tourism industry in kerala india

8/6/2019 Tourism Industry in Kerala India

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KERALATHE IMPACTOFTRAVEL&TOURISM

ON JOBSANDTHE ECONOMY


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CHAIRMAN:

Sir Ian Prosser

Chairman

InterContinental Hotels Group

VICE CHAIRMEN:

Donald Carty

Chairman & CEO

American Airlines

Jean-Marc Espalioux

Chairman of Management Board& CEO

Accor

Andr Jordan

Chairman

Lusotur SA

Jonathan S Linen

Vice Chairman

American Express Company

Vincent A Wolfington

Chairman

Carey International, Inc

EXECUTIVE COMMITTEE:Peter Armstrong

President & CEO

Rocky Mountaineer Railtours

Sebastin Escarrer

Vice Chairman

Sol Meli

Edouard Ettedgui

Group Chief Executive

Mandarin Oriental Hotel Group

Maurice Flanagan CBE

Group Managing Director

The Emirates Group

Michael Frenzel

Chairman

TUI AG

David House

Group President, Global Network

and Establishment Services

American Express Company

Richard R Kelley

Chairman

Outrigger Enterprises, Inc

Geoffrey JW Kent

Chairman & CEO

Abercrombie & Kent

J W Marriott, Jr

Chairman & CEO

Marriott International, Inc

David Michels

Chief Executive,

Hilton Group plc

Hilton International

Curtis Nelson

President and COO

Carlson Companies

PRS Oberoi

Chief ExecutiveThe Oberoi Group

Henry Silverman

Chairman, President & CEO

Cendant Corporation

Jonathan Tisch

Chairman & CEO

Loews Hotels

Brett Tollman

Vice Chairman

The Travel Corporation

GLOBAL MEMBERS:

Akbar Al Baker

CEO

Qatar Airways

Giovanni Angelini

CEO & Managing Director

Shangri-La Hotels & Resorts

David Babai

Chairman

Gullivers Travel Associates

Phil Bakes

Chairman & CEO

FAR&WIDE Travel Corporation

Henrik Bartl

Head of International HotelFinancing

Aareal Bank AG

Gordon Bethune

Chairman of the Board & CEO

Continental Airlines

Paul Blackney

President & CEO

Worldspan

Richard Brown

Chief Executive

Eurostar Group

Rgis Bulot

Chairman of the Board

Relais & Chteaux

Marilyn Carlson Nelson

Chairman & CEO

Carlson Companies

Alun Cathcart

Deputy Chairman

Avis Europe plc

U Gary Charlwood

Founder,Chairman & CEO

Uniglobe Travel (International)

Inc

Jennie Chua

Chairman & CEO

Raffles International

Hotels & Resorts

David Clifton

Managing Director,

Europe & Asia

Interval International

Glen Davidson

Senior VP,Worldwide Travel

Insurance & Related Services

American InternationalGroup Inc

Lloyd Dorfman

Chairman & Chief Executive

The Travelex Group

Rod Eddington

Chief Executive

British Airways plc

Mathias Emmerich

President & CEO

Rail Europe Group, Inc

Manuel Fernando Esprito Santo

President

Esprito Santo Tourism

Laurence Geller

Chairman & CEO

Strategic Hotel Capital

Henri Giscard dEstaing

Chairman & CEO

Club Mditerrane

Maurice H Greenberg

Chairman & CEO

American International

Group,Inc

Richard Helfer

Raffles International

Hotels & Resorts

James Hensley

President

Allied Europe

James Hogan

President and Chief Executive

Gulf Air

Stephen Holmes

Vice Chairman

Cendant Corporation

Raimund Hosch

President & CEO

Messe Berlin GmbH

Joseph Humphry

CEO

Travelweb LLC

Xabier de Irala

Chairman & CEO

Iberia, Airlines of Spain

Nuno Trigoso Jordo

President & CEO.

Sonae Turismo Gesto

e Servios SA

Sol Kerzner

Chairman & CEOKerzner International Ltd

Nigel Knowles

Managing Partner

DLA

Krishna Kumar

Managing Director

The Taj Group of Hotels

Hans Lerch

President & CEO

Kuoni Travel Holding Ltd

Manuel Martin

PartnerCyberDodo Productions Ltd

Paul McManus

President & CEO

The Leading Hotels of the World

David Mongeau

Vice President

CIBC World Markets

Alan Mulally

Executive Vice President

The Boeing Company

John M Noel

President & CEO

The Noel Group

Tom Nutley

Chairman

Reed Travel Exhibitions

Alan Parker

Managing Director

Whitbread Hotel Company

Jean Gabriel Prs

President & CEO

Mvenpick Hotels & Resorts

Dionsio Pestana

Chairman

Group Pestana

Stefan Pichler

Chairman & CEO

Thomas Cook AG

Fernando Pinto

CEO

TAP Air Portugal

David Radcliffe

Chief Executive

Hogg Robinson plc

Jay Rasulo

President

Walt Disney Parks & Resorts

Kurt Ritter

President & CEO

Rezidor SAS Hospitality

Peter Rogers

President & CEO

Diners Club International

Carl Ruderman

Chairman

Universal Media

Bruno Schpfer


Mvenpick Hotels & Resorts

Robert Selander

President & CEO

MasterCard International

Per Setterberg

CEO

Global Refund Group

Eric Speck

Executive Vice President &

Chief Marketing Officer

Sabre Holdings Corporation

Barry Sternlicht

Chairman & CEO

Starwood Hotels & ResortsWorldwide, Inc

Ron Stringfellow

Executive Chairman

Southern Sun Group

Lalit Suri

Chairman & Managing Director

Bharat Hotels Ltd

Ian Swain

Chairman & CEO

Swain Travel Services Inc

Kathleen Taylor

President,

Worldwide Business Operations

Four Seasons Hotels and Resorts

Jos Antonio Tazn

President & CEO

Amadeus Global Travel

Distribution

Jeffrey Toffler

Chairman

Coventry Partners

Mustafa Trkmen

CEO & Managing Director

Enternasyonal Tourism

Investments, Inc

Patrice VinetPartner

Accenture

Trevor de Vries

Deputy Managing Director

Mondial Assistance Group

Jurgen Weber

Chairman

Lufthansa German Airlines

Peter Yesawich

Managing Partner

Yesawich, Pepperdine,

Brown & Russel

HONORARY MEMBERS:

Lord Marshall of Knightsbridge

Chairman

British Airways plc

Sir Frank Moore,AO

Chairman

Taylor Byrne Tourism Group

Frank Olson


The Hertz Corporation

Grard Plisson

Co-Chairman, Supervisory BoardAccor

Tommaso Zanzotto

President

TZ Associates Ltd

CHAIRMAN EMERITUS:

James D Robinson III

General Partner

RRE Ventures

IMMEDIATE PAST

CHAIRMEN:

Harvey Golub

Retired Chairman & CEO

American Express Co

PRESIDENT:

Jean-Claude Baumgarten

Correct as at April 23, 2003

2003 WORLD TRAVEL & TOURISM COUNCIL

1-2 QUEEN VICTORIA TERRACE.SOVEREIGN COURT.LONDON E1W 3HA. UNITED KINGDOM

TEL: +44 (0) 870 727 9882 or + 44 (0) 207 481 8007 FAX: +44 (0) 870 728 9882 or + 44 (0) 207 488 1008 [email protected] www.wttc.org


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WTTC is delighted to have collaborated with the Government of Kerala

to produce this report the first simulated Tourism Satellite Account

(TSA) for an Indian state. Kerala is also one of the first state/provincial

governments in the world to quantify the far-reaching contribution of

Travel & Tourism to economic growth and employment thanks to the

implementation of this new accounting concept, approved by the United

Nations Statistical Commission.

This report estimates the current performance of Keralas Travel &

Tourism and provides forecasts based on the most recent national and

international data fed into econometric models developed by WTTCs

research partner, Oxford Economic Forecasting. It quantifies all aspects of

Travel & Tourism demand, from personal consumption to business

purchases, capital investment, government spending and exports. It then

translates this information into economic concepts of production,such as

gross state product and employment, which can be compared with other

industries and the economy as a whole to provide credible statistical

information that will assist in policy and business decision processes.

The message from this report is surprisingly positive. Travel &

Tourism is already one of the highest priority industries and employers

for the Kerala Government. Demand growth in Kerala is the highest in

the world and is projected to increase by 11.4 per cent per annum over

the coming decade.

However, in order to manage the projected demand, WTTCs

research highlights the need for Kerala to address mission-critical issues

such as tourism policy planning, investment incentives, infrastructure

development, and marketing and promotion. In addition, sustainable

tourism development will depend on preservation and maintenance of

the states fragile ecosystem and the provision of facilities to train the

huge manpower required to adapt to the growth in demand.

We hope that, by raising awareness of the enormous potential of

Travel & Tourism in Kerala, this report will act as a catalyst, encouraging

industry and government to work together to create the conditions

necessary to realize this potential.

THE WORLD TRAVEL & TOURISM COUNCIL (WTTC) IS THE BUSINESS

LEADERS FORUM FOR TRAVEL & TOURISM, WORKING WITH

GOVERNMENTS TO RAISE AWARENESS OF THE IMPORTANCE OF THE

WORLDS LARGEST GENERATOR OF WEALTH AND JOBS.

With chief executives of more than 100 of the worlds leading companies in membership,

WTTC has a unique mandate and overview on all matters related to success in Travel &

Tourism.

