPPORT ACTIVITIES:

Infrastructure includes secretarial and accounting

Human resource management includes recruitment, selection, hiring,

training and staff development agency regarding work with customers,

motivating them and so on; they are of particular importance because for

tourism, the human factor is predominant.

Technological development is linked to the tourism product design and

design technology travel

Supplies include agency relationships with suppliers.

PRIMARY ACTIVITIES:

Inbound Logistics includes the activities of receiving, collecting and

analyzing the bids received from the tourism service providers or tour

operators.

Operations include the design and preparation of the tourism product, hire

cars with or without drivers, plane and bus ticket reservation, end health

insurance and the Green Paper, providing tourist information.

Outbound logistics involves gathering tourism products developed by the

company (or coming from tour operators) and their distribution to partner

agencies and correspondents.

Marketing and sales means studying the local tourist market, promote

products and services included in the offer and sale of the tourism product.

After-sales services consist in evaluating post-sale includes the following

activities: the drafting questionnaires, conducting surveys, customer file

management, monitoring of sales, management complaints from clients.

Value chain for tourism companies I identified the activities can be

outsourced by the firm, i.e. those activities that need to be improved. The

activities can be outsourced by the companies whose cost disadvantage or

those activities that do not contribute to the differentiation of the tourism

product attributes. On the other hand, the companies needs to improve its

own activities that can bring savings or activities that generate tourism

product attributes perceived as unique by customers.

TOP 5 COMPANIES OF THE SECTORS 1. Cox & Kings Ltd

The first most popular travel company in India is Cox and Kings Ltd. The

company has been present in the country for a while now and it is first choice of a

customer who wants to book their tour and packages.

Travel Packages: Duniya Dekho, Flexi Hol, Bharat Dekho, Luxury

Escapades, Summer holidays, Rail Europe Holidays, Instant Travel Packages

etc

Head Office: Mumbai, Maharashtra

Website: www.coxandkings.com

2. India Tourism Development Corporation Ltd (ITDC)

The second travel company that we would like to include in our list is India

Tourism Development Corporation Ltd. It is a public sector company founded in

year 1966. Company has 76 crores in equities.

Travel Packages: Travel across the country and book hotels at cheap rates.

Book Ashoka Hotels.

Head Office: New Delhi, India

Website: www.theashokgroup.com

3. Thomas Cook Ltd

The third company is Thomas Cook Ltd and it is a private owned enterprise. It

offers various packages in the country and around the world. It is an UK based

travelling company with a branch in India.

Travel Packages: Asia Group Tours, India Holidays, Personalized holidays,

Europe Group Tour etc

Head Office: Mumbai, India

Website: www.thomascook.in

4. Make My Trip

The fourth travelling company in our list is Make My Trip. This an online

company where you can book your travel. It is India number one web portal

founded in year 2000.

Travel Packages: For honeymoon, adventure, beach, off beat, shopping to

Europe, Singapore, and Thailand

Head Office: Gurgaon, Haryana, India

Website: www.makemytrip.com

5. SOTC Tours and Travel

The fifth traveling company is SOTC tours and travel. SOTC was acquired by

Kuoni travels in the year 1996.

Travel Packages: Customized Holidays, Escorted group holidays, India

Holidays, Box holiday, Corporate tours etc

Head Office: Mumbai, Maharashtra

Website: www.sotc.in

CONCLUSION Indian tourism industry the travel and tourism sector holds strategic importance in

the Indian economy providing several socio economic benefits. Provision of

employment, income and foreign exchange, development or expansion of other

industries such as agriculture, construction, handicrafts etc. are some of the

important economic benefits provided by the tourism sector. In addition,

investments in infrastructural facilities such as transportation, accommodation and

other tourism related services lead to an overall development of infrastructure in

the economy.

INDUSTRY OVERVIEW IN SHORT

Size of the Industry

5 million annual foreign tourist arrivals and 562 million domestic tourism visits.

Output per annum

Increased 7 % per annum

Percentage in world market

6.5% share

Market Capitalization

6.23% of GDP