white paper o ntourism

WHITE PAPER ON

AN INTEGRATED APPROACH FOR PROMOTION AN INTEGRATED APPROACH FOR PROMOTION OF INDIAN TOURISM OF INDIAN TOURISM

Prepared for THE BOMBAY CHAMBER FOR COMMERCE & INDUSTRY BUSINESS CONSULTING GROUP

309/310 Mhatre Pen Bldg, Senapati Bapat Marg, Dadar (West) Bombay 400 028 Phone : (22) 430 1745, 437 1823, 431 3914 Fax : (22) 430 1655 E-Mail : [email protected] Website : www.businessconsultinggrp.com

About Bombay Chamber

The Bombay Chamber of Commerce & Industry is one of the oldest Chambers of Commerce in the Country. The Bombay Chamber for over 165 years of its existence, since its inception in 1836, has been serving Trade & Industry. It is well respected for its balanced and studied approach to matters pertaining to development of trade and industry, promotion of government – industry inter-linkages and for pursuing radical trade policies. Bombay Chambers’ membership comprises predominantly the most of large and medium size companies from manufacturing and service sectors, leading banks and financial institutions and the multinationals having their corporate headquarters in Mumbai. The Chamber’s membership, therefore, contributes almost a quarter of India’s Gross Domestic Produce in manufacturing and service industries.

Bombay Chamber of Commerce & Industry 1 An Integrated Approach for Promotion of Indian Tourism

INTRODUCTION

The Bombay Chamber seeks to reflect the views, perceptions and interests of their constituents in a proactive and constructive manner. In recognition of its changing role, the Chamber initiated debate on various important issues, such as future direction of economic reforms and integrated approach for promoting of Indian Tourism. The Tourism Committee of the Bombay Chamber of Commerce and Industry therefore, engaged the services of Business Consulting Group to develop a White Paper on Indian Tourism The objective of the White Paper is to generate action in the Government and the Industry in terms of policy and operational initiatives that will help promote the growth of Indian tourism - inbound as well as domestic tourism. Several reports have lamented the low share of India in world tourism and have made meaningful suggestions. Nothing much has changed on the ground despite all that. It is expected that the Bombay Chamber’s White Paper which that offers practical direction for change will spur action for change and growth.

Bombay Chamber of Commerce & Industry

2

An Integrated Approach for Promotion of Indian Tourism

ACKNOWLEDGEMENT

. Bombay Chamber would like to express its gratitude and sincere thanks to the Sponsors of this White paper:

The Indian Hotels Co. Ltd. Thomas Cook (India) Ltd Kuoni Travel (India) Ltd. BCC&I Trust for Economic & Management Studies

Secretariat: Bombay Chamber of Commerce & Industry Mr. L.A.D’Souza, Executive Director Ms. Kavita Sharma, Deputy Director Bombay Chamber of Commerce & Industry Oficial Travel Agents Jet Airways India Pvt. Ltd. Consultants: Business Consulting Group Mr. Raj Nair, Chairman Mr. Utpal Ashar, Consultant

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ADVISORY COMMITTEE

Mr. R. K. Krishna Kumar, Managing Director, The Indian Hotels Co. Ltd. Mr. Ranjit Malkani, CMD, Kuoni Travel India Ltd. Mr. Adi Katgara, Chairman, Travel Corporation of India Mr. Ashwini Kakkar, MD, Thomas Cook India Ltd., Mr. Lalit Sheth, CMD, Shree Raj Travels, Mr. Reyaz Mama, Director, Ratan Mama Consultants Mr. Vishambher Shewakramani, Managing Director, Ras Resorts, Mr. Anil Kaul, General Manager, The Oberoi Hotels, Mr. Yogesh Dhawan, General Manager, The Regent Mumbai. Mr. Rajan Divekar, Director, A.F. Ferguson & Co., Mr. P.J. Crasta, Sr. General Manager, Jet Airways India Pvt. Ltd. Mr.Ajoy Misra, Sr. Vice President The Indian Hotels Co. Ltd. ( Chairman, Tourism Committee) Mr. Zubin Karkaria, Sr. Vice President & COO, Kuoni Travel India Ltd. ( Co-Chairman, Tourism Committee) Mr. U.K. Mukhopadhyay, Secretary,Department of Tourism, Maharashtra Mr. Ashish Kumar Singh, Managiong Director, MTDC Mr. M.M. Jain, Asst. Director, Govt. of India Tourism Office Mr. B.B. Gomre, Asst. Director Govt. of India Tourism Office, Mr. Alok Awasthi, Jt. Director, MP Tourism Development Corporation Mr. Bimlesh Kumar, Regional Manager, UP State Tourism Development Corporation


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CONTENTS

Executive Summary Action Plan - Government Action Plan - Industry Why India Needs Tourism Indian Tourism Industry - Growth Analysis An Integrated Strategy - Strategic & Operational Initiatives - Influence & Facilitate Tourist Decisions - Branding & Marketing Strategy - Facilitate Tourist Arrival, Stay & Movement - Tourism Infrastructure - Pricing & Taxation Organisational Mechanism for Development of Tourism

Bombay Chamber of Commerce & Industry 5

1 11 15 18 26 37 38 43 49 56 59 61


EXECUTIVE SUMMARY

Why India Needs Tourism Indian Tourism Industry - Growth Analysis - Factors Affecting Tourism Industry in India An Integrated Strategy : Strategic & Operational Initiatives Influence & Facilitate Tourism Decisions Branding and Marketing Strategy Facilitate Tourist Arrival, Stay & Movement Tourism Infrastructure Pricing & Taxation 1 2 4 5 6 7 8 9 10

Operational Mechanism for Development of Tourism


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EXECUTIVE SUMMARY

Why India Needs Tourism

• • Tourism is the largest sector in the worldwide exports of goods & services. At over $ 500 billion, it is larger than automotive, chemicals, fuels and every other sector. Recognise Enormous potential of the Hotel, Travel, Entertainment, Transport and other allied industries. As per WTTC, the travel and Tourism economy in India which includes all the above stated industries as well as supporting industries currently account for 17.4 million jobs in India or 5.8% of total employment. This has a potential to rise to 25 million jobs or 6.8% of total employment by 2010. Developing economies are benefiting more than developed economies because inbound travel dollars exceed outbound travel dollars for them, but in India’s case the travel account balance per year has declined from $ 1.5 billion in 1997-98 to $ 0.9 billion in 1999-2000 because the increase in forex outflow due to outbound travel is much higher than the increase in forex inflow on account of inbound travel. The total world tourist arrivals is 664 million tourists and the dominant destinations are Europe & America. South Asia gets a very small share. Only some part of it can be addressed by India because it is a long haul destination for the key countries and long haul tourism has only 18% share of the world tourism pie. International arrivals into any country depends upon the level of it’s International trade. India’s low level of international trade limits its inbound tourism potential further. But its ability to fully exploit the tourism potential will depend upon its ability to develop customer segment focussed strategies through co-ordinated approach by the government, hotel, airlines, tour operators etc. Other countries like Thailand, Brazil, Turkey, etc. demonstrated this. Tourism industry can boost India’s GDP and forex earnings significantly 7 An Integrated Approach for Promotion of Indian Tourism

•

•

•

•


EXECUTIVE SUMMARY

Indian Tourism Industry - Growth Analysis

• International tourists arrival in India was 2.66 mn according to published statistics, growing at 4% CAGR over the past decade but stagnated somewhat over the last 4 years. Though India’s earnings from inbound travel have shown a growth in rupee terms, they have stagnated in absolute dollar terms during the past 4 years. • In India, growing income over the years has led to an increase in consumption expenditure on recreation, education and cultural services, transport and communication increasing from 24% to 28%. This and the growth in disposable income has resulted in the total domestic tourist movement in India to more than double over a period of 7 years. Growth in disposable incomes is also one of the major factors responsible for increase in the number of outbound tourists from India. The number of outbound tourists will increase further, especially due to lack of availability of well developed and reasonably priced tourist destinations within the country. Tertiary benefits of tourism are huge. The trickle down benefits of the travel & tourism industry on the economy go beyond what is apparent. The Satellite Accounting figures of WTTC suggest that the $ 11.33 bn Travel &Tourism industry in India (2000) supported a $ 23.8 bn Travel & Tourism related economy. Unless the Government and Private sector come together and develop a clear strategy, India will continue to be ignored as an interesting long haul destination by leisure and business travelers and India will become, gradually one of the few developing countries with a negative travel account balance.

•

•


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EXECUTIVE SUMMARY

Factors Affecting Tourism Industry in India

• Leisure Tourists : India’s low leisure tourist numbers (inbound as well as domestic) could be attributed to: • Inadequate Promotion & Marketing Poor Infrastructure Restrictive Policies Other Obstacles

Business Tourists: India’s low business tourist numbers (inbound as well as domestic) could be attributed to: Inadequate Magnets to attract business groups and facilities for business conventions Attitude towards potential business investors Inadequate Promotion & Marketing Poor Infrastructure Restrictive Policies


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EXECUTIVE SUMMARY

An Integrated Strategy : Strategic & Operational Initiatives

• Put Tourism on the Concurrent List of the Constitution of India • Government should declare Tourism as a ‘Priority Industry’ like Information Technology • Government should increase outlay on Tourism - India spends only 0.9% of GDP on Tourism compared to 4-9% in most other countries. • Lay down a master plan to implement planned and phased development/ upgradation of infrastructure and areas of tourism potential with private sector participation • Policy initiatives for the same • Aimed at improving the operational efficiency by focussing on infrastructural constraints and optimising existing infrastructure with the available resources.