The World Travel & Tourism Council would like to express its sincere gratitude to the Members and secretariat of the WTTC India Initiative who have contributed their time,

effort and resources to this and many other important India projects. A complete list of WTTC India Initiative Members can be found on the inside back cover of this report.

Jean-Claude Baumgarten

President, World Travel & Tourism Council

Yogesh Chandra

Secretary General,WTTC India Initiative


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EXECUTIVE SUMMARY____________________________________________________________________________ 4

ECONOMIC IMPACT_________________________________________________________________________________________ 6

GROWTH____________________________________________________________________________________________________ 7

SUMMARY OF KEY TRENDS___________________________________________________________________________________ 9

KERALAS TRAVEL & TOURISMOVERVIEW OF CURRENT TRENDS AND DEVELOPMENTS_____________________________________________________ 11

TRAVEL & TOURISM SATELLITE ACCOUNTTSA CONCEPTS & STRUCTURE_______________________________________________________________________________ 14

TRAVEL & TOURISMS ECONOMIC IMPACT ___________________________________________________________________16

TSA HIGHLIGHTS____________________________________________________________________________________________ 18

THE POLICY FRAMEWORK ____________________________________________________________________21

APPENDIX

SATELLITE ACCOUNT TABLES ________________________________________________________________________________ 26

CONTENTS

Use of material is authorized, provided the source is acknowledged


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The decision to develop a tourism satellite account

(TSA) for Kerala was taken in June 2001 in an attempt

to explore the true potential of Keralas tourism product.

The TSA research was conducted in December 2001

and was based on data collected in the state at that time.

Kerala became WTTCs first partner state in India

in 2000. In a communication to A K Antony, Chief

Minister of Kerala, Jean-Claude Baumgarten, President

of WTTC, said:

We recognize that Kerala has tremendous potential for

Travel & Tourism.This partnership is designed to initiate and

strengthen a cohesive set of strategic policies to champion theinterest of Indias strongest economic growth sector and creator

of employment We look forward to actively working with

you to strengthen tourism in your beautiful state and to make

it the foremost provider of income and jobs in the coming

years.

A late-comer to tourism, Kerala is in many ways in

a fortunate position, since it has the opportunity of

learning from the mistakes of other destinations. In

particular, it needs to understand how to develop the

enormous potential of its tourism product without

over-exploiting its natural assets.Considerable care must

be taken to ensure that growth achieves a healthy

balance between business imperatives, the protection of

cultural heritage and environment, and the well-being

of local communities.

As is evident from the 1995 Kerala Tourism Policy

initiative, the state has strong support from government,

which is anxious to protect Keralas heritage and

welcomes the advice and expertise that will help it to

achieve this. Nevertheless, while there is no doubt that

Travel & Tourism already drives Keralas economy in

terms of both employment and business opportunities

a number of challenges must be addressed if it is to

achieve its enormous potential as a catalyst for future

economic and social development across the whole of

the state.

If managed effectively,Travel & Tourism can be an

important catalyst for the development of other

economic sectors within the state, such as

manufacturing, construction and the service industries.

It can also help to protect Keralas primary assets, namely

its largely unspoilt natural and cultural environment.The

government has already taken steps to establish a

working partnership with the private sector.This will

facilitate harmonization of the two sectorsdevelopment

targets so that they remain complementary.Keralas Travel & Tourism directly contributes 3.7

per cent of gross state product (GSP) and 3.0 per cent

of jobs. If its impact on the broader economy is taken

into consideration,Travel & Tourism generates as much

as 7.7 per cent of GSP and 6.2 per cent of total

employment. Visitor exports (tourism receipts from

international and ex-Kerala Indian visitors including

spending on transport) are even more impressive in

terms of share at 14.3 per cent of total exports.

Over the next ten years, the average annual growth

in visitor exports is forecast at 13.8 per cent, and the

growth in Travel & Tourism economy GSP and

employment will be 10.7 per cent and 10.9 per cent

respectively, according to WTTC/OEF. Yet to ensure

these growth levels are achieved, the Kerala Government

must place a much higher priority on Travel & Tourism

than is the case at present.Of key concern is the fact that

government expenditures allocated to providing Travel

& Tourism services to visitors, travel companies and the

community at large are extremely low.

The different measures recommended in this

report are intended to set the stage to help ensure the

larger rewards that Travel & Tourism can bring over the

short, medium and longer term.

THE IMPORTANCE OF TRAVEL & TOURISM TO KERALASECONOMY IS INDISPUTABLE AND CURRENT FORECASTS

PROJECT A VERY ROSY FUTURE FOR THE INDUSTRY.

NEVERTHELESS, CARE MUST BE TAKEN TO ENSURE THAT

FUTURE TOURISM DEVELOPMENT IS SUSTAINABLE, AND

THAT KERALA ATTRACTS THE RIGHT KIND OF TOURISM

WITH BENEFITS FOR ALL STAKEHOLDERS.

EXECUTIVESUMMARY


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ECONOMIC IMPACTIN 2003, KERALAS TRAVEL & TOURISM IS EXPECTED TO GENERATE RS102.2

BILLION (US$2.1 BN) OF ECONOMIC ACTIVITY (TOTAL DEMAND). THE

INDUSTRYS DIRECT IMPACT INCLUDES:

HOWEVER, SINCE TRAVEL & TOURISM TOUCHES ALL SECTORS OF THE

ECONOMY, ITS REAL IMPACT IS EVEN GREATER. KERALAS TRAVEL &

TOURISM ECONOMY DIRECTLY AND INDIRECTLY ACCOUNTS FOR:

378,584jobs representing 3.0% of total

EMPLOYMENT.

Rs39.3 bn(US$791.1 mn) of

GROSS DOMESTIC PRODUCT

(GDP) equivalent to 3.7% of total GDP.

788,551jobs representing 6.2% of totalEMPLOYMENT.

Rs81.8 bn(US$1.6 bn)ofGROSS DOMESTIC PRODUCT

equivalent to 7.7% of total GDP.

Rs

41.0bn

(US$826.9 mn) ofEXPORTS, SERVICES & MERCHANDISE

or 16.6% of total Exports.

Rs

18.1bn

(US$365.5 mn) ofCAPITAL INVESTMENT

or 7.8% of total Investment.

Rs

1.4bn(US$27.6 mn) of

GOVERNMENT EXPENDITURES

or a 1.0% share.

6


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GROWTHIN 2003,TRAVEL & TOURISM IN KERALA IS FORECAST TO SEE REAL GROWTH

OF:

OVER THE NEXT TEN YEARS, KERALAS TRAVEL & TOURISM IS EXPECTED TO

ACHIEVE ANNUALIZED REAL GROWTH OF:

11.4%in total TRAVEL & TOURISM GDP,

to Rs216.5 bn (US$2.9 bn) in 2013 for theindustry directly and 10.7% to Rs423.5 bn (US$5.6 bn)

for the Travel & Tourism Economy overall.

13.0%in TRAVEL & TOURISM INDUSTRY GDP,

to Rs39.3 bn (US$791.1 mn) for the industry directlyand 11.6% to Rs 81.8 bn (US$1.6 bn)

for the Travel & Tourism Economy overall(direct and indirect expenditures).

11.6%in TRAVEL & TOURISM EMPLOYMENT,to 1,135,660 jobs directly in the industry,and 10.9% to 2,221,370 jobs in the

Travel & Tourism Economy overall in 2013.

15.1%in TRAVEL & TOURISM EMPLOYMENT(direct impact only), to 378,584 jobs, and13.8% to 788,551 jobs in the Travel & Tourism

Economy overall (direct and indirect).

11.4%in total

TRAVEL & TOURISM DEMAND,to Rs563.9 bn (US$7.5 bn) in 2013.

12.2%in total

TRAVEL & TOURISM DEMAND,Rs102.2 bn (US$2.1 bn).

13.8%in VISITOR EXPORTS,rising to Rs239.1 bn(US$3.2 bn) by 2013.

8.3%in terms ofCAPITAL INVESTMENT,increasing to Rs75.1bn(US$1.0 bn) in 2013.

5.6%in terms ofGOVERNMENT EXPENDITURESto Rs4.4 bn (US$58.9 mn) in 2013.


