Rescuing India's Tourism

Hit by the double blow of a global meltdown and worldwide television coverage of flaming hotels and exploding trains, India appears to have picked a hell of a time to announce 2009 as "Visit India Year." But they have, and are trying to regain momentum.

Tourism, which had been growing by 15 to 20 percent annually, is experiencing its worst downturn since numbers have been recorded. Tourism arrivals, according to the Ministry of Tourism, fell by 2.1 percent in November year-on-year for the first time in six years, while foreign exchange earnings from tourism plummeted by 12.5 percent to US$1 billion for the same period.

Industry analysts say the ministry's projection of doubling foreign tourist arrivals to 10 million by 2010 from the current 5.08 million seems dead on arrival. This is indeed unfortunate considering tourism is a top revenue grosser for the country, earning over Rs364.6 billion (US$7.52 billion) in foreign exchange earnings last year. The sector was expected to create millions of new jobs*.

According to the UNWTO World Tourism Barometer, foreign exchange earnings per foreign traveler coming to India were US $2112 in 2007, more than twice that earned per foreign travelers worldwide (US$948) as well as Asia Pacific (US$1,027). In fact, most major Asian tourism destinations like China, Japan, Indonesia, Malaysia, Singapore and Thailand earn much less foreign exchange per foreign traveler as compared to India.

The hospitality sector’s woes have been compounded by travel alerts issued by a clutch of countries -- including the US, Australia, Singapore and Australia -- advising their citizens against travel to India in the wake of the November Mumbai massacre in which 160 people were slaughtered by Islamic militants over three days, with many of the deaths occurring in some of India’s most famed hotels. Although the alerts have been withdrawn, they had an immediate damaging impact on tourism which was already caught in the throes of the global meltdown.

For instance, the US state department pointed out that the attacks had "targeted American citizens and other westerners for the first time and tragically demonstrate that even in Indian five-star luxury hotels, security is not equipped to deter such attacks". Australia too, advised its citizens to “reconsider” travel to India.

“For the first time in nearly a decade,” says Subhash Goyal, former president of the Indian Association of Travel Operators (IATO), “Indian tourism has dark clouds looming over it. Even while we were thinking of how to wriggle out of the damage caused by the recession, the terror attacks threw us off kilter.”

What’s worse, the current turbulence in the tourism sector is most ill-timed as October to March is the peak business period. This has not only led to a sharp dip in corporate bookings from the west but also affected traffic of the vast Indian diaspora.

Furthermore, as the US and developed economies decline for at least this year, volumes and margins in sectors like tourism are likely to fall even more, say experts, as the crisis will have a cascading effect on the entire Indian hospitality chain – from airlines to tour operators to hotels.

According to a recent ICICI direct.com report, average room occupancy levels across major Indian cities have declined from 66 percent to 57 percent during November this year. This has hi the hospitality sector hard as room supply increased by about 8 percent over last year. But now, according to the report, average room rents are expected to dip by 15-20 percent over the next eight months.

Unsurprisingly, ever since the attack on Mumbai’s Taj Mahal Hotel, Oberoi Trident and the Chhatrapati Shivaji Terminus, rentals at most Indian hotels have crashed. “Room rentals in the country are driven mainly by Delhi and Mumbai,” says Ankur Bhatia, MD, Amadeus India. “The moment these are impacted, it has a domino effect on hotel rates across the country.”

In view of the looming crisis, several pan-India bodies representing hotels, airlines and travel operators met the tourism minister Ambika Soni and aviation minister Praful Patel last month to ask the government to aggressively market Brand India abroad.

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Tourism bodies are also working in concert with the government to ameliorate further damage. As a part of its new focus, the tourism ministry -- among other initiatives – is launching an online and print media blitzkrieg to attract foreign tourists. The freshly-minted campaign —which will highlight India’s vastness – will reinforce the fact that violence in one part of the country needn’t mean all of India is `unsafe’. Hence, specific web portals of different countries will now promote India as a `safe destination’.

The new campaign – Quintessential India – highlights youth, teamwork, the will to win and showcases the country’s resilience. The Taj Mahal, expectedly, features in the print ads as does Kerala’s snake boat race. The global economic downturn is given a different spin in another ad with the title – “A different kind of bull run” – featuring a bullock cart race. Playful tiger cubs, in yet another poster, focus on the spirit of India’s youth in “villages, cities and jungles”.

The ads will appear in local languages in several countries including Russia, Europe, Latin America, the Far East and Scandinavia, apart from the English-speaking nations. “It will be a comprehensive exercise covering major portals and websites in countries that register the maximum visits in India. They will also featured on portals like MSN, Yahoo, Google, baidu.com, khaleejtimes.com and wallstreetjournal.com,” says a ministry of tourism official.

The `Quintessential India’ campaign – launched with a new thrust -- is part of the Rs2.2 billion budget earmarked for overseas marketing for 2009. To promote India in a more aggressive way, the MoT has almost doubled the financial assistance for promotional activities undertaken by travel agents, tour operators and hoteliers. The tourism ministry currently has seven international media campaigns running in Europe, Americas and Asia Pacific.

“As all ads will direct visitors to the `Incredible India’ mother campaign launched in 2004, we’ll be able to keep tabs on which ads generate more interest so that we can tweak our campaign accordingly,” says the ministry official.

Indian tourism offices overseas have also been advised to liaise with the media and travel trade in their respective regions and organize familiarization tours to Mumbai and other important regions of the country. In a bid to woo foreign tourists back to India, the ministry is fleshing out a scheme to lure repeat foreign visits. Under the proposed scheme, a foreign national visiting India twice on a tourist visa till 2010 will be offered hospitality free for the third visit.

The ministry is also setting up a large India Pavilion at its international trade fair (FITUR 2009) in Madrid to promote India in the Spanish market. Incredible India will also have a visible presence at ITB 2009 in Berlin with the participation of state governments and travel trade bodies. An outdoor Incredible India campaign will also be undertaken in Berlin, to coincide with the ITB.

Under the new initiative, the ministry will also provide financial assistance to travel operators for participation in three international trade fairs per year from the earlier two. Moreover, the upper ceiling of foreign exchange earnings of applicant companies for eligibility under the scheme has been doubled from Rs100 million to Rs200 million. Those who travel to India next year will be offered specially fleshed out packages in 2010 and 2011 like Rural Tourism, Ecotourism, Adventure Tourism and Wellness Tourism to boost repeat tourism in the country.

Hotels, airlines and travel agents are also working in synergy with the Indian tourism departments to tackle the current turbulence in the sector on a war footing. The government is offering a 25 percent subsidy in participation fee to the travel trade and state governments to take part in the India Pavilions set up by India tourism offices overseas at major international travel fairs till the end of the financial year 2009-2010.

*This story originally quoted an inflated figure from the Ministry of Tourism.