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EXECUTIVE SUMMARY

An Integrated Strategy : Influence & Facilitate Tourist Decisions

• • • • • Focus on select target countries, which account for most of the outbound tourists and most of the world tourism expenditure e.g. UK, USA, Germany, Japan, France, & Italy Need to have detailed market research data to identify socio-economic profile, their tourism needs, etc. For these countries deploy a country specific Push-Pull Strategy to influence their choice of holiday destination Target Non Resident Indians (NRIs) too because they are large in number and they can influence nonIndians to visit India Promotion through multiple channels. Several suggestions have been made in the report, ranging from Indian restaurants, airlines to creation of an interactive website for Indian tourism


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EXECUTIVE SUMMARY

An Integrated Strategy : Branding & Marketing Strategy

• Indian Tourism needs Branding - Several countries have specific themes to attract tourists and their entire marketing strategy and offerings are in sync with the theme. e.g. Land of Smiles (Thailand), 1% water, 99% fun (Mauritius), etc. The ‘Experience India’ project is a step in the right direction. A theme could emerge out of it. Develop ‘National Tourism Logo’ that can be used by industry players in their communication and publicity materials. Introduce the concept of ‘Debit Cards’ like prepaid Phone cards to facilitate tourist spending. ‘Interactive website’ which could be made to pay for itself through fees from industry participants Quality information dissemination through contemporary & innovative means using multiple channels e.g. Select Indian restaurants in target markets, airlines and other channels. Co-marketing/ Co-Selling with key travel operators Outsourcing promotion and marketing activities to private players based on target fulfillment criteria The product on offer need to be packaged for relevant customer segment in the target countries and the various industry participants in the value chain must co-ordinate their efforts to provide a seamless and consistent experience which is congruent with the theme.

• • • • • • •


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EXECUTIVE SUMMARY

An Integrated Strategy : Facilitate Tourist Arrival, Stay & Movement

• Visa procedures are seen as a hindrance. Countries competing with India for tourists provide visa on arrival (SriLanka, Maldives, Thailand, Nepal, Seychelles, etc.). India too should provide visa on arrival for certain categories of tourists/ for specific duration. Reputed inbound travel operators to be permitted to bring in group of tourists without any visa, subject to submission of guarantee by concerned operator By categorising the countries, India could do away/ facilitate visa requirements for certain countries Upgrade Tourism Infrastructure and address areas of prime concern (e.g. safety, security, language, cleanliness, hygiene quality of tour guides, etc.) in order to make the tourists’ experience memorable Eliminate various irritants eg. discriminatory monument entry fee for foreign tourists

• • • •


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EXECUTIVE SUMMARY

An Integrated Strategy : Tourism Infrastructure

• The Government does not have adequate finance for the upkeep of the 3700 protected monuments and 10,000 unprotected monuments. The annual budget of Rs.156 crores amounts to a paltry sum of Rs.7600 per year per monument. Suggestions: - involve the private sector for upgrading and maintaining the key monuments of tourist interest. 38 have been identified. The Government need not spend money at all on these, e.g. The Indian Hotels Group has adopted the Taj Mahal - use Government funds to upgrade other protected monuments • Remove procedural bottlenecks for creation of tourism infrastructure. This has restricted the supply of facilities, reduced competition and made India a more expensive tourist destination than several places in S. E. Asia which offer superior facilities Since the infrastructure in the whole country cannot be upgraded simultaneously, identify and develop certain areas as ‘Special Tourism Circles’ which can be tendered to bidders from the private sector just like other infrastructure is, e.g. Telecom

•


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EXECUTIVE SUMMARY

An Integrated Strategy : Pricing & Taxation

• It will help if the State and Central taxes are rationalised taking into account the fact that wide difference between states create operational problems and high taxation which pushes up the pricing dampens the the growth of tourism. Tourism is price elastic. Tourism earnings could be deemed as Exports to the extent of the Net Foreign exchange earned Tax Deferment in case of ‘Currency Fluctuation Reserve’ to the extent of Net Foreign Exchange (NFE) earned can be provided to encourage investment in tourism.

• •


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EXECUTIVE SUMMARY

Organisational Mechanism for Development of Tourism

Create an apex professional body modeled along the lines of ‘NASSCOM’ could be called ‘National Association for Tourism Promotion’ (NATPRO) or whatever. The Council of the ‘NATPRO’ could include senior representatives of associations of all the tourism related industries. ‘NATPRO’, can co-ordinate and act as prime catalyst to promote the interest of the tourism and related industry. ‘NATPRO’ would act as the advisory, consultative and co-ordination body for the tourism industry through representatives in various committees of the Government of India including various Ministries like Ministry of Tourism, Ministry of Finance, Ministry of External Affairs etc. ‘NATPRO’ will be a private sector initiative with Government support.


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ACTION PLAN

Action Plan - Government Action Plan - Industry 11 15


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ACTION PLAN - GOVERNMENT

A. Strategic Initiatives by the Government

1. Recognise Tourism as ‘Priority Industry’ for the Country

Government should declare Tourism as ‘Priority Industry’ like Information Technology

2. Put Tourism on the ‘Concurrent List’ of the Constitution of India

3. Give ‘Tourism’ the desired importance in economic and budgetary planning process

Government should increase outlay on Tourism - currently, India spends 0.9% of GDP on Tourism Government Travel & Tourism Expenditure (%of the total GDP)

India China Spain Singapore China Malaysia 0.9 3.8 9.5 9.1 7.4 5.1 France Sri Lanka USA UK Thailand Germany 4.7 4.0 3.9 2.9 2.6 3.3

4. Recognise Enormous Employment Potential of the Hotel, Travel, Entertainment,

As per WTTC, the Travel & Tourism economy in India which includes all the above stated industries as well as supporting industries currently account for 17.4 mn jobs in India or 5.8% of total employment. This has a potential to rise to 25 million jobs or 6.8% of total employment by 2010. Bombay Chamber of Commerce & Industry 18 An Integrated Approach for Promotion of Indian Tourism

Transport and other Allied Industries.


5. Lay Down a Master Plan to implement planned and phased Development/Upgradation of Infrastructure and Areas of Tourism potential with Private sector Participation Develop ‘Special Tourism Circuits’ (like Telecom circles)

ϖ Identify and create ‘Special Tourism Circles’ based on categorisation of regions depending upon selected parameters of infrastructure development index and potential. ϖ These areas could be tendered for infrastructural development to bidders from private sector, on similar basis as ‘Telecom circles’ ϖ Develop a master plan through a Special Area Development Authority constituted for the region identifying boundaries for notification and development ϖ Provide basic infrastructure in terms of roads, transport network, electrical grids, water supply etc. ϖ Facilitate private investments through fiscal incentives, removal of restrictions preventing foreign ownership and leasing of infrastructure through special legislation in these areas.

6. Taxation Policy

ϖ ϖ ϖ Introduce uniform taxation across the States and do away with multiple taxation. Tourism Industry be deemed as Exports to the extent of the Net Foreign exchange earned Tax Deferment in case of ‘Currency Fluctuation Reserve’ to the extent of Net Foreign Exchange (NFE) earned. A fixed percentage of each years’ profit can be transferred to this reserve account, subject to a monetary limit on the aggregate amount of such reserve not exceeding the Foreign Exchange exposure. The annual contribution to such reserve should be tax deductible at the time of transfer of amount to reserve account. After a period of, say, 5 or 8 years, such amount transferred to reserve account can be released on payment of tax. Bombay Chamber of Commerce & Industry 19 An Integrated Approach for Promotion of Indian Tourism


B. Operational Measures as Components of the Strategy

1. Brand Indian Tourism Through Development of ‘National Tourism Logo’

Tourism needs Branding. There has to be a promise that appeals to the relevant population. Therefore, India’s National Tourism Logo’ need to be developed which represents tourist interest in India.

2. Develop an integrated long- term strategy for Marketing

2.

ϖ Idetifying countries for targeting, ϖ Promoting India in the target markets identified based on a concept of promotion for India aimed at creating an ‘Indian Tourism Brand’, through ‘Theme’ promotion ϖ Develop ‘National Tourism Logo’ ϖ Adopt ‘innovative marketing strategy’ : ‘co-selling and co-marketing with key travel operators’ ϖ Introduce the concept of ‘Dollar Tourism Debit Cards’, similar to ‘pre-paid telephone cards’ ϖ Facilitate tourist arrivals, movement & stay as well as keeping the tourist occupied and interest. ϖ Strategically plan to attract investments in infrastructure



3. Recognise the Need for an Organisational Mechanism - ‘NATPRO’

ϖ Support the formation of ‘NATPRO’ (National Association for Tourism Promotion), a tourism industry initiative based on the NASSCOM. ϖ Recognise ‘NATPRO’ as the single united voice of the tourism industry Recognise NATPRO in the role of an advisory, consultative and coordinating body representing the tourism industry by including representatives of NATPRO on the committees of various Ministries concerning the tourism industry

4. Relax Visa Requiremnts

ϖ Relax visa requirements and facilitate unrestricted tourist movement (domestic as well as inbound) involving removal of obsolete laws, restrictions and licence permits

5. Other Initiatives

ϖ Address basic areas of concern of tourist like security, language, safety, hygiene conditions in the promotions as well as on the ground. ϖ Involve the private sector in the upgradation and maintenance of heritage sites. Bombay Chamber of Commerce & Industry 21 An Integrated Approach for Promotion of Indian Tourism

ACTION PLAN - INDUSTRY

Lobby with the Government for Tourism to be given a Priority Status

ϖ Tourism is world’s largest Export Industry but South Asia, & India in particular, gets a very low share. India’s dismal performance is due to variety of reasons. It needs examination and analysis why the implementation has been elusive and in creating an enabling mechanism for proactively implementing the solutions.