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SUMMARY OFKEY TRENDS

s Travel & Tourism is one of the largest industries in

Kerala today, contributing Rs39.3 billion (US$791.1

million), or 3.7 per cent, to the gross state product

(GSP). This is projected to rise to 5.2 per cent, or

Rs216.5 billion (US$2.9 billion) of GSP, by 2013.

s Keralas international tourism receipts (excluding

transport payments) have risen rapidly over the past

decade. In 2000 the latest year for which detailed

statistics are available they totalled Rs5.3 billion(US$117 million).

s Visitor exports, meanwhile receipts from foreign

and ex-Kerala Indian visitors, including transport

payments have also shown extremely sharp annual

growth, and are expected to rise by more than 16 per

cent in 2003 to Rs35.2 billion (US$709.9 million).

s In 2001, Kerala recorded 5.2 million domestic

tourist arrivals,up 3.8 per cent on the previous year, and

accounting for some 2 per cent of total domestic tourist

arrivals in India. Average annual growth in domestictourism has been more than 18 per cent over the past

decade.

s International tourist arrivals totalled 209,000 in

2001 and are estimated to have grown by 11.4 per cent

in 2002 reaching 233,000, or a record 9.8 per cent of

Indias international arr ivals count. In the last ten years,

international arr ivals in Kerala have risen by an average

11.8 per cent per annum

s Capital investment by the government and private

sector in Keralas Travel & Tourism is expected to total

Rs18.1 billion (US$365.5 million) in 2003. Of this, a

very modest 2.5 per cent share is projected to come

from the states Annual Plan Allocation.

s Tourist arrivals in Kerala peak during the month of

January and are at their lowest during May. The first

quarter of the year accounts for the highest share of

foreign arrivals 31.3 per cent of the total annual count.

s Although air transport accounts for only a modest

8.7 per cent share of total arrivals in Kerala domestic

and international it is by far the preferred mode of

transport for foreign tourists.The two major ports of

entry are Thiruvananthapuram and Cochin, but Cochin

is grossly under-utilized at present.

s The opening of the new Konkan Railway

connecting Kerala to Maharashtra via Karnataka and

Goa will significantly boost tourism traffic to the

Kerala coast.

s The state highways are yet to be full developed,

with the result that over 85 per cent of domestic

travellers choose to travel by rail or use secondary roads

to reach Kerala.

s Kerala currently boasts 147 hotels that are officially

recognized by the Ministry of Tourism up from 122in 2000.The total number of rooms available is 5,365

(4,499 in 2000), of which more than 54 per cent are in

either the two- or three-star categories. The five-star

category includes 569 rooms, or a 10.6 per cent share

down from 15 per cent in 2000.

s Keralas coastal resorts of Cochin, Kovalam,

Thiruvananthapuram, Thekkady, Kozhikode and

Ernakulam account for more than 75 per cent of total

tourism traffic in Kerala.

sAlmost 600 kilometres of coastline include some

of the most attractive beaches in the country, such as

Kovalam, Varkala, Marari, Bekal and Kannur. Keralas

most popular backwater destinations are Kumarakom,

Alapuzha, Kollam, Kochi and Kozhikode, and its best-

known hill stations are Ponmudi, Munnar,Wynad and

Vagamon.

s Kerala has a number of well-known wildlife

reserves, including the Periyar Wildlife Sanctuary,

Eravikulam National Park, Thattekkad Bird Sanctuary

and Parambikulam Wildlife Sanctuary. These parks

remain relatively under-developed as tourist attractions.

s Health/wellness tourism has been one of the

strongest growth sectors over the past few years for

Kerala, which has attracted attention as the home of

Ayurvedic medicine an ancient Indian science of

natural medicinal herbs used for curative and relaxation

purposes.

s Kerala is extremely rich in terms of culture and

heritage the tradition of classical and folk arts in the

state dates back over a thousand years. Koodiyattom,

one of the oldest art forms of Kerala and the only

surviving form of the ancient Sanskrit drama was

recently selected by UNESCO for proclamation as an

oral and intangible world heritage.


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GODS OWN COUNTRYSandwiched between the Western Ghats and the Arabian Sea, the Indian

state of Kerala is blessed with unmatched natural diversity that provides

immense scope for tourism. Within its 38,863 square kilometres, this

virtual paradise boasts a wide range of tourist attractions from serene

beaches and tropical islands to coastal lagoons and quiet backwaters,

mist-clad hills stations, wildlife sanctuaries, unspoilt wilderness areas,

lush evergreen forests and a r ich cultural heritage with unique art forms.

In addition, a moderate climate, a level of literacy far above the rest

of India, and a long history of community harmony, make this region a

unique tourism destination, positioned by the Keralites themselves as

Gods own country.

In recent years Kerala has become known as the perfect haven forthe traveller in search of improved health/wellness and,notably, a deeply

relaxing and regenerating experience. This is thanks to the growing

popularity of Ayurvedic medicine an ancient Indian science of natural

medicinal herbs used for curative and relaxation purposes.The region is

also recognized for having developed a new form of physical yoga as a

means of rejuvenating mind and body.The extensive backwaters and lagoons are very popular attractions.

These offer the tourist a chance to escape from the mainland and

disappear into the wilderness on a houseboat, or to stay at a remote

hotel or resort far away from lifes daily realities.

RECENT TOURISM PERFORMANCEOne of the worlds fastest-growing tourism regions

In the ten years to 2001, domestic tourist arrivals in Kerala increased by

an average annual rate of more than 18 per cent, while arrivals from

abroad rose by 12 per cent per annum.These growth rates are well above

the world averages and corroborate the findings of the WTTC and

Oxford Economic Forecasting (OEF) research.

KERALASTRAVEL & TOURISMOVERVIEW OF RECENT TRENDS AND DEVELOPMENTS

QuilonKollam

CalicutKozhikode

CochinKochi

Trivandrum

MaheTellicherry

Kasaragod

Hosdrug

Cannanore

Badagara

Alleppey

Irinjalakuda

Kunnamkulam

Mavelikara

Attingal

Neyyattinkara

Ernakulam

Mattancheri

Punalur

Valparai

Changanacheri

Kottayam

Alwaye

Trichur

ChitturShoranur Palghat

Ponnani

KERALA

Bay ofBengal

I n d i a nO c e a n

I n d i a nO c e a n Andaman Islands

Nicobar Islands

MADHYAPRADESH

MAHRSHTRA

RJASTHN

HARYNA

PUNJAB

UTTARPRADESH

GUJART

ORISSA

WESTBENGAL

BIHR

MIZORAM

MEGHLAYA

SIKKIM

ASSAM

MANIPUR

ARUNACHALPRADESH

TRIPURA

ANDHRAPRADESH

KARNTAKA

TAMILNDU

KERALALAKSHADWEEP

GOA

PONDICHERRY

PONDICHERRY

PONDICHERRY

JAMMUAND

KASHMR

HIMCHALPRADESH

NG-LAND

A

N

D

A

M

A

N

&

NI

CO

B

Qandahr

Lahore

Faisalabad

Quetta

Sukkur

Amritsar

Srnagar

Delhi

Lhasa

Calcutta

Cuttack

Mandalay

Chiang

Chittagong

MadrasBangalore

Trivandrum

Jaffna

Bombay

chi

Ahmadbd

Bhopl

Ngpur

Hyderbd

Indore

Jamnagar

Knpur

LucknowJaipur

Patna

Rohtak

Gndhnagar

Chandgarh

Bhubaneswar

zawl

Shillong

Gangtok

Dispur

Imphl

Kohima

Agartala

Pondichery

Yanam

Kariakal

Kavaratti

Panaji

Shimla

Itnagar

Port Blair

Colombo

Kabul

Islamabad

New-DehliKathmandu Thimphu

Dhaka

Rangoun

C H I N A

BANGLADESH

MYANMAR

BHUTAN

HANISTAN

SRI LANKA

TAJIKISTANN.

ISTAN

MALDIVES

NEPAL

OCCUPIED BY INDIA

AND CLAIMED

BY PAKISTAN

OCCUPIED BY PAKISTAN

AND CLAIMED

BY INDIA

OCCUPIED BY CHINA

AND CLAIMED

BY INDIA


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During the 1990s, Kerala only recorded one year of decline in

domestic arrivals, in 1998. But growth picked up again sharply the

following year. Most domestic visitors travel to Kerala by rail or road;

air transport accounts for less than 7 per cent of arrivals. And a

significant share of visitors are non-resident Keralites, visiting friends

and/or relations.

A rising share of Indias foreign tourist count

In the ten years from 1991 to 2001, during which time Indias

international tourist arrivals doubled, Keralas more than tripled, with

the result that the southern Indian states share of the countrys total

arrivals increased from 5.6 per cent to 8.1 per cent. More significantly,

preliminary results for 2002 suggest that, while Indias arr ivals declined

by 6.6 per cent the second consecutive year of decline Keralas rose

by 11.4 per cent, taking its share to as much as 9.8 per cent of Indias

total count.

A major contributor to Keralas tourism growth in the last few years

has been the development and refinement of its Ayurveda tourism

product.The growing demand for health/wellness holidays whether to

test the Ayurvedic medicines claims to rejuvenate mind and body, or

simply for regeneration and relaxation has come from both Western and

Asian markets. Europe is an important source of tourism for India

accounting for 35 per cent of arrivals as against 40 per cent from within

Asia and 17 per cent from the Americas and Kerala has certainly

benefited from Indias reputation as a fascinating tourism destination, rich

in natural and cultural attractions.

But Keralas appeal for foreign tourists is also due to its own unique

attractions, such as its magnificent beaches and its quiet backwaters,

offering opportunities for houseboat cruising. Today, some houseboats

have all the creature comforts of a good hotel.

Tourism generates fairly low yields

Nevertheless, despite the enormous and rapid growth in tourism, a non-

negligible share of Keralas foreign tourists is fairly low yield. The

average spend per tourist per trip is around US$550.International tourism receipts totalled Rs5.3 billion (US$117

million) in 2000 the last year for which details are available nearly

19 times higher than in 1991,nine years earlier.

FUTURE TOURISM DEVELOPMENTGovernments increasingly important contribution

Kerala was a late starter in tourism. In 1950 the Department of Tourism

was created, but it only functioned as a State Hospitality Department

catering to important visitors and State guests.The real Department of

Tourism was not founded until 1960 and, even then, its initial role was

confined to managing state-owned guesthouses and providing

hospitality for important visitors. The state government did not

recognize tourism as an industry until the mid-1990s.

