At the policy level, the Central government initiated various policy measures to steer tourism growth – both international and domestic. There has been concerted focus on skill development, especially the ‘Hunar Se Rozgar’ programme. In order to make the scheme effective, the government has made involvement of the hospitality industry mandatory by bringing special clause into the classification guidelines for hotels. After some questioning by the Parliamentary Standing Committee on Tourism on the poor condition of the tourist destinations in the country, MoT launched the ‘Clean India Campaign’ towards the second quarter of the year. MoT also identified ten monuments across the country in the first phase for sprucing up with the support of corporate India. The Committee also raised some serious questions on the dismal overseas marketing initiatives considering the low inbound figures despite spending almost Rs 200 crore of tax payers’ money. The report was like a wake-up call for MoT to revisit the effectiveness of India Tourism offices overseas. Although there have been talks about setting up offices in new markets, like CIS countries, and Latin American markets, on a representation basis, these offices are yet to become functional.
A temporary ban on Tiger Tourism in the country by the Supreme Court became a cause for concern for the tourism policy makers and stakeholders alike. The issue had created a huge debate between environmentalists who supported a blanket ban on tourism inside core areas of tiger reserves and people who supported restricted tourism. The National Tiger Conservation