Promote Establishing ‘NATPRO’ (National Association for Tourism Promotion)

NATPRO will be a tourism industry body, modeled on the lines of NASSCOM, as per the steps listed below: - Draw up charter for ‘NATPRO’, complete all the legal and procedural formalities, develop the organisational framework required and prepare a Business Plan - A few visionaries from the travel and tourism industry should form an Interim Council - Recruit top flight professionals and set up the elected / nominated Executive Council which replaces the Interim Council - Draw up a detailed long term action plan - Present Bombay Chamber’s White Paper on Tourism to the PMO and if possible to a group of key functionaries including Ministers from all the relevant ministries. - Through ‘NATPRO’, work in close interaction with the government in the role of an advisory, consultative & coordinating body for the tourism industry. This could be through various activities aimed at fulfilling objectives laid down. Bombay Chamber of Commerce & Industry 22 An Integrated Approach for Promotion of Indian Tourism


Creation of ‘Special Tourism Circles’

Since it is impractical to raise the quality of infrastructure across the entire country, this paper suggests the creation of ‘Special Tourism Circles’ around anchor destinations. The ‘Special Tourism Area’ would have to be identified for development by evaluating & categorising various regions based on laid down parameters indicating extent of infrastructure development and potential for further development. Private sector may bid for infrastructural development, on a similar basis as ‘Telecom Circles’.

Develop Interactive Web-site for information

ϖ To help tourists select India as an attractive destination, decide on itinerary, city specific details to decide on

specific activities, hotels to stay, the transport to book, etc. ϖ Interactive facility to query and get information and action such as reservation etc. ϖ To be made available in different languages of target countries. ϖ Such an initiative to pay for itself by subscription fees from industry participants (similar to the concept of ‘Tata yellow pages’).

Maintenance & Development of Tourism Infrastructure

Actively participate in the maintenance & development of tourism infrastructure through investments in tourism infrastructure, preservation of heritage sites by adoption etc.


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Theme Promotion - ‘Experience India’ & ‘India Tourism Logo’

Prepare a promotion campaign based on the theme and provide support to the government for its promotion in target countries

Promotion of ‘Tourism Debit Cards’

ϖ

ϖ ϖ Private sector may bid for exclusive rights similar to the concept of pre-paid telephone cards and credit cards Participants may give token discounts Cost may be recovered by way of advertisements


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WHY INDIA NEEDS TOURISM

Tourism & World Trade Travel Account Balance India’s Travel Balance World Tourism India: Long Haul Destination Tourism Arrival vs. International Trade Tourist Arrival vs Country Size 18 19 20 21 23 24 25


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WHY INDIA NEEDS TOURISM Tourism & World Trade

Tourism has the largest share in the worldwide exports of goods and services

Worldwide exports of goods and services ($ bn)

600 500 400 300 200 100 0 Food Computer & Office eqpt. Automotive products Textiles & Clothing Telecommunication eqpt. Tourism Mining products other than fuels Iron & steel Chemicals Fuels 9 503 7.5 443 399 6.6 5.9 344 5.1 331 283 4.9 4.2 8 7 6 5 4 158 2.3 141 2.1 3 2 1 0

% of total worldwide exports of goods and services

532 7.9

525 7.8

Ë Tourism is one of the five top export categories for 83 % of countries worldwide and the main source of foreign currency for at least 38% of them. Ë For India, tourism earns over $ 3 bn but is the 4th largest forex earner after gems & jewellery, garments, software.

Source : World Tourism Organisation

India should take a holistic view to encourage the growth of Tourism rather than view it as separate pieces like aviation, hotels, airports, entertainment complexes, etc.


WHY INDIA NEEDS TOURISM Travel Account Balance

Developing economies are benefiting more than developed economies because inbound travel dollars exceed outbound travel dollars for them.

Increasing Travel Account Balance for developing countries

Declining Travel Account balance for India 1477 1250 $ million 897

1997-98

1998-99

1999-00

Source : Reserve Bank of India

India has not been able to benefit from this trend


WHY INDIA NEEDS TOURISM India’s Travel Balance

Increase in the level of outbound travel has resulted in corresponding increase in the forex outflow, the rate of which is much higher than the forex inflow due to inbound travel.

1991 Total forex inflow (inbound tourism) $1842 mn. 2000 $3036 mn. % change 65%

Forex outflow (outbound tourism)

$434 mn.

$2138 mn.

393%

Net forex earned by travel industry

$1408 mn.

$897 mn.

(36%)

India’s Net Foreign Exchange Earnings from Travellers K Industry experts estimate that the travel account will become negative by 2002 if no concrete steps are taken by the government to arrest this slide.

Source : Data Reserve Bank of India

If proper steps are not taken, the travel account balance may soon become negative, thereby becoming a drain of source of precious foreign exchange.


WHY INDIA NEEDS TOURISM World Tourism

There is a slight shift from Europe & America ( developed countries) as a prime travel destination towards developing countries, but …..

America 100% Tourist arrival (% of total) 80% 60%

61.84 40.4 60.03 60.29 59.31

Europe

EAP

0.74 2.18 14.39

Middle East

3.75 0.78 2.31 14.28

South Asia

3.92 0.82 2.4 13.73

Africa

4.05 0.85 2.58 14.62

3.27 0.69 1.96 11.94

3.56

No. of Tourists (‘000) ‘90 14959 Africa ‘95 20155 4200 12353 81355 ‘97 23205 4834 14258 88254 ‘98 24937 5219 15281 87428 ‘99 26878 5655 17157 97158

South Asia 3158 Middle East 8959 EAP 54598 America

ϖ

40% 20%

20.3 19.27 18.85 18.84 18.5

Europe 282744 228382 371104 383777 394115

92799 108939 116558 119939 122874

East Asia Pacific has almost doubled the number of tourists and taken 75% of the loss suffered by Europe & USA

Source Data : World Tourism Organisation

0% 1990

ϖ

1995

1997

1998

1999

Europe & USA have dropped from 82% to 78%

… East Asia Pacific region is the biggest gainer of this trend, largely because South Asia (India in particular ) has not been proactive.


WHY INDIA NEEDS TOURISM World Tourism

The total world tourist arrivals is 664 million and the dominant destinations are Europe and America. South Asia gets a very small share.

International Tourist Arrivals 1999

400 350 Million 300 250 200 150 100 50 0

Europe Americas EAP Africa Middle East South Asia

International Tourist Arrivals Share of World Trade (%) -1999

Americas 18.5%

Europe 59.3%

EAP 14.6% Africa 4.0% South Asia Middle East 2.7% 0.9%

Source : Data WTTC

• International tourist arrivals cover the number of arrivals of visitors and not the number of persons

Why does this happen to South Asia and India in particular ? There are 2 major reasons


WHY INDIA NEEDS TOURISM India : Long Haul Destination

Firstly, India is a long haul destination for the key countries and long haul tourism has only 18% share of the world tourism pie

Distance in km from India Share of long haul travellers in total international traveller numbers

Long haul 18%

USA Japan Germany UK 0 5000 6,758 6,306 7,193 10000

12,565

15000

Short haul 82%

Source : Data: World Trade Organisation / World Tourism Organisation/ WWW

Does this mean that India cannot become a tourism major ?


WHY INDIA NEEDS TOURISM Tourist Arrivals vs. International Trade

Secondly, international arrivals depend upon the level of international trade. Ability to fully exploit the tourism potential will depend upon India’s ability to develop customer segment focussed strategies

International trade ($ bn) (1999) 2500 2000 1500 1000 500 0

Japan Germany UK USA

Norway South Africa Brazil Turkey Indonesia Thailand India 0

4.481 6.253 5.107

International trade ($ bn) (1999) 117 64 116 93 94 8.651 128 114

6.893 4.7

Hong Kong Korea Singapore Thailand India

China

2.48 2 4 6 8 10 Tourist arrivals (1999) (mn nos.)

0 20 40 60 Inbound international traveller (mn nos.) (1999)

Source : Business Consulting Group Analysis data from World Trade Organisation/ World Tourism Organisation

ϖ *India needs to step up the pace of reforms to encourage global trade and international investment in India ϖ Smaller countries with high international trade have much high tourist traffic Bombay Chamber of Commerce & Industry 32

ϖ Countries with similar international trade level have implemented focussed integrated tourism strategies to exploit the potential offered by international trade ϖ India has not done that An Integrated Approach for Promotion of Indian Tourism

WHY INDIA NEEDS TOURISM Tourist Arrivals vs. Country Size

Ë The level of international trade and not size of the country is important. That is why smaller developed get more tourist arrivals than larger developing countries like India, Brazil, South Africa, etc. 80

70

France

Source : Data : World Tourism Organisation / WWW Analysis : Business Consulting Group

Tourist Arrivals (in mns.)