The first major step for tourism development in Kerala was taken

with the launch of the Kerala Tourism Policy in 1995. To quote the

policy itself:

Domestic tourist arrivals in Kerala, 1991-2001

Year Arrivals ('000) % annual change

1991 949 9.5

1992 994 4.8

1993 1,027 3.3

1994 1,284 25.0

1995 3,916 204.91996 4,403 12.5

1997 4,953 12.5

1998 4,482 -9.5

1999 4,888 9.1

2000 5,011 2.5

2001 5,200 3.8

Source: Kerala Tourism Development Corporation (KTDC)

Foreign tourist arrivals in Kerala and India, 1991-2002

India's Kerala's Kerala's

arrivals arrivals % annual share

Year ('000) ('000) change (%)

1991 1,236 69 na 5.6

1992 1,435 92 32.2 6.3

1993 1,443 95 3.9 6.6

1994 1,886 105 9.8 5.5

1995 2,124 143 36.7 6.7

1996 2,288 177 23.7 7.7

1997 2,374 182 3.2 7.7

1998 2,358 190 4.1 8.1

1999 2,482 202 6.4 8.2

2000 2,677 210 3.8 7.8

2001 2,537 209 -0.4 8.22002a 2,370 233 11.4 9.8

a Preliminary estimates

Source: KTDC;World Tourism Organization; Pacific Asia Travel Association

q

q

q

q

q

q

qq

q

1991 1992 1993 1994 1995 1996 1997 1998 1999 20000

1,000

2,000

3,000

4,000

5,000

6,000

0

20

40

60

80

100

120

Receipts (Rs mnb) q % annual change

aReceipts excluding transport paymentsbRs47.40 = US$1 as at May 1, 2003

Kerala's international tourism receiptsa, 1991-2000

Source: KTDC


15/3213

Ministry of Tourism with a total of 5,365 rooms.Many of these have

been developed with state money, but they are managed/operated by

the national/international groups.Indias Department of Tourism acts as

a coordinator, establishing broad collaborative agreements with groups

like Taj and Oberoi through Tourist Resorts (Kerala) Ltd, a subsidiary

of the KTDC.

The latest year for which a detailed breakdown of hotel

accommodation supply is available is 2000.As shown in the following

table, most development has been in the one- to three-star categories.

In 2000, 677 rooms (15 per cent of total supply) were in the five-star

and five-star-deluxe categories; this share has since dropped to 569

rooms,or less than 11 per cent.

Tour operators have also played a key role in the development of

tourism to Kerala by creating unique and innovative tour options.Most

of the leading tour operators in India such as Thomas Cook, SITA

and TCI feature Kerala prominently in their national and

international holiday brochures. A number of home-bred tour

operators, like Kerala Travels, Great India Tour Company and Pioneer

Travels, which have exhaustive knowledge of the state, have also

established themselves as niche players in Keralas Travel & Tourism

industry.

A joint Task Force, focusing on private-public sector partnership,

has been constituted with major industry players and other stakeholders

as members to act as advisors to the state government with regard to

tourism development activities.Keralite NRIs,who have also identified

tourism as a high growth sector for investment, are also involved.

The main aim is to serve as a guiding force to make maximum

use of Keralas tourism potential and also to make it an ideal

instrument for social and economic growth.

The policy was aimed at realizing Keralas tourism potential by

enhancing investment from the government and the private sector,

improving the tourism product and harnessing human resources more

efficiently.An additional goal was to measure the influx of foreign and

domestic tourists.The 1995 Tourism Policy remains the basis for much

of the states progress over the last eight years, whether in terms of

infrastructure and product development or tourism performance.

New beaches and backwater resorts have been opened up by the

Kerala Tourism Development Corporation (KTDC), which also

operates budget hotels,restaurants and cafs, as well as managing central

reservation systems and conducting tours. Other projects undertaken by

the KTDC include the development of Ayurveda as a unique selling

point and the development and promotion of nature-based and heritage

tourism.

In line with the 1995 Kerala Tourism Policy, the government is alsotaking measures to create an investment-friendly atmosphere and to

generate confidence among non-resident Indians (NRIs) and other

prospective investors.A Tourism Investment Agency is planned, and this

will act as a bridge between the investors and other institutions by

facilitating the procurement of land, electricity, communications and

other infrastructure facilities.

Other necessary measures identified in the policy either

underway or in planning include the setting up of a Heritage Home

Protection Scheme to provide incentives for residents of Kerala to

convert their traditional homes into tourist accommodation. In

addition to the tourist circuits recognized by the Government of India,

places seen as having particular tourism potential will be identified as

tourism attractions. Special incentives and subsidies will be given to

entrepreneurs investing in these areas.

The policy also highlights the need for a special Backwater

Tourism Plan, the training of specialized tour operators and other

human resource development, a proper marketing campaign, the

promotion of special fairs and festivals to attract tourists, and the

education of local communities to raise awareness of tourisms

importance and potential.

The critical role of the private sector

While governments role has changed over the years, becoming more

that of a catalyst, or a facilitator for the growth of the industry,Travel &

Tourism is basically a private sector activity.The industrys spectacular

performance over the past decade has largely been driven by private

sector investment and involvement, which have helped to spread

tourism to hitherto virgin areas in the state such as Marari, Vythiri,

Kalpetta, Mananthavady and Poovar.

Major national and international hotel chains including Taj,

Oberoi,Le Mridien, Best Western, Golden Tulip,Casino and Mahindra

have already established hotels and resorts in the state. Kerala currently

has 147 classified hotels ie hotels that are officially recognized by the

Keralas classified hotel and room capacity, 2000

Category No. of hotels No. of rooms

5-star deluxe 1 93

5-star 6 584

4-star 9 465

3-star 39 1,602

2-star 36 940

1-star 24 703

Heritage resorts 7 112

Total 122 4,499

Source: KTDC

The main aim is to make maximum use of

Keralas tourism potential and also to make it

an ideal instrument for social and economic

growth.


16/3214

TSA CONCEPTS& STRUCTURE

T&TEconomy

Employment

788.6

PropertyTaxes

IndirectTaxes

Imports

411.7

PersonalIncome Taxes

Travel & Tourism Economy GDP(Direct and Indirect)

1,647.8

Year 2003 (US$ mn, 000 Jobs)

Travel & Tourism Taxes

CorporateTaxes

PropertyTaxesT&T Industry

Employment

378.6

Personal Travel

& Tourism

757.6

Business Travel

81.9

GovernmentExpenditures(Individual)

8.4

VisitorExports

709.9

GovernmentExpenditures(Collective)

19.2

CapitalInvestment

365.5

Exports(Non-Visitor)

117.1

T&T Industry GDP (Indirect)409.3

Imports357.3

Travel & Tourism Economy Supply

2,059.5

Travel & Tourism Industry GDP(Direct Only)

791.1

Travel & Tourism Industry Supply

1,557.8

Travel & Tourism Economy Supply (Residual)

501.8

Travel & Tourism Demand

2,059.5

Travel & Tourism Consumption

1,557.8

OperatingSurplus -Subsidies

Indirect

Taxes

Comp. Depreciation


17/3215

Travel & Tourism Satellite Accounting research for Kerala reflects a

comprehensive simulation of the new international standard

adopted by the United Nations following the Enzo Paci World

Conference on the Economic Impact of Tourism (Nice, France,

June 1999), ten years of model development and TSA experience by

WTTC and Oxford Economic Forecasting (OEF), and application of

OEFs latest macro-economic forecasts.

TSA Economic Concepts

The Travel & Tourism Satellite Account is based on a demand-side

concept of economic activity, because the industry does not produce or

supply a homogeneous product or service like traditional industries

(agriculture, electronics, steel, etc). Instead, Travel & Tourism is an

industrial activity defined by the diverse collection of products (durables

and non-durables) and services (transportation,accommodations,food and

beverage, entertainment, government services, etc) that are delivered to

visitors.There are two basic aggregates of demand in the TSA:

I Travel & Tourism Consumption represents the value of

products and services that have been consumed by visitors. It is the

basic demand-side aggregate used to construct an explicitly defined

production-side industry equivalent for comparison with all otherindustries.Travel & Tourism Consumption includes:

Personal Travel & Tourism,more formally known as consumer

expenditures, which captures spending by Kerala residents on

traditional Travel & Tourism services (lodging, transportation,

entertainment, meals, financial services, etc) and goods (durable

and nondurable) used for Travel & Tourism activities.

Business Travel by government and industry, which mirrors

Personal Travel & Tourisms spending on goods and services

(transportation, accommodation, meals, entertainment, etc), but

represents intermediate inputs used in the course of business orgovernment work.

Government Expenditures (Individual) by agencies and

departments which provide visitor services such as cultural (art

museums), recreational (national park) or clearance (immigration/

customs) to individual visitors.

Visitor Exports, which include spending by international and

ex-Kerala domestic visitors goods and services.

II Travel & Tourism Demand builds on Travel & Tourism

consumption to include Travel & Tourism products and services

associated with residual components of final demand. It is used to

construct a broader economy-wide impact of Travel & Tourism.

The residual elements of Travel & Tourism demand are:

Government Expenditures (Collective) made by agencies

and depar tments associated with Travel & Tourism, but generally

made on behalf of the community at large, such as tourism

promotion, aviation administration, security services and resort

area sanitation services.

Capital Investment by Travel & Tourism providers (the private

sector) and government agencies (the public sector) to provide

facilities, equipment and infrastructure to visitors.

Exports (Non-Visitor) which include consumer goods sent

out of Kerala for ultimate sale to visitors (such as clothing,

electronics or petrol) or capital goods sent out of Kerala for use by

industry service providers (such as aircraft or cruise ships).

By employing input/output modelling separately to these two

aggregates (Travel & Tourism Consumption and Travel & Tourism

Demand), the Satellite Account is able to produce two different and

complementary aggregates ofTravel & Tourism Supply:the Travel &

Tourism Industry and the Travel & Tourism Economy.The former

captures the explicitly defined production-side industry equivalent,

direct impact only, for comparison with all other industries, while the

latter captures the broader economy-wide impact,direct and indirect,of

Travel & Tourism.Through this process, the Satellite Account is also able

to determine that portion of supply, which it Imports.

Next, the satellite account breaks down both aggregates of supply(Industry and Economy) into the direct and indirect impacts ofGross

State Product (GSP), the main descriptor of economic production, as

well as the various components of GSP (Wages & Salaries,

Indirect/Transaction Taxes, Operating Surplus, Depreciation

and Subsidies). Beyond the regular TSA accounts, a separate analysis is

also provided ofPersonal Income Taxes paid by Travel & Tourism

generated employment and Corporate and Property Taxes paid by

Travel & Tourism companies.

Finally,one of the most important elements of the Travel & Tourism

Satellite Account are the Employment results, which can now bequantified for the basic Travel & Tourism Industry and the broader Travel

& Tourism Economy.

T&T Industry Employment generally includes those jobs with

face-to-face contact with visitors (airlines, hotels, car rental,

restaurant, retail, entertainment, etc).

T&T Economy Employment includes T&T Industry

Employment plus those faceless jobs associated with:

Industry suppliers (airline caterers, laundry services, food

suppliers, wholesalers, accounting firms, etc).

Government agencies,manufacturing and construction of capital

goods and exported goods used in Travel & Tourism.

Supplied commodities (steel producers, lumber, oil production,

etc).


18/3216

Worldwide in 2003, it is expected to post US$4.5 trillion of economic

activity (Total Demand) and this is forecast to grow to US$8.9 trillion

by 2013.

Travel & Tourism Total Demand in India is expected to total Rs1,519.7

billion (US$30.1 billion) in 2003, growing to Rs6,736.3 billion

(US$88.8 billion) in 2013.

In Kerala, in 2003,Travel & Tourism is expected to post Rs102.2 billion

(US$2.1 billion) of economic activity (Total Demand), growing to

Rs563.9 billion (US$7.5 billion) by 2013.

In 2003, the Travel & Tourism Industry should contribute 3.7 per cent

to worldwide GDP. The broader Travel & Tourism Economy should

contribute 10.2 per cent to world GDP in 2003.

In India, the Travel & Tourism Industry is expected to post a GDP

contribution of 2.0 per cent in 2003, while the Travel & Tourism

Economy contribution will be 4.8 per cent.

In Kerala, the Travel & Tourism Industry is expected to contribute 3.7

per cent to GSP in 2003 (Rs39.3 billion, or US$791.1 million), rising to

Rs216.5 billion, or US$2.9 billion (5.2 per cent of total GSP), by 2013.

The Travel & Tourism Economy contribution should grow from 7.7 per

cent (Rs81.8 billion, or US$1.6 billion) to 10.2 per cent (Rs423.5

billion, or US$5.7 billion) over the same period.

Travel & Tourism is a high-growth activity, which is forecast to increase

its total economic activity by 4.6 per cent per annum worldwide in real

terms over the next ten years.

In India,Travel & Tourism is expected to post average annualized gains

of 8.8 per cent between 2004 and 2013.

For Kerala,Travel & Tourism economic activity is expected to grow by

11.4 per cent per annum in real terms between 2004 and 2013.

Travel & Tourism is human resource intensive, creating quality jobs

across the full employment spectrum. In 2003, one in 13.2 jobs is

generated by the Travel & Tourism Economy. The Travel & Tourism

Industry accounts for 2.6 per cent of global employment.Today there are

67.4 million Travel & Tourism Industry jobs and 194.6 million jobs in

the Travel & Tourism Economy, and these will rise to 83.9 million Travel

& Tourism Industry jobs and 247.2 million Travel & Tourism Economy

jobs by 2013.

Indias Travel & Travel Industry is expected to generate 11.1 million jobs

in 2003 (2.7 per cent of total employment), while the broader Travel &

Tourism Economy will account for 23.8 million jobs (5.8 per cent of

total employment).

In Kerala, in 2003,Travel & Tourism Economy employment is estimated

at 788,600 jobs, or 6.2 per cent of total employment. By 2013, this

should grow to more than 2.2 million jobs 15.0 per cent of total

employment.The 378,600 Travel & Tourism Industry jobs will account

for 3.0 per cent of total employment in 2003 and are forecast to rise to

1.1 million jobs, or 7.7 per cent of the total, by 2013.

Travel & Tourism is a major exporter, with inbound visitors injectingforeign exchange directly into the economy.

Travel & Tourism exports in India are expected to represent 5.9 per cent

of total exports in 2003, declining to 5.7 per cent in 2013.

In Kerala, exports are a fundamental component of Travel & Tourisms

contribution to GSP. Of Keralas total exports including foreign and

ex-Kerala Indian visitor exports, services and merchandise Travel &

Tourism is expected to generate 16.7 per cent (Rs41.0 billion, or

US$827.0 million) in 2003, increasing to Rs269.7 billion, or US$3.6

billion (22.4 per cent of total exports), by 2013.

Travel & Tourism is a catalyst for construction and manufacturing. In

2003, the private and public sectors combined are expected to spend

US$686.0 billion in new Travel & Tourism capital investment worldwide

9.6 per cent of total investment rising to US$1.3 trillion, or 10.1 per

cent of the total, in 2013.

Indias Travel & Tourism Capital Investment is expected to total Rs412.9

billion, or US$8.2 billion, in 2003 7.0 per cent of total capital

investment.

Year 2003 capital investment in Keralas Travel & Tourism Economy is

estimated at Rs18.1 billion (US$365.5 million), or 7.8 per cent of total

investment. By 2013, this should reach Rs75.1 billion (US$1.0 billion),

or 8.3 per cent of total capital investment.

Travel & Tourism is both a generator and receiver of government funds.

Globally, in 2003, Travel & Tourism is expected to generate US$843.6

billion of taxes 11.7 per cent of total taxation while channelling

US$224.1 billion of government expenditures, or 3.9 per cent of total

expenditures. By 2013, taxes should increase to US$1.5 trillion 12.4

per cent of the total and government spending on Travel & Tourism to

US$378.2 billion 4.1 per cent of total government expenditure.

In Kerala, government Travel & Tourism operating expenditures in 2003are expected to total to Rs1.4 billion (US$27.6 million), or 1.0 per cent

of total government spending. In 2013, this spending is forecast to rise

to Rs4.4 billion (US$58.8 million), or 1.1 per cent of total government

spending.

TRAVEL & TOURISMSECONOMIC IMPACTTRAVEL & TOURISM ENCOMPASSING TRANSPORT,ACCOMMODATION,CATERING, RECREATION AND SERVICES FOR VISITORS IS ONE OF

KERALAS HIGHEST PRIORITY INDUSTRIES AND EMPLOYERS.


19/3217

KERALA ESTIMATES AND FORECASTS2003 2013

Rs bn % of Total Growtha Rs bn % of Total Growthb

Personal Travel & Tourism 37.6 5.4 10.9 195.7 7.2 10.8

Business Travel 4.1 --- 17.4 19.1 --- 9.7

Government Expenditures 1.4 1.0 4.8 4.4 1.1 5.6

Capital Investment 18.1 7.8 7.7 75.1 8.3 8.3Visitor Exports 35.2 14.3 16.0 239.1 19.9 13.8

Other Exports 5.8 2.4 10.8 30.6 2.5 10.9

Travel & Tourism Demand 102.2 --- 12.2 563.9 --- 11.4

T&T Industry GDP 39.3 3.7 13.0 216.5 5.2 11.4

T&T Economy GDP 81.8 7.7 11.6 423.5 10.2 10.7

T&T Industry Employmentc 378.6 3.0 15.1 1,135.7 7.7 11.6

T&T Economy Employmentc 788.6 6.2 13.8 2,221.4 15.0 10.9

a2003 Real Growth Adjusted for Inflation (%); b2004-2013 Annualized Real Growth Adjusted for Inflation (%); cEmployment in '000 Jobs

INDIA ESTIMATES AND FORECASTS2003 2013

Rs bn % of Total Growtha Rs bn % of Total Growthb

Personal Travel & Tourism 748.3 4.5 7.9 3,286.1 5.4 8.7

Business Travel 91.5 --- 0.7 465.4 --- 10.4

Government Expenditures 32.5 1.0 3.8 101.8 1.0 5.1

Capital Investment 412.9 7.0 6.8 1,616.7 7.4 7.5

Visitor Exports 156.1 3.9 8.2 802.4 3.6 10.5

Other Exports 78.4 2.0 15.6 463.9 2.1 12.0

Travel & Tourism Demand 1,519.7 --- 7.4 6,736.3 --- 8.8T&T Industry GDP 529.4 2.0 6.1 2,153.4 2.2 7.9

T&T Economy GDP 1,274.6 4.8 6.5 5,180.2 5.3 7.9

T&T Industry Employmentc 11,093.1 2.7 1.0 12,659.9 2.7 1.3

T&T Economy Employmentc 23,839.8 5.8 1.3 27,684.9 6.0 1.5


WORLD ESTIMATES AND FORECASTS

2003 2013US$ mn % of Total Growtha US$ mn % of Total Growthb

Personal Travel & Tourism 2,135,860 9.9 2.2 3,862,270 10.8 3.7

Business Travel 488,765 --- 0.6 871,716 --- 3.7

Government Expenditures 224,058 3.9 2.8 378,172 4.1 3.0

Capital Investment 685,957 9.6 2.8 1,308,620 10.1 4.3

Visitor Exports 530,912 5.9 3.0 1,332,080 6.0 7.1

Other Exports 478,952 5.3 8.9 1,186,990 5.4 7.2

Travel & Tourism Demand 4,544,240 --- 2.9 8,939,730 --- 4.6

T&T Industry GDP 1,280,350 3.7 1.1 2,279,200 3.8 3.6

T&T Economy GDP 3,526,850 10.2 2.0 6,461,360 10.8 3.9

T&T Industry Employmentc 67,441.1 2.6 0.1 83,893.6 2.8 2.2T&T Economy Employmentc 194,562.0 7.6 1.5 247,205.0 8.4 2.4



20/3218

TOTAL DEMAND

Travel & Tourism in Kerala is expected to total

Rs102.2 billion of Total Demand in 2003, growing

12.2 per cent over 2002 levels, and is expected to

grow a further 11.4 per cent per annum over the

next decade.