60

Spain

The number of travellers coming to India is far lower than for many other countries much smaller in size than that of India. Therefore it is argued that India remains significantly under exploited as far as its carrying capacity is concerned.

50

Developed countries

USA

40

30

UK

China

20

Germany

Developing Countries

Australia India Brazil

Ë Australia, China & South Africa have recognised this & have become very aggressive in tourism. Others like HK, Thailand, Malaysia have initiated special efforts to woo tourists Ë Dubai has gone further and has a single organisation called ‘Dubai Tourism & Commerce Marketing’

HongKong 10 Thailand Malaysia South Africa Singapore Japan Indonesia Dubai 0 Bahamas 0 2000000

4000000

6000000

8000000

10000000

12000000

Total country area (sq.kms)

India’s tourism strategy should recognise the importance of co-promoting leisure and business tourism


INDIAN TOURISM INDUSTRY

GROWTH ANALYSIS

Inbound Arrivals Indian Tourism (Value Growth) World Tourism - Tourist Density vs Average Daily Spend Tourism Statistics Need for Strategy Changing Pattern of Consumer Spend Domestic Tourism Indian Outbound Tourism Satellite Accounting Factors Affecting Tourists - Leisure & Business 26 27 28 29 30 31 32 33 34 35


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INDIAN TOURISM INDUSTRY - GROWTH ANALYSIS Inbound Arrivals - India

The total tourist arrivals in India was 2.66 mn according to published statistics, growing at 4% CAGR over the past decade but stagnated somewhat over the last 4 years

3000 Tourist Arrivals (000. nos) 2500 2000 1500 1000 500 0

-9 2 -9 3 -9 5 -9 6 -9 7 -9 8 -9 9 -9 4 -2 0 91 92 93 94 95 96 97 98 00 -0 1 00

ϖ

CAGR 4.11%

ϖ

Tourist arrivals actually refer to all visitors to India. This number is way below the targeted number of arrivals of 5 mn. tourists by 2000-2001.

19

19

19

19

19

19

19

19

19

99

20

Source : CMIE


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INDIAN TOURISM INDUSTRY- GROWTH ANALYSIS Indian tourism (Value Growth)

Though India’s earnings from inbound travel have shown a growth in rupee terms, they have stagnated in absolute dollar terms during the past 4 years

14000 12000 10000 8000 6000 1.50 4000 2000 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 0.75

Rs. Crore

3.75

$ billion Tourist earnings ($ bn)

3.00

Tourist earnings (Rs. Crores)

θ This stagnation is partly due to business travel not growing … political and business environment has not been condusive and , there have been events like riots, earthquakes, insurgency in parts of India which tarnishes the image of India from the leisure tourists perspective

2.25

0.00

Source : CMIE /GOI Department of Tourism


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INDIAN TOURISM INDUSTRY- GROWTH ANALYSIS World tourism : Tourist Density vs. Average Daily Spend

In addition to increasing inbound tourist traffic, there is also a need to increase the average tourist spending

120

Average spend per tourist per day ($) High ( ≥ $ 100 )

Singapore

Thailand USA UK

C

Country

Tourist density (no Average spend of tourists per sq per tourist per km of total country day ($) area)

100 80

India China Thailand USA UK South Africa (1998) Brazil Malaysia Singapore Australia Dubai

41.89 N. A 101.65 98.42 81.23 26.68 57.93 N. A 288.13 64.91 N. A

0.75 2.82 5.04 5.04 105.14 4.83 0.60 24.05 9664.86 0.58 24.02

Medium ($ 50 to $ 100 )

Australia Brazil

B

60

India

40 20

Low (< $50)

A

South Africa (1998)

0

Low (<1) Medium (1-5) High (> 5) Tourist density (no of tourists per square km of total country area)

Source : Data : World Tourism Organisation/ country tourism body site

India gradually needs to move from A to B diagonally on the graph to tourism revenues


INDIAN TOURISM INDUSTRY - GROWTH ANALYSIS Indian Tourism Statistics

Industry experts opine that India’s tourism strategy is based on unreliable and misleading

Inbound

ϖ

Outbound

ϖ

Of the 2.65 million arrivals the tourists are about 1.2 million (45% of which are leisure tourist, numbering around 0.7 million) One estimate is that the 2.65 million includes the following categories Million Leisure tourists Non-tourist arrivals from Pakistan, Bangladesh & Nepal NRI returning to meet family Airline staff Business visitors on tourist visas, backpackers, etc. 0.7 0.5 0.7 0.25 0.5 2.65

38

Of the 3.9 million tourist departures, genuine tourists are probably 0.4 million only. Of this group tours are probably as low as 50,000 Nearly 2 million are travelling out for their jobs in the Gulf, etc. Government & business travellers classified as tourists, Haj pilgrims, etc. probably account for 1.6 million Actual forex outgo under BTQ in 2000 was $ 379 m (RBI). If tourist departures were indeed 3.9 million, the average tourist spend would have been less than $ 100 per head per trip ! RBI statistics of $ 2139 million forex outgo on outbound travel (often quoted by tourism related publications as outbound tourism dollars) actually shows a breakdown by category of travel. Business accounts for 60%


ϖ

ϖ ϖ

ϖ

ϖ

Source : Data : Field Interviews, RBI Publications,


INDIAN TOURISM INDUSTRY- GROWTH ANALYSIS India : Need for Strategy

Domestic tourism is essential to balance seasonality of inbound tourism

ϖ

Being a long haul destination, the flow of inbound tourists is seasonal for India. Only domestic tourism can balance that to make investment in infrastructure viable Fortunately India’s domestic tourism is rising for reasons explained in the next two slides

ϖ


39


INDIAN TOURISM INDUSTRY - GROWTH ANALYSIS India : Changing Pattern of Consumer Spend

In India, growing disposable income over the years has led to an increase in consumption expenditure on recreation, education and cultural services, transport & communication increasing from 24% to 28%* of consumption expenditure

6.32 3.05 11.26 80% 3.38 3.05 12.27 60% 6.06

Private final consumption expenditure (% of total)

6.51 3.15 11.60 3.86 3.00 11.84 6.20

6.75 3.23 11.69 3.98 3.20 11.15 6.48

6.51 3.07 12.18 3.85 3.02 10.34 5.86

6.82 3.40 13.30 4.26 3.04 10.34 6.05

6.69 3.53 13.66 4.39 2.97 10.18 5.23

increasing

100%

Item Misc. Goods & services Recreation, education & cultural services Transport & Communication Medical & Healthcare

Increase / decrease (1998-99 to 93-94) + 0.37 +0.48 +2.4 +1.01 -0.08 -2.09 -0.83 -1.26

θ

40% 54.61 20% 53.84 53.52 55.17 52.79 53.35

declining

Furniture, fuel and power Gross rent, fuel & power Clothing and footwear

Although these activities, conventionally considered the preserve of the classes, can now be afforded by the masses, the government’s policy initiatives have not changed. * In the case of middle and upper income groups this presents a much higher share

θ

0% 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99

Food, beverages & tobacco

Source: Data : CMIE

There are huge implications of this shift in consumption for the tourism industry


INDIAN TOURISM INDUSTRY- GROWTH ANALYSIS Indian Domestic Tourism

The growth in disposable income has resulted in the total domestic tourist movement in India to more than double over a period of 7 years.

θ Drivers of domestic tourism

ϖ

Tourist (mn. nos)

Growing size of the Indian middle class with increasing levels of disposable incomes. Increasing chunk of the salaried class eligible for LTC (a tax free component) Stressful professional life and frequent need for breaks Pilgrimage Migration for employment

180.00 160.00 140.00 120.00 100.00 80.00 60.00 40.00 20.00 0.00 1993 90.00

CAGR 11.83% 139.13 141.78

159.88

168.20

176.08

*

127.12

ϖ

ϖ

ϖ ϖ

1994

1995

1996

1997

1998

1999

(* Figures are unreliable, but the trend is not questionable)

Source : Data : GOI - Department of Tourism


41

INDIAN TOURISM INDUSTRY - GROWTH ANALYSIS Indian Outbound Tourism

Growth in disposable incomes is also one of the major factors responsible for increase in the number of outbound tourists from India.

ϖ ϖ

ϖ ϖ

ϖ

ϖ

ϖ

The number of outbound tourists from India will go up further, especially due to lack of availability of well developed and reasonably priced tourist destinations within the country.


Growing size of the Indian middle class with increasing levels of disposable incomes. Lack of good, developed domestic tourist destinations as well as high cost of quality domestic travel Indian psyche & the social prestige associated with foreign travel Influence of the increasing number of movies shot overseas as also other channels in the media Aggressive promotions by foreign tourist offices in India through road shows and regular focussed trade promotions With outbound charter being allowed by the government, overseas travel will become affordable to many more Indians. Several good international destinations are cheaper than domestic holidays

CAGR 6.03% Outbound Tourist* (mn. nos)

5.00 4.00 3.00 2.00 1.00 0.00

93 94 95

2.73 2.73

3.06

3.81 3.88 3.46 3.73

96

97

98

19

19

19

19

19

19

(* These figures are unreliable as explained in Slide 18 but the real outbound tourist numbers have grown from a low base in 1993 to about 4,00,000 in 2000)

Source : Data : GOI - Department of Tourism

19

99

INDIAN TOURISM INDUSTRY - GROWTH ANALYSIS Satellite Accounting

Not only is tourism per se important for an economy but the trickle down benefits of the travel & tourism industry on the economy go beyond what is apparent . As a whole, they are too vast to be ignored

Multiplier effect of tourism: K Transport Accommodation Catering Entertainment Recreation and other travel related service The secondary & tertiary effects of tourism in the form of increased purchases of Indian goods, benefits to the transport industry etc, which in turn drives the demand in the manufacturing sector & creates employment. Increased employment further drives demand due to higher disposable incomes.