The largest portion of Kerala Travel & Tourism

Demand is personal consumption by residents at

Rs37.6 billion followed by international and ex-

Kerala Visitor Exports of Rs35.2 billion.

EMPLOYMENTThe Travel & Tourism Industry in Kerala is

expected to yield directly 378,600 jobs in 2003, or

3.0 per cent of total employment. A total of

788,600 jobs (direct and indirect), or 6.2 per cent

of total employment are expected to be generated

across the broader spectrum of the Travel &

Tourism Economy.

Over the next ten years, Keralas Travel &

Tourism Industry is expected to create 757,100

jobs while the broader Travel & Tourism Economy

is expected to create 1.4 million new jobs.

GSP

The Travel & Tourism Industry in Kerala is

expected to produce directly Rs39.3 billion, or 3.7

per cent, of total gross state product (GSP) in 2003.

The broader Kerala Travel & Tourism Economy

(direct and indirect) is expected to produce Rs81.8

billion, or 7.7 per cent of total GSP.

The long-term expectations for Travel &

Tourism GSP are exceedingly positive - exceeding

10.7 per cent annualized real growth.

1990 1995 2000 2005 2010

0

50

100

150

200

250

300

1990 1995 2000 2005 2010

0

50

100

150

200

250

300

KERALATravel & Tourism Total Demand(Cumulative Real Growth, %)

KERALATravel & Tourism Economy Employment

(Cumulative Real Growth, %)

1990 1995 2000 2005 2010

0

50

100

150

200

250

300

KERALATravel & Tourism Economy GSP(Cumulative Real Growth, %)

Personal Travel & Tourism (37.6)

Business Travel (4.1)

Government Expenditures (1.4)Capital Investment (18.1)

Visitor Exports (35.2)

Other Exports (5.8)

1999 2000 2001 2002 2003 2004

0

200

400

600

800

1,000 Economy Industry

KERALATravel & Tourism Total Demand

(2003 Est Rs bn)

KERALATravel & Tourism Employment

('000 Jobs)

1999 2000 2001 2002 2003 2004

0

500

1,000

1,500

2,000 Economy Industry

KERALATravel & Tourism GSP

(1990 Constant US$ mn)

TSA HIGHLIGHTS


21/3219

CAPITAL INVESTMENT

In 2003, Travel & Tourism Capital Investment in

Kerala is expected to reach Rs18.1 billion or 7.8

per cent of total investment. By 2013, this figure is

expected to grow to Rs75.1 billion or 8.3 per cent

of total capital investment, representing ten years of

8.3 per cent annualized growth.

PERSONAL & BUSINESS

In 2003, Kerala is expected to generate Rs37.6

billion of Personal Travel & Tourism consumptionby residents, or 5.4 per cent of total personal

consumption. In Kerala, business travel in 2003 is

expected to total Rs4.1 billion.

Over the next decade (2004-2013), Personal

Travel & Tourism in Kerala is expected to grow at

an annual rate of 10.8 per cent, while Business/

Government Travel is forecast to grow at a slightly

lower annual rate of 9.7 per cent.

EXPORTS

Travel & Tourism Exports to international and ex-

Kerala visitors play a fundamental role in Keralas

Travel & Tourism business.

In 2003, Travel & Tourism services and

merchandise exports for Kerala are expected to

total Rs41.0 billion or 16.7 per cent of total

exports for the state.

Over the next decade, Visitor Exports are

expected to grow at an annual rate of 13.8 per cent,

one of the highest rates in the world.

GOVERNMENT

In 2003, national, state and local government

agencies in Kerala are expected to spend Rs1.4

billion of current operating funds for Travel &

Tourism. This represents 1.0 per cent of total

government expenditures, which are allocated to

providing individual and collective governmentTravel & Tourism services to visitors, travel

companies and the community at large.

1990 1995 2000 2005 2010

0

50

100

150

200

250

300

KERALATravel & Tourism Capital Investment


1999 2000 2001 2002 2003 2004

250

300

350

400

450

1990 1995 2000 2005 2010

0

50

100

150

200

250

300

1990 1995 2000 2005 2010

0

50

100

150

200

250

300

KERALAPersonal Travel & Tourism


KERALATravel & Tourism Exports


1990 1995 2000 2005 2010

0

50

100

150

200

250

300

KERALATravel & Tourism Govt Expenditures


1999 2000 2001 2002 2003 2004

0

250

500

750

1,000

1,250 Business Personal

1999 2000 2001 2002 2003 2004

0

250

500

750

1,000

1,250 Other Visitor

KERALAPersonal & Business Travel & Tourism


KERALATravel & Tourism Exports(1990 Constant US$ mn)

1999 2000 2001 2002 2003 2004

20

25

30

35

KERALATravel & Tourism Govt Expenditures


KERALATravel & Tourism Capital Investment



22/32


23/3221

Nevertheless, despite the growing recognition of Travel & Tourisms

importance, there seems to be a lack of appreciation of the full scope of

the industry and its potential as a catalyst for the development of other

areas of economic activity, such as agriculture, manufacturing or

financial services. Moreover, the full significance of Travel & Tourism as

an instrument of social transformation is still not yet fully understood.

This lack of appreciation of Travel & Tourisms potential means that

government policies could be drawn up without sufficient attention to

their impact on the industry. Government expenditures allocated to

providing individual and collective government Travel & Tourism

services to visitors, travel companies and the community at large are very

low, and there are inadequate incentives to encourage capital investment

by the private sector. Despite the bullish forecasts, neglect of this kind

could endanger the long-term success of Keralas Travel & Tourism.

The government is the primary owner of Keralas tourism product

and should therefore lead the way by encouraging continued investment,

building infrastructure and streamlining and coordinating tourism-

related policies and activities. However, the private sector also has a

critical role to play and needs to be proactive in developing quality

products and services geared to international and domestic demand.The

private sector should therefore continue to develop quality hotels, travel

agencies and transport services, while the government needs to relinquish

responsibility for areas that are best managed by private enterprise.

Against this background WTTC recommends that the Kerala

Government:

PLAN FOR THE FUTURELong-term tourism planning

In line with the strategy outlined in the 1995 Kerala Tourism Policy,

long-term development plans should be drawn up in consultation with

the municipal authorities and the private sector to ensure sustainable

tourism development, including optimal land-use planning.The plans

should be drawn up in accordance with the states Tourism Vision,

namely:

To make Kerala,Gods Own Country, an upmarket, high-quality tourism

destination through the rational utilization of resources with a focus on the

integrated development of infrastructure, conserving and preserving the heritage

and environment and enhancing productivity, income, creating employment

opportunities, alleviating poverty, thereby making tourism the most important

sector for the socio-economic development and environmental protection of the

State.

Establish Development Authorities for selected

destinations

Kerala has some of the finest beaches in India. However, unplanned

construction, over-population and overcrowding can considerably

diminish their appeal. One example is Kovalam beach which, due to its

proximity to Thiruvananthapuram,was one of the first tourist attractions

in the state. Kerala should ensure that newly developed beaches do not

suffer the same fate.

The 1995 Kerala Tourism Policy spoke of the constitution of

development agencies to ensure the integrated development of tourism

destinations. WTTC also notes that Bekal beach was identified as a

special tourism area by the Government of India and a development

authority was recommended for its planned expansion.

WTTC recommends that the Government of Kerala constitute

independent development agencies for each identified tourism

destination.These agencies should draw up integrated Master Plans for

their respective areas, using the services of world-class area planners,

architects and landscape artists.The development agencies would also be

responsible for the creation of the essential infrastructure such as

highways, interconnecting roads, power, water and sewage systems,

airports, railway stations and basic municipal services. Land should be

allotted to private developers of hotels, restaurants,motels, shopping and

commercial facilities, sports and entertainment, business and support

services.

The Development Authorities should involve the best

administrators in the state, and private sector investors should nominate

powerful representatives to sit on the working boards. The agencies

could raise funds from government and financial institutions, which

could be repaid through the sale of the developed land to investors.

THE POLICYFRAMEWORKPOLICY RECOMMENDATIONS

The development of the 1995 Kerala Tourism Policy is a clear indication that the

government of Kerala recognizes the contribution that Travel & Tourism can make to the

states economy, both in terms of wealth creation and employment generation.The steps

that have already been taken to harness the regions tourism potential are a further

reflection of the governments commitment to the industry.


24/3222

Encourage greater market and product

diversification

Keralas greatest tourism assets include its beaches, its inland water

systems and its nature/wildlife reserves. In order to tap the full potential

of the beaches and backwaters for tourism, it is essential to have luxury

boats, cruise boats, houseboats and yachts.These will help Kerala attract

high-yield foreign and domestic visitors.WTTC has noticed that utility

vessels geared for local transport are frequently used to transport tour ists

within the backwaters and along the coast.These modes of transport are

not appealing to the affluent tourist.

It is recommended that a concerted policy be adopted to permit

private entrepreneurs to import luxury sailing vessels from the Middle

East, Singapore and elsewhere. Financial assistance from institutions

should be encouraged and the central/state governments import taxes

should be significantly reduced to facilitate the process.

Market and product diversification should be a high prior ity for the

Kerala Government since it will enhance the destinations

competitiveness and improve added value and yield.The state already has

a number of different tourism products that have proved popular with

domestic and foreign visitors. As a start, these can be expanded and

improved.The following provide some examples.

Coastal cruises

Luxury cruise boats would ensure the development of coastal travel,

eventually linking Keralas beaches and inland water destinations to the

Lakshadweep and Maldives islands, as well as to Sri Lanka and other parts

of Southeast Asia. The development of marinas would, in turn, attractupmarket travellers visiting the region on their pr ivate yachts.

Luxury houseboats

Kerala has introduced the system of houseboats to harness the potential

of its backwaters. Unfortunately, quality houseboats are few and far

between.WTTC is aware that Indias finest houseboats,of every category,

are to be found on the Dal Lake in Kashmir. But, because of the poltical

problems in Kashmir,many of the houseboat builders and owners are out

of work,which causes enormous distress.

WTTC would therefore strongly recommend that the Government

of Kerala invite the houseboat builders/owners in Kashmir to create

similar houseboats and facilities in the backwaters of Kerala. In this way

two separate problems affecting tourism in different parts of the

country could be successfully addressed.

Water sports

WTTC has noted that facilities for water sports are relatively undeveloped

in Kerala. In order for the state to attract high-yield tourists to its beaches

and backwaters, private investment in water sports facilities should be

increased. What is needed is the full complement of facilities for every

type of water sports water-skiing, water scooters, para-sailing, airborne

sailing,marine fishing and scuba diving.These sporting facilities should be

listed as priority areas for investment by foreigners and Keralites alike.


25/3223

Ayurveda

Ayurveda including massages and the use of medicinal herbs for

relaxation and rejuvenation purposes has already become a major

attraction for tourists. The Kerala Government should ensure that all

centres practising Ayurveda are authorized by the Department of

Tourism and Health to function as such centres. More health/wellness

holidays could be packaged around Ayurvedic treatment and special

courses could be introduced to educate tourists about Ayurveda.

Keralas cuisine

Kerala boasts of some of the best seafood anywhere in the world the

Malabar prawn, for example, is a quality name signifying the wealth of

the states seafood attraction. Unfortunately, most of the good quality

seafood is exported and not available to tourists in Kerala. It is

recommended that special catering and culinary institutes be created to

develop Keralas cuisine. Steps should also be taken to ensure there is

sufficient seafood for consumption by local tourists.This would be an

added attraction for Kerala and would pay rich dividends for the future.

Traditional festivals

The traditional Kerala festivals are colourful social events that reflect the

vibrant nature of the land and its people. Boat races in the backwaters

are majestic and the traditional art forms in the state are spectacular.

Kerala also has a rich and singular cultural heritage. These festivals

should be seen as a high-priority attraction for marketing and

promotion.

HIGHLIGHT THE STRATEGICIMPORTANCE OF TOURISMRecognize Travel & Tourisms impact across

the broader economy

In 2003, expenditure by national, state and local governments on

Keralas Travel & Tourism will be around Rs1.4 billion (US$28.9

million) a mere 1 per cent of total government expenditures.Over the

next decade, governments contribution to Travel & Tourism is expected

to grow by only 0.1 percentage point to just 1.1 per cent of total

expenditure.This unwillingness by government to invest adequately in

Travel & Tourism clearly reflects its lack of appreciation of the industrys

importance as a generator of wealth and employment. It also

undermines Travel & Tourisms role as a catalyst for growth in other

areas such as retailing and construction,which would decline if demand

for Travel & Tourism were reduced.

WTTC recommends that the share of government expenditure in

Travel & Tourism be increased significantly over the next few years, so

that it is more in line with the forecast contribution of Travel & Tourism

to GDP and employment.The following shares highlight the greater

importance attributed to Travel & Tourism in some other

countries/states: Singapore, 9.1 per cent; Hong Kong, 7.4 per cent;

Malaysia, 5.1 per cent; Sri Lanka, 4.0 per cent; and China, 3.8 per cent.

Reconstitute Keralas policy-making system

In order to make Travel & Tourism the states primary economic driver,

it is necessary for the Chief Minister to be associated with the planning,

execution and maintenance of tourism projects. This is because the

development of tourism infrastructure involves decisions affecting a

variety of different disciplines such as public works, highways, power

and water systems, the constitution of development agencies, the

maintenance of law and order and security.Without the association of

the Chief Minister,decisions on a broad spectrum affecting tourism will

not be taken.

WTTC strongly recommends that a Cabinet Committee on

tourism be constituted under the chairmanship of the Chief Minister

and, with other important ministers as members. The Ministry of

Tourism would service the Cabinet Committee,whose decisions would

be final and would determine the execution of policy in this vital sector.

DEVELOP THE HUMAN CAPITALREQUIRED FOR GROWTHPlace a high priority on education and

training

The vast increase forecast in the manpower requirements of the tourism

industry will necessitate the creation of suitable training facilities, which

could equip the workforce with the skills required to handle

sophisticated foreign visitors. Special attention should be paid to placing

education and training at the forefront of Travel & Tourism

development, introducing it into the school curriculum and havingmid-career refresher courses to constantly upgrade skills.

Existing educational institutes, such as KITTS, KIHMS and

IHMCT, should be developed into institutions of excellence, and the

syllabi and training facilities of other institutions offering courses in

Travel & Tourism should be enhanced to ensure quality standards.

Continuous training programmes should also be organized to train the

various categories of people engaged in the tourism industry, such as

taxi drivers, cooks, waiters, guides, information office assistants, etc.

ENCOURAGE OPEN MARKETS ANDSKIES AND REMOVE BARRIERS TOGROWTHImprove airline access

One major hurdle to the rapid growth of tourism to Kerala is access.

The Government of India has a very restrictive air transport policy, and

existing bilateral air service agreements limit international flights to just

Thiruvananthapuram and Cochin, although a third airport at

Kozhikode is also considered to be an international one. At these

airports, foreign airlines are also restricted in terms of seat capacity as

determined by the national carriers.

As an example,Cochin airport has been in operation for four years


26/3224

now, but services to the airport are severely limited to a handful of

foreign carriers. Emirates is one airline that has been unsuccessful in

obtaining rights for a daily service to Cochin. A much more liberal

approach is necessary to tap the full potential of these gateways to Kerala.

Tax intelligently

One issue of considerable concern is that of tourism taxation.Travel &

Tourism-related taxes in the state of Kerala (eg taxes on hotels, liquor,

food and beverages) are higher than in any other state in India.

The Kerala Government needs to recognize that air-conditioned

rooms and imported liquor are not considered by foreign tourists to be

luxury items. Many visitors look on these items as necessities and ones

that are readily available in their everyday lives at home. It is also worth

noting that the lowering of these tax rates can make a destination a more

attractive option and, as a consequence, actually result in increased

revenue collection due to an increase in demand and lower tax evasion.

MATCH PUBLIC AND PRIVATEINFRASTRUCTURE TO CUSTOMERDEMANDIncrease government investment in Travel &

Tourism infrastructure

It has already been established that the Kerala Government allocates a

mere 1 per cent of its budget to Travel & Tourism for expenditures

related to the provision of individual and collective government services

to visitors, travel companies and the community at large. This is

extremely low. But, in addition, the governments allocation for

investment in Travel & Tourism infrastructure, as detailed in the State

Plan Allocation for tourism, is also low, as is the Central Assistance

Allocation for Keralas tourism. Although there has been a substantial

increase in percentage terms over the last few years, as the following

tables show, the allocation for tourism has remained stagnant in terms of

its share in the overall budgets.

Kerala would benefit enormously from a plan to progressively

increase the states contribution. Such a plan could be implemented over

a five-year period, with the state allocation for Travel & Tourism

gradually increasing to 5 per cent of the total budget.

Tourism taxes in Kerala

Luxury tax

Room rate:

Non air-conditioned 7.5%

Air-conditioned 15.0%

Sales tax

Food 9.2%

Imported liquor 100.0%

Local liquor 10.0%

Source: KTDC

Kerala needs to strengthen its overall infrastructure significantly

not only in the interest of tourism, but also for the general economic

development of the state. The inter-state highways, as well as roads

connecting tourism destinations, need to be upgraded to international

standards. Highways and roads have been developed all over the world by

private sector investors on a build,operate and transfer(BOT) basis, and

have been made economically viable through the introduction of toll

systems.Kerala needs to introduce toll roads to link tourism destinations

to airports and railway stations. This network of world-class highways

would allow Keralas numerous tourist attractions to be fully enjoyed.