Travel & Tourism industry

T&T Economy

Food/ beverage supply, Laundry Services, Oil/ Gas supply, Wholesalers, Printing/ Publishing, Utilities, Financial Services, Sanitation Services, Furnishings & Equipment Suppliers, Security Services, Rental car, manufacturing, Transportation Administration, Tourism Promotion, Ship Building, Aircraft Manufacturing, Resort Development, Glass Products, Iron & Steel, Computers, Utilities, Concrete, Mining, Plastics, Chemicals, Textiles, Metal Products, Wood

Source: WTTC

The satellite accounting figures suggest that the $ 11.33 bn. T&T industry in India (2000) supported a $ 23.8 bn. T&T economy


INDIAN TOURISM INDUSTRY - GROWTH ANALYSIS Factors Affecting Indian Tourism - Leisure Tourists

India’s low leisure tourist numbers (inbound as well as domestic) could be attributed to 4 major reasons

Inadequate Promotion & Marketing

ϖ Poor image ϖ Inadequate targetting (country & type of tourist) ϖ Concept (diffused & no continuity) ϖ Poor co-ordination between various marketeers and Government ϖ Inadequate information on several tourist destinations ϖ Potential marketing channels not exploited ϖ Major fun magnets for tourists (e.g. Disney etc. in USA, France, Japan, etc. which draw tourists by the thousands) have not been created in India

Poor infrastructure

ϖ Inadequate in quantity due to ϖ low investment by Government and private sector, ϖ cumbersome procedures for creating infrastructure, etc. ϖ ϖ Inadequate quality due to lack of focus on customer and poor co-ordination ϖ Poor VFM due to high taxation ϖ and high price caused by low competition ϖ Poor functioning of Railways, ϖ Government owned airlines, etc. ϖ Lack of well co-ordinated top quality tour packages (intra & ϖ intercity) with door-to-door service

Restrictive Policies

Cumbersome visa procedures Interstate movement of tourist vehicles Bureaucratic processes for getting clearances to set up infrastructure Hurdles for foreign ownership of tourism infrastructure Hurdles in private sector management of heritage sites (Taj Mahal is an exception) Prohibition laws in certain states

Other Obstacles

ϖ Perceived low safety, cleanliness, reliability ϖ Obstacles for tourists (visas, bookings, language, etc) ϖ Inadequate entertainment and shopping opportunities ϖ Poor upkeep of tourist attractions ϖ Discriminatory pricing of historical sites for foreigners ϖ Exploitative attitude of some service providers ϖ Poorly trained guides, lack of signages/ information disseminating mechanism ϖ Sudden changes in tariff and taxes affecting even pre sold tours

Source: A listing of issues that came out in Focussed Group Discussions with experts in the tourism industry Bombay Chamber of Commerce & Industry 44 An Integrated Approach for Promotion of Indian Tourism

INDIAN TOURISM INDUSTRY - GROWTH ANALYSIS Factors Affecting Indian Tourism : Business Tourists

India’s low business tourists numbers (in bound and domestic) could be attributed to

Inadequate magnets to attract business groups

ϖ Very few Trade Fairs to attract business tourists (except a few at Pragati Maidan) unlike, say for example, Germany which holds 2/3rd of all major international trade fairs & attracts 1.8 mn tourists from outside Germany alone. ϖ Lack of nightlife & entertainment ϖ Since India remains largely isolated from global trade (nonconvertible currency, low foreign trade, severe restrictions even for transit of goods, etc.) international business tourists do not need to visit India

Inadequate facilities for business conventions

ϖ India is not equipped to handle very large international business conventions unlike destinations in USA, Europe & East Asia Pacific ϖ Even for smaller conventions, facilities exist only at a few 5 Star hotels in a few locations ϖ Other competing countries in Asia are able to offer better value packages

Attitude towards potential business investors

ϖ Barring a few notable exceptions, the business traveller to most parts of India faces a disinterested bureaucracy, inadequate information, an attitude that smacks of being given permits as a favour and not as a welcome guest

The 4 reasons listed for leisure tourists

ϖ Same as for leisure tourists

Source: A listing of issues that came out in Focussed Group Discussions with experts in the tourism industry 45 An Integrated Approach for Promotion of Indian Tourism


AN INTEGRATED STRATEGY

Strategic & Operational Initiatives Influence & Facilitate Tourist Decisions Branding & Marketing Strategy Facilitate Tourist Arrival, Stay & Movement Tourism Infrastructure Pricing & Taxation 37 38 43 49 56 59


46


AN INTEGRATED STRATEGY: STRATEGIC AND OPERATIONAL INITIATIVES Tourism as a Priority Industry

Strategic & Operational Initiatives

Operational initiatives

ϖ

Strategic initiatives

ϖ ϖ ϖ

Operational measures aimed at improving the operational efficiency by focussing on infrastructural constraints & how best can the existing infrastructure be better utilised with the available resources Tours to be packaged for relevant customers as one complete experience Brand Indian Tourism through development of ‘National Tourism Logo’

Government should declare Tourism as a Priority Industry as Software industry Put Tourism on the Concurrent list of the Constitution of India Government should increase outlay on Tourism: India spends only 0.9% of GDP on Tourism as compared to 49% in most other countries Lay down a master plan to implement planned & phased development / upgradation of infrastructure & areas of tourism potential with private sector participation Policy initiatives for the same aimed at improving the operational efficiency by focussing on infrastructural constraints and optimising existing infrastructure with the available resources

47 An Integrated Approach for Promotion of Indian Tourism

ϖ ϖ

ϖ

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AN INTEGRATED STRATEGY : INFLUENCE & FACILITATE TOURIST DECISIONS Target Countries & Needs

India should focus marketing efforts on just six countries

Country target

ϖ

International tourism expenditure % (1998)

USA 12.7% Germany 10.6% Others 50.0% Japan 6.5% UK 7.3% France Canada Italy 4.0% 2.4% 4.0% Netherlands 2.5%

There is a clear need for focus on a limited number of countries because India’s financial resources for marketing are limited. India should focus on just six countries (USA, UK, Germany, Japan, France and Italy) which account for 53% of the outbound tourists and 45% of the world tourism expenditure. That will be all long haul tourists. To counter balance their traffic seasonality India needs to look for load from some special segments of those countries and other source countries. In the target countries, India needs to have a ‘push-pull’ strategy which will pull potential tourists to travel agents and tour operators and incentivise the travel trade to push for India since they play a big role in helping a tourist to decide on the destination, itinerary, planning, etc.

45%

ϖ

International tourism supply % (1998)

USA 14.8% Others 41.6% Germany 12.4% Japan 7.6% UK 8.5% France 4.7%

Push-Pull Strategy

ϖ

Canada 2.8% Netherlands 2.9% Italy 4.7%

53%

Source Data : World Tourism Organisation


48



We need a clear and distinct strategy for each country

ϖ

In those few countries there is a clear need to have detailed market research data which identifies the consumer segments for which a long haul travel will be relevant, understand the socio-economic profile, demographic profile and tourism interests and habits of each segment. Without that marketing efforts could go awry. For instance: USA

East Asia 29%

ϖ

American outbound tourists American outbound tourists

Govt./Military 2% Craftsmen/ factory 3% Clerical/ sales 4% Homemaker 5% Others 2% Manager/ Executive 31%

Religion/ pilgrimage 2% Study/ teaching 2% Convention conference 2%

Asia 2% Middle East 5% Africa 2%

VFR 39%

Central America 3% South America 8%

Europe 51%

Student 6%

Professional/ technical 38% Retired 9%

Business 28% Leisure/ recreation/ holiday 27% Purpose

Destination Country

Source : Data : Travel Industry Association of America

Occupation

ϖ

These statistics suggest that 36% visit East Asia Pacific, South Asia and the Middle East but only 2% head for South Asia. Would it be possible to club India with a trip to East Asia (29%) through suitable incentives and marketing? Many of them travel in Aug / September when it rains heavily in many parts in India. Which destinations should India market in August / Sept? Others travel around Christmas, New Year.