Channel private sector investment

Much of the wealth of Kerala comes by way of remittances from its

industrious workforce based in the Middle East and Southeast Asia.The

Government of Kerala should try to channel the inward remittances to

strengthen the Travel & Tourism infrastructure in the state. Special

schemes could be devised incorporating tax incentives and other

assistance, whereby this money could become capital investment in

hotels,motels, restaurants,entertainment and tourism transport facilities.

There is an urgent requirement for different kinds of tourism

transport luxury coaches, air-conditioned cars, luxury boats, yachts

and speedboats.A drastic lowering of import duty and other incentives

would help to divert money to the development of these productive

tourism assets.

Keralas State Plan Allocation for tourism,

1995/96 to 2001/02a

Year Allocation (Rs mnb) % annual change

1995/96 173.0 na

1996/97 292.0 68.8

1997/98 360.0 23.3

1998/99 372.0 3.3

1999/00 360.0 -1.22000/01 460.0 27.8

2001/02 400.0 -13.0

a Fiscal years ended Mar 31 b Rs47.40 = US$1 as at May 1, 2003Source: KTDC

Central Assistance Allocation for Keralas tourism,

1995/96 to 2001/02a

Year Allocation (Rs mnb) % annual change

1995/96 21.0 na

1996/97 23.6 12.41997/98 27.7 17.4

1998/99 69.9 152.3

1999/00 112.5 60.9

2000/01 122.5 8.9

2001/02 140.0 14.3

a Fiscal years ended Mar 31 b Rs47.40 = US$1 as at May 1, 2003Source: KTDC


27/3225

FAVOUR TECHNOLOGICALADVANCEMENTE-marketing and distribution

In todays increasingly competitive global marketplace, there is a real

need for a strong leadership branding that optimizes resources, focuses

the myriad of interests public and private sector, state and local and

gets the attention of travellers.This will require particular attention to a

coordinated approach to internet marketing and distribution to

optimize Keralas visibility.

The Government of Kerala has already taken important steps in

developing an attractive and useful website, and this should be expanded

and enhanced so it becomes a fully fledged regional tourism destination

database. This should be carried out with partners from the private

sector, so as to improve distribution of Keralas tourism products and

help small and medium-sized enterpr ises develop e-marketing skills.

Support for local companies should also be provided so that they

can develop access to technology advances and compete more

effectively with suppliers in competing destinations.

PROMOTE RESPONSIBILITY INNATURAL, SOCIAL AND CULTURALENVIRONMENTSKerala has a fragile eco-system and its backwaters and coastal lagoons are

susceptible to pollution and overcrowding. In order to preserve its

precious tourist attractions, and ensure sustainable development in the

future, the Kerala Government should conduct carrying capacity

studies.

In addition, it should adopt the principles of ecological

preservation as outlined in Agenda 21, developed for the Travel &

Tourism Industry after the 1992 Rio Earth Summit by WTTC, the

World Tourism Organization and the Earth Council. WTTC also

recommends that:

s Clear policies and guidelines are developed for planned and

sustainable tourism expansion;

s The socio-economic, cultural and environmental benefits of Travel

& Tourism are spread equitably across the population in all parts of

the state; and

s The need for local community engagement and empowerment is

recognized.

Sustainability will need a balance of private initiative, economic

instrument and regulation.Global pr inciples should be reflected in local

action and market-based delivery mechanisms should be encouraged.

Micro-loans for local community-based sustainable tourism enterprises

should be provided as incentives, and pilot projects used to evaluate and

demonstrate local sustainability.

Increase branding through international

and/or national designations

Kerala is immensely rich in its unique art forms, culture and heritage.

The tradition of classical and folk arts in Kerala dates back over athousand years. Koodiyattom, one of the oldest art forms of Kerala, and

the only surviving form of the ancient Sanskrit drama, was recently

selected by UNESCO for proclamation as an oral and intangible world

heritage.

Kathakali, Mohiniyattam,Thullal, Theyyam, Thira, etc are unique

in their style and forms and the architectural monuments in the state

maintain a unique character. The state has also decided to hasten the

process for the preservation and conservation of these heritages. But it

could also consider developing and promoting a regional heritage

designation, with clearly defined criteria defined to support quality.Such a designation should result in increased funding from the

government for the development and promotion of identified areas of

particular heritage value.

One major hurdle to the rapid growth of

tourism to Kerala is access.


28/3226

1998 1999 2000 2001 2002E 2003E 2013P

Kerala Travel & Tourism - Rs bn

Personal Travel & Tourism 19.08 22.71 26.22 28.64 32.00 37.61 195.67

Business Travel & Tourism 2.88 3.40 3.77 3.47 3.27 4.07 19.10

Corporate 2.59 3.04 3.36 3.09 2.90 3.62 17.43

Government 0.29 0.37 0.41 0.38 0.36 0.44 1.67

Govt Expenditures - Individual 0.22 0.27 0.31 0.34 0.37 0.42 1.34

Visitor Exports 17.63 20.41 23.27 25.50 28.64 35.24 239.07

Travel & Tourism Consumption 39.82 46.80 53.57 57.95 64.28 77.33 455.17

Govt Expenditures - Collective 0.50 0.63 0.70 0.78 0.86 0.95 3.07

Capital Investment 10.02 11.64 13.04 14.20 15.88 18.14 75.13

Exports (Non-Visitor) 2.98 3.51 4.11 4.60 4.95 5.81 30.56

Travel & Tourism Demand 53.31 62.58 71.42 77.53 85.97 102.23 563.94

Travel & Tourism Industry Aggregates (Direct Impact Only)

Employment ('000) 272.71 210.94 241.54 290.20 328.82 378.58 1,135.66

Gross Domestic Product 20.90 24.68 27.31 29.49 32.79 39.27 216.52

Travel & Tourism Economy Aggregates (Direct and Indirect Impact)Employment ('000) 570.82 441.41 506.21 611.28 692.98 788.55 2,221.37


Note: Employment in 000 Jobs

T&T Accounts as % of National Accounts


Govt Expenditures 0.99 1.01 1.01 1.01 1.02 1.03 1.10


Exports 16.28 15.63 15.48 15.27 15.83 16.62 22.42

T&T Imports 7.54 7.76 8.41 8.59 8.71 8.97 11.59


Employment 2.23 2.35 2.45 2.56 2.70 2.98 7.68


Travel & Tourism Economy Aggregates (Direct and Indirect Impact)

Employment 4.68 4.91 5.13 5.38 5.68 6.20 15.02


Travel & Tourism Real Growth (% per annum, except 2013 = 10-year annualized)


Business Travel & Tourism 8.31 12.46 6.50 -10.72 -10.44 17.44 9.74

Govt Expenditures 15.06 20.83 7.09 7.30 5.27 4.81 5.62


Visitor Exports 15.26 10.22 9.56 6.27 6.97 16.05 13.78Other Exports -3.09 12.17 12.59 8.51 2.48 10.78 9.14

Travel & Tourism Consumption 13.63 11.93 10.02 4.91 5.62 13.47 12.18

Travel & Tourism Demand 10.14 11.79 9.70 5.27 5.59 12.17 11.45

SATELLITE ACCOUNT


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1998 1999 2000 2001 2002E 2003E 2013P



Employment 13.88 -22.65 14.51 20.14 13.31 15.13 11.61

Travel & Tourism Economy Aggregates (Direct and Indirect Impact)


Employment 10.73 -22.67 14.68 20.76 13.36 13.79 10.91

Kerala Travel & Tourism - US$ mn

Personal Travel & Tourism 462.48 527.44 583.54 606.95 659.94 757.60 2,610.78


Corporate 62.81 70.55 74.81 65.46 59.88 72.96 232.53

Government 7.07 8.52 9.12 8.13 7.49 8.96 22.28


Visitor Exports 427.42 474.09 517.69 540.26 590.74 709.86 3,189.74

Travel & Tourism Consumption 965.01 1,086.98 1,191.96 1,227.96 1,325.76 1,557.76 6,073.20

Govt Expenditures - Collective 12.02 14.62 15.60 16.44 17.69 19.20 40.98

Capital Investment 242.83 270.37 290.20 300.98 327.62 365.52 1,002.46

Exports (Non-Visitor) 72.16 81.45 91.41 97.41 102.04 117.06 407.77

Travel & Tourism Demand 1,292.03 1,453.42 1,589.17 1,642.78 1,773.11 2,059.54 7,524.41


Employment ('000) 272.71 210.94 241.54 290.20 328.82 378.58 1,135.66

Gross Domestic Product 506.67 573.28 607.69 624.80 676.37 791.11 2,888.93

Travel & Tourism Economy Aggregates (Direct and Indirect Impacts)

Employment ('000) 570.82 441.41 506.21 611.28 692.98 788.55 2,221.37

Gross Domestic Product 1,060.50 1,199.64 1,273.56 1,316.09 1,425.41 1,647.81 5,650.81

Travel & Tourism - 1990 Constant US$ mn

Personal Travel & Tourism 537.11 608.70 675.67 715.65 761.25 843.95 2,353.12



Visitor Exports 496.38 547.13 599.42 637.01 681.43 790.77 2,874.94

Travel & Tourism Consumption 1,120.72 1,254.44 1,

tourism industry in kerala india

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