Each of India’s target countries will have its own characteristics and each relevant segment within it will have its own idiosyncrasies. Example : Japan

Japanese outbound tourists Japanese outbound tourists

Other New Zealand 23% 1% Australia 5% Europe 13% Hong Kong 5% 50-59 years 16% Korea 10% China 6% Taiwan 5% USA 32% over 60 years 12% 0-4 years 3% 10-19 years 5% 40-49 years 17% Individually Arranged 29% Group Travel 11% Others 7% 20-29 years 28% Package Tours 53%

30-39 years 19%

Destination Country Source Data : www.tradeport.org

ϖ

Age Profile of Outbound tourist

Type of Travel

Most Japanese travel around end Dec - early Jan, the Summer OBON (around August 15) and the Golden week (April - May). They take short vacations and head largely to Korea, Taiwan, Hong Kong, China and USA (where Hawai is the key destination). The rest of America and Europe have a good mix of leisure, student and business travel. India neither fits in as a leisure spot nor a business magnet. The Japanese traveller is not as religious as he is made out to be. If India has a Buddhist trail to offer, the target is probably the ‘over 60 year old’ Japanese who account for 12% of the Japanese outbound tourist. What are this segment’s specific needs for mode of travel, type of experience, food requirements, cleanliness requirements, tour guide and other facilities? Unless this is known, marketing India to Japan may be a waste of money 50 An Integrated Approach for Promotion of Indian Tourism



A clear strategy is required for the other target countries as well

ϖ

The Germans, French and Italians are known to be travel-friendly and may seek warm destinations in July-August. Neighbouring countries like Maldives and Sri Lanka have exploited their beaches to lure tourists from these destinations with well co-ordinated strategies. India for some reason, has restricted tourist arrivals in the Lakshadweep which is next door. Barring Goa, the much talked about beautiful coast line brings in more drift wood than tourists. The beaches of Thailand, Malaysia and Indonesia take in tourists by the millions, whereas the Andamans and Nicobar remain largely ignored …. and probably intentionally, due to the Governments perceived security threat. We need to realistically assess whether islands around India are particularly vulnerable, whereas it is not so for the rest of the world.

India should focus on relevant consumer segments in a few focussed countries and offer all the attractions that are relevant to them based on serious market research


AN INTEGRATED STRATEGY : INFLUENCE & FACILITATE TOURIST DECISIONS Target NRIs

Persons of Indian Origin should be targeted

• It is estimated that there are over 20 million NRI’s the world over . Only 3.5% travelled to India last year, even if it is wrongly assumed that there are no multiple trips. The 1987 statistics reveal that of the 12.5 million Indians living abroad, two thirds were in other Asian Countries who would tour India without much prodding if there are interesting and economical tourist packages. It is significant that there may be more than 3 million Indians living in the 6 target countries for world tourism. They are known to travel like others living in the country of residence, to various parts of the world. There is a case for motivating them to visit their roots through a targetted marketing strategy because anecdotal evidence suggests that the second and third generation NRIs have little desire to travel to India due to loss of roots. If they travel to India and have a good experience, they are likely to become better brand ambassadors for Indian tourism in their country of residence than many others. Location of Persons of Location of Persons of Indian Origin Indian Origin

Middle East 8.5% Africa 13.4% Oceania & Indonesia 3.7% America 13.1% Europe 7.7%

Source Data : Statistical Outline of India 1992-93

•

Asia 53.5%

•

The opportunity exists.


AN INTEGRATED STRATEGY : BRANDING & MARKETING STRATEGY Product Packaging

Tours should be packaged for the relevant customers as one complete experience.

• India no doubt, has several good hotels, at least one good domestic airline, one good rail experience for tourists, many good beaches, several outstanding historical monuments, entertainment spots, several brilliant people in the travel & tourism industry with good ideas, a well intentioned tourism ministry. But put these in the chain from travel booking to visit to return to home country & what you get is a mixed experience, with service gaps, joy killers and some delightful movements. Even to connect these islands of excellence requires someone to co-ordinate all the linkages. This need not be the case if a tour is understood to be a complete experience and is served as a one single continuum. The Kerala package offered by a five star hotel group and a private airline is an outstanding example of what can be done to create a great tourism experience for domestic or international tourists.


53


AN INTEGRATED STRATEGY : BRANDING & MARKETING STRATEGY Branding

Indian tourism needs Branding that will reflect the experience that the tourist can expect

ϖ

Tourism needs branding no less than any consumer product. There has to be a promise that appeals to the relevant population. There has to be a theme/ logo that is relevant and one that can be actually experienced during the visit. Several countries have adopted certain themes and positioned tourism in their countries in a manner that attracts the target segments. See the box alongside. ‘Experience India’ a joint initiative of the private sector and the Government appears to be a step in the right direction. A theme for marketing India could emerge from it. The ‘Maharaja’ logo could represent the tourists’ experience in India. Various organisations in the tourism business should be allowed to use the Indian Tourism Logo provided they adhere to certain norms and policies that are laid down.

Thailand - “Land of Smiles” Malaysia - “Malaysia truly Asia” Mauritius - “1% water, 99% fun” Maldives - “The sunny side of life” Dubai - “Discover Dubai” Srilanka - “A land like no other” Seychelles - “Seychelles magic”

ϖ

ϖ


54


AN INTEGRATED STRATEGY : BRANDING & MARKETING STRATEGY Multi-Channel Approach

Multi-channel approach to promotion of the concept of Indian tourism using a unified theme for promotion

Channel Dollar Debit Cards Approach to promotion/ information dissemination Debit cards can be issued to Foreign tourists on payment in foreign exchange by approved agencies e.g. Forex Dealers, select tour operators, etc. ‘Debit Cards’, to be acceptable for all tourism related purposes - air, train, hotel and restaurants, monument entry, shopping etc. Companies who participate, will have to provide the necessary infrastructure to handle debit cards, give token discounts/ facilities and portray the ‘Tourism Logo’ at their company premises. A booklet giving names of all participant agencies will have to be provided to the tourists on purchase of’ ‘Debit Cards’. The cost of this ‘Debit Card’ should be recovered through advertisements Popularity of Indian cuisine overseas is undisputed. At peak hours there is considerable waiting time at a majority of these restaurants. This waiting time could be utilised to promote India as a tourist destination by screening of theme videos & disseminating information through information kiosks. This also ensures that the promotion is addressed to the right audience.

Select Indian restaurants in target markets should be tapped


55


AN INTEGRATED STRATEGY : BRANDING & MARKETING STRATEGY Multi-Channel Approach Channel Concept of co selling / co marketing with key operators Approach to promotion/ information dissemination Underwriting the media costs of promotion. This would not only incentivise the tour operators to promote India as a destination amongst the tourists but also help depict India much more prominently in the media (brochures, information booklets, billboards etc.) Identifying destinations of high tourist traffic in the same region as India and pursue tourists coming to these destinations to come to India through attractive fares, targeted promotions. Plan joint charter flight with neighboring SAARC countries like Nepal, Sri Lanka, Maldives on one leg of their journey and take Indian destinations like Goa, Agra, Jaipur on the other. Offer attractive fares for tourists visiting South East Asian countries (could be to visit Andaman & Nicobar islands) Plan joint promotional initiatives with Indian and other willing carriers & promote India as a tourist destination. Outsourcing promotion and marketing activities in the target countries to private players with periodic targets to be fulfilled by the agency. This would also help provide much needed accountability towards fulfillment of targets. It is not practical to expect the Government of India’s Tourism Department alone to get the required reach


ϖ

Airline Schemes

ϖ

ϖ ϖ

Outsourcing promotion and marketing activities in the target countries

ϖ


AN INTEGRATED STRATEGY : BRANDING & MARKETING STRATEGY Multi-Channel Approach Channel Approach to promotion/ information dissemination

World Wide Web site for information and action

ϖ

An interactive website that carries the India brand, conveys the proposed theme, and helps tourists with all kinds of information which will help a tourist from all the relevant segments in the target countries to know all that is relevant to select India as a destination, decide on the itinerary, city specific details to decide on the specific activities, the hotels to stay in, the transport to book, the shopping that can be done, the entertainment available, etc. Interactive facilities to query and get information or action such as reservation, etc. There are websites in India which partially meet these requirements or deal with just one state. A comprehensive effort is called for, with hyperlinks to the service provider sites. It should be available in the languages of the target countries. Such an initiative could be made to pay for itself by subscriptions fees from industry participants. PIO’s/ NRI’s can serve as goodwill ambassadors for the country. With the increasingly large number of Indians overseas and their knowledge about the country, they can be a good source of promotion. The expatriate community is very strong overseas. They have a lot of community activities and celebrations during various Indian festivals. These can be used to promote India as a tourist destination amongst the people interested to know more about India and its culture.


PIO’s/ NRI’s in overseas countries

ϖ


AN INTEGRATED STRATEGY : BRANDING & MARKETING STRATEGY Multi-Channel Approach Channel Approach to promotion/ information dissemination

Expatriates in India (includes foreign consulates in India) Indian consulates abroad Business Travelers visiting India Media/ sports celebrities Incentivising tour operators Mass media (TV, radio, movies etc)

ϖ

Expatriates could be a very good source of promoting India as a tourist destination to a large overseas destination. For this, the domestic tourist destinations should be promoted aggressively within the expatriate community. Indian consulates abroad could be used as a medium of information dissemination / promotion Business travelers, if provided with a good experience, could serve as an excellent word of mouth publicity for India. India has always attracted celebrities from the west who are in search of spiritual solace. These people could be not only targeted for promotion but also they could be used as a channel to promote India as a tourist destination. Tour operators could be incentivised lucratively for selling packaged tours to India Establishing contacts with TV program producers, travel writers, adventure societies, religious groups, film producers (to encourage them shoot in India)

ϖ

ϖ

ϖ

ϖ

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58


AN INTEGRATED STRATEGY : FACILITATE TOURIST ARRIVAL, STAY & MOVEMENT Facilitate Visa Issuance

Having identified target countries remove obstacles

Situation

ϖ

Suggestions

ϖ

Indian missions are located in a few cities in the overseas countries. Tourists willing to tour India need to get a visa for which either they have to personally travel to the city where Indian mission is located or send their passport to the Indian mission through post or some other form of delivery. For example a tourist in Manchester has to either send his passport to Edinburgh or personally go there in order to obtain a visa. Individuals are not very comfortable parting with their passports.

Visa on arrival for certain categories of tourists/ countries at least for a limited duration of stay. Facilitate entry of foreign tourists, visiting India in large groups, by allowing inbound travel operators to bring these tourists into India without any visa requirements on the guarantee of the tour operator. This facility can be extended only to reputed tour operators with an established track record.

ϖ

ϖ


59


Visitors/ tourists of all nationalities (except Nepal) require visas for visiting India

Nationality American Australians British Canadian European/ Other Indian Bangladesh Nepal Singapore Sri Lankan Japanese Nepal Y Y Y Y Y No Y NA Y Y Y India Y Y Y Y Y NA Y No Y Y Y Sri Lanka Maldives # Bangladesh @ No No No No No No No No Y No No No No No No Yes No No No NA No No No No No No No Y NA No No Y Y Singapore No No No No No Y No No NA No No Japan No Y No No No Y Y Y No Y NA Canada No No No NA No Y Y Y No Y No Greece No No No NA NA Y Y Y No Y No UK No No NA No No Y Y Y Y Y No Australia * Y NA Y Y Y Y Y Y Y Y Y USA NA Y No No No Y Y Y Y Y No

* Australia is ETA - Electronic Travel Authority # Visa on arrival on presentation of health papers @ For items marked ‘No’ visas are issued on arrival at Colombo Airport

Source : WWW

Visa on Arrival is available in countries like Bhutan, Sri Lanka, Nepal, Singapore, Seychelles, Maldives, Macau, Thailand, Turkey, Taiwan, etc. who are competing with India for tourists



By categorising countries, India could do away/ facilitate visa requirements without compromising security concerns

Country Category

Visa Criteria

Identified markets for promoting India as a tourist Category 1 destination in terms of tourists interest, disposable No visa requirements income, historical data e.g. USA, select European countries, Japan, etc. Category 2 Tourists from countries seen as a potential hazard from the point of health or some other factors e.g. African countries, Middle East, etc. Category 3 Tourist from countries seen as a potential risk in terms of illegal migrants, national security, e.g. Afghanistan, Pakistan, Bangladesh etc. Visa on arrival based on laid down criteria (presentation of required documents, certificates, etc.) Stringent visa requirements in the interest of issues like national security, illegal migration, etc.


61


AN INTEGRATED STRATEGY : FACILITATE TOURIST ARRIVAL, STAY & MOVEMENT Remove Obsolete Laws Without Compromising Security

Obsolete laws & restrictions obstruct tourism.

Indian visitors have to procure permits to go to some parts of the North Eastern region due to the enforcement of ‘Inner line permits (ILP’s)’ in some hilly states. Restricted area permits for foreign tourists to be procured in addition to visa requirements. Restrictions like prohibition of photography on dams & installations like All India Radio (AIR) stations could be done away with after proper assessment of security & related issues. The recent rule requiring Indian citizens to report their foreign visitors to the nearest police station if they stay more than a certain number of hours is another case of unrealistic policy.


62


AN INTEGRATED STRATEGY : FACILITATE TOURIST ARRIVAL, STAY & MOVEMENT Infrastructure - Soft Issues

Need to address negative impressions about India

ϖ ϖ ϖ

Security Language Quality of tour guide Safety standards Quality of lodging & boarding Cleanliness & hygiene conditions

ϖ

It is very important for India to deal with problems and also address misinformation in their promotions too. Lack of information could result in the tourist decision being influenced by adverse media reports which may talk about some trouble/ calamity in some state of India which may not even be of concern to the tourist since he may be visiting some other state albeit within India. The fact that India’s cultural & geographical diversity is so vast that some trouble happening in Kashmir or some natural calamity in Orissa does not in any way affect the tourist planning to visit Rajasthan. The international image of India is that of a country that epitomies poverty, poor hygiene & low safety standards. There is always a fear within the tourists that they would contract some disease when they visit India. This needs to be countered. Stray experience of being taken for a ride gets blown out of proportion. This needs to be curbed but that alone does not keep tourists away from India. How does Italy with a similar reputation, get tourists?

ϖ

ϖ

ϖ

ϖ

ϖ

ϖ

ϖ


63


AN INTEGRATED STRATEGY : FACILITATE TOURIST ARRIVAL, STAY & MOVEMENT Maintenance of Heritage Sites

Like Italy and Greece, India too, can attract tourists to our monuments / heritage sites

Ground realities/ facts/ Issues :

ϖ

The need

ϖ

India has 3700 protected monuments and 10000 unprotected monuments. Archaeological Survey of India. Does conservation, illumination, penetration, creating public facilities, and publications/ promotions. ASI’s annual budget is Rs. 156 crores i.e. Rs. 7600/- per monument per year (after providing for salaries and expenses of the ASI). This amount is not at all sufficient to fulfil even the basic preservation and maintenance of monuments and sites.

ϖ

Restoration and maintenance of world heritage structures and the surroundings like approach roads, non ticket areas etc. Ensure that people other than tourists (beggars, urchins, encroachers etc) do not get inside the monument premises. Provide a safe and secure environment to enable the tourists to have a memorable experience inside the monument. No amount of increase in gate collections will solve the problem 38 sites have been identified. Get the private sector to participate in funding (and managing the property if possible)

ϖ

ϖ

ϖ

Source : Data : India Today 9th July, 2001 Bombay Chamber of Commerce & Industry 64 An Integrated Approach for Promotion of Indian Tourism

AN INTEGRATED STRATEGY : FACILITATE TOURIST ARRIVAL, STAY & MOVEMENT Preserving Heritage Sites

Preserving the participation.

heritage

of

India

closer

government

private

sector

Action Plan : List of 38 sites prepared, which are in need of fiscal support. Sites include the likes of Ajanta/ Ellora, Fatehpur Sikri, Hampi, Red Fort, Alchi monastery Ladakh. Start action with private sector help quickly

Govt. benefits from increased tourist turnout : - Benefit to the local economy and the country as a whole. An ideal way to solve out regional economic balance - Prevent heritage property from falling to pieces - Can avail of best possible advice and services of experts in the fields of restoration and conservation

Private sector benefits : - Guarantee mileage at the site like signages, etc. - Use of monument’s image in their advertisements - Private players have a say in the management of their money - Corporate and individual donations under ‘Adopt a Monument’ scheme, eligible for full income-tax exemption as also other benefits which may be site or project specific

Source : Data : India Today 9th July, 2001


65


AN INTEGRATED STRATEGY : TOURISM INFRASTRUCTURE Strategic Measures - Special Tourism Circles

Since it is impractical to raise the quality of infrastructure across the whole country ‘Special tourism circles’ could be developed around anchor tourist destinations and promoted under a unified theme of India.

ϖ

Specific products, (represented by destinations) covering various interest areas to be identified alongwith anchor destinations in a number of regions for development. The anchor destinations and the surrounding ‘destinations’ representing the products should be classified as ‘Special Tourism Circles’.

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‘Special Tourism Circles’ should satisfy the needs of a variety of needs of target tourist interest groups by offering a mix of conventional & contemporary destinations & activities. Personalization & individualization of itineraries wherein the tourists should be able to pick & choose, to suit individual tastes, from a basket of offerings. Each designated area should be provided with full fledged infrastructure facilities. Package of monetary & financial assistance/ incentives for private participants should be conceived to provide impetus to tourism. There is no need to prevent foreign ownership or

leasing of infrastructure. The anchor tourist destination for each ‘Special tourism Area’ should be the focus of all promotions & should serve as as gateway city for that particular ‘Special Tourism Circle’. ‘Special Tourism Circle’ should specifically address basic areas of concern of inbound tourists like safety, security, hygiene & cleanliness etc., should be kept clear of beggars Concept of ‘Project in the Box’ wherein tourism & related projects are cleared subject to the parties agreeing to comply to a given set of regulatory conditions.

The final objective for this is to be able to offer & deliver to the tourist, an ‘Experience’ comparable to the best in the world & not a destination



Various regions within India need to be evaluated for potential of developing them into ‘Special Tourism Circles’.

‘Special Tourism Circles’ should be selected after evaluating the regions in terms of the ‘Infrastructure Development Index’ & ‘Potential for Exploitation’ which should be based on the following parameters: ϖ Carrying capacity of the region (in terms of number of tourists) ϖ Connectivity/ infrastructure (tourist specific/ general) ϖ Extent of investment required for building/ upgrading the necessary infrastructure to world class levels. ϖ The attractiveness of returns in terms of return on capital employed, time for breakeven etc (tourist specific/ general infrastructure) ϖ Assessment of the region (in terms of safety, manpower availability, tourist interests it can satisfy) ϖ Popularity amongst the domestic tourists ϖ Identify boundaries for these areas for necessary notification ϖ Master plan for the area for the purpose of development

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Develop & allot land for hotels & tourism related services at reasonable rates To constitute Special Area Development Authority

Facilitate private sector participation through fiscal incentives & by allowing private companies to bid for development rights in various circuits/ areas which could cover various tourism related infrastructure



Based on such evaluation we would have four categories of regions for development. Some places in each cell need to be identified

High

Infrastructure Development Index

Regions already exploited like the Golden Triangle

1

2

Goa Kerala

There needs to be different strategies for each of the three categories. Policies should facilitate relevant action on the ground by hotels, airlines, tour operators, etc. The overall game plan is to move places in category 3 to 2, and then to category 1 over a period of time by planned development of domestic and inbound tourism. This paper does not seek to classify individual regions. That requires a detailed study. The places mentioned in the cells are merely illustrative

4

3

Low priority for tourism

North East Andaman & Nicobar

Low Low Potential for further exploitation High

Goa & Kerala, for instance, could provide the platform for the government to start promoting tourism on the international scene


AN INTEGRATED STRATEGY : PRICING & TAXATION Pricing

High cost of tourism in India despite indifferent infrastructure is a result of high taxation and inadequate competition.

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Restrictive policies and the maze of permits / clearances that are the legacy of the licence Raj continue to hamper the travel and tourism industry. This naturally reduces the infrastructure on the ground and leads to higher pricing due to shortage. Multiplicity of taxes, high licence fees, etc. raise the cost of hotels and travel services. It is a case of the Central and State Government killing the goose that lays golden eggs. Much more can be earned by taking inbound travel to India from the measly 2.6 million per year to 5 times that (China : 27 million, Turkey : 7 million, Thailand : 9 million) than by charging 30-40% taxes which stunt the industry. One should not forget the domestic tourists (including business) who automatically cut down on such expenses. Government should look at the elasticity of demand for tourism and not do simplistic revenue budgeting. Discriminatory pricing of air travel, entry to historical sites and sanctuaries weighed against foreigners is not taken to kindly. We are well within our rights to do so, but the question is, what message does one want to convey to foreign tourists?

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Tourism demand is price elastic


AN INTEGRATED STRATEGY : PRICING & TAXATION Taxation Policy

Tax Deferment through creation of a ‘Currency Fluctuation Reserve’

The Tourism Industry, one of the largest foreign exchange earners for the country. Income from Tourism in Foreign Exchange should be ‘Deemed as Exports’. It is crucial for the country to enhance foreign exchange reserves. As an incentive, Government should permit the Tourism and thousands of related industries to create “Foreign Exchange Fluctuation Reserve” to the extent of Net Foreign Exchange (NFE) earned. A fixed percentage of each years’ profit can be transferred to this reserve account, subject to a monetary limit on the aggregate amount of such reserve not exceeding the Foreign Exchange exposure. The annual contribution to such reserve should be tax deductible at the time of transfer of amount to reserve account. After a period of, say, 5 or 8 years, such amount transferred to reserve account can be released on payment of tax. This tax deferment will provide financial support to the Foreign Exchange earner to meet any foreign exchange risks, which may arise and improve their margins to some extent. At the same time the Government will get its tax revenue, though after a specified period. A similar incentive mechanism was operating earlier for investment in plant & machinery as “Development Reserve”.

Tourism Industry could be ‘deemed as Exports’ to the extent of Net Foreign Exchange earned’ by the Industry


Organisational Mechanism

For Development of Tourism

Government & Industry to Unite Strategically Possible Models Why a Professional Body ? - ‘National Association for Tourism Promotion’ (NATPRO) ‘NATPRO’ - Aims and Objectives Action Steps for ‘NATPRO’ 64 65 61 62 63


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ORGANISATIONAL MECHANISM FOR DEVELOPMENT OF TOURISM Strategic Government & Industry Partnership

Strategies & policies for development of Tourism in India requires an effective body for co-ordination between government and industry

Issues

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Action areas/ decisions concerning the tourism industry are out of the jurisdiction of the Ministry of Tourism & involves other ministries as well. (such as the Ministry of External Affairs, Ministry of Finance, Ministry of Urban Development, Home Ministry, Ministry of Environment at the centre and various Ministries and Departments at the State level). They often retard or work at cross purposes despite the best intentions. Policy initiatives by the GoI through a series of National Tourism Policies as well as fiscal incentives like tax breaks etc. have failed to bring life to this industry primarily due to lack of any action at the ground level There is a clear need to build & sell the brand of Indian tourism worldwide but there is no single body depicting the united face of the tourism industry in India Presently, the tourism industry is represented by a large number of associations/ bodies. These associations / bodies are either a part of a larger industry body or are tourism industry related trade bodies (either an industry association or a trade body). Each association/ body works independently with its own agenda. e.g. ASSOCHAM, FICCI, CII, IATO, TAAI, FHRAI, apart from Bombay Chamber of Commerce & Industry None of the bodies currently monitor, maintain & update detailed reliable data related to the tourism industry

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The need is for a mechanism whereby development and implementation of various strategies & policies are ensured.


ORGANISATIONAL MECHANISM FOR DEVELOPMENT OF TOURISM Possible Models

There are three models for developing a unified body to represent the tourism industry

Federation of the various trade Associations that belong to Travel and Tourism ϖ Danger of getting labelled or positioned as yet another trade body for lobbying, a constant internal tussle for turf for prioritisation of issues, etc.are the inherent dangers of this model ϖ A co-ordinated panel of the Tourism cells of CII, FICCI, Assocham, etc. is not being considered because these association do not as yet have a track record of joint working except on specific issues. ϖ What is required is a fully operational organisation and not a panel, and it needs to be headed by people who will rise above the sectarian interests of one trade or the other, even if they belong to one Board of Tourism Development in India ϖ Not recommended because in India, Boards tend to be quasi Government bodies with a good charter but little power or funds to provide action. The organisational format too is not conducive. e.g. Coffee Board, Rubber Board, Tea Board, etc. ϖ However, the Singapore Tourism Promotion Board and Dubai Tourism are outstanding examples of success A NASSCOM like format with industry leaders working in close touch with the Government ϖ A fully professional private sector initiative with a functioning organisation with clear objective and plans ϖ What NASSCOM did for the IT sector can be done for the tourism sector ϖ The GOI understands this model and can be persuaded to support it

For convenience, the suggested body is referred to as NATPRO


ORGANISATIONAL MECHANISM FOR DEVELOPMENT OF TOURISM Why a professional body - ‘National Association for Tourism Promotion (NATPRO)’

Prima facie there is a case for the creation of ‘National Association for Tourism Promotion (NATPRO)’ an apex professional body which can coordinate & promote the interest of the tourism industry with a single voice

Why a professional umbrella body for the Tourism industry ?

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There is a need to co-ordinate the needs and activities of the various trade bodies on the one hand and co-ordinate the actions of various ministries which act independently but impact the tourism business The option of vesting of all possible powers / responsibilities related to the tourism industry with a single ministry is also not a practical solution, because of the nature of issues involved. Will effectively function as an apex body representing all the major tourism industry related trade Associations. Therefore a full time professional body is required to deal with issues and work for Indian tourism in a co-ordinated manner.

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Such a body would act as the prime catalyst for the growth of tourism & related industry.


ORGANISATIONAL MECHANISM FOR DEVELOPMENT OF TOURISM ‘NATPRO’ - Aims and Objectives

The Government needs to encourage the creation of such a body as it will complement the role of the Tourism Ministry

Aims & Objectives of ‘NATPRO’ ϖ Vision and Strategy: Build a brand of Indian tourism & work towards building & delivering what the brand promises to offer ϖ Maintain close interaction & work actively with the GoI in formulating National Tourism Policy & other related issues ϖ Maintain & disseminate information & statistical database of tourism & hospitality services related activities ϖ Take effective steps to create awareness about the economic & social benefits of tourism ϖ Promote the concept of travel as a leisure activity domestically. ϖ Encourage members to provide world class quality products & services by laying down industry standards of service, manpower quality & infrastructure. ϖ Actively help in the development of tourism related service infrastructure by assuming the role of certifying/ accreditation body for various tourism industry related vocation & training institutions. ϖ Provide an ideal forum for overseas & domestic players to explore the vast potential of Indian tourism through joint ventures, strategic & marketing alliances, joint product development by organising business meets with delegations of various countries. ϖ Provide members with opportunities to participate at major tourism events across the world & organise tourism events in India. Involve membership participation in various forums on subjects like HRD, Export, Food & Nutrition, Housekeeping etc.

Act as advisory, consultative and co-ordination body for tourism industry through representatives in various committees of the Government of India including various Ministries like Ministry of Tourism, Ministry of Finance, Ministry of External Affairs etc. The government should be convinced on the need & utility of such a body to partner the Tourism Ministry


ORGANISATIONAL MECHANISM FOR DEVELOPMENT OF TOURISM Actionabl;e Agenda - ‘NATPRO’

Action steps for the setting up of a NATPRO

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A few visionaries from the travel and tourism industry who enjoy respect within their respective trade bodies and the Government should form an Interim Council The Interim Council should make a presentation of BCCI’s White Paper on Tourism to the PMO and if possible to a group of key functionaries including Ministers from all the relevant ministries. The objective of which will be a) to get the Government of India to incorporate some of the suggestions in the proposed tourism policy b) to get the Government of India to bless the formation of NATPRO

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With the help of an initial corpus, the Interim Council should get the charter for NATPRO drawn up, complete all the legal and procedural formalities for creating NATPRO, develop the organisational framework required and prepare a Business Plan Presentations to the Trade Bodies for a ‘buy-in’ and to start the membership drive Recruitment of top flight professionals and setting up of the elected / nominated Executive Council which will replace the Interim Council NATPRO to prioritise activities for the first 6 months and to develop a detailed action plan

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white paper o ntourism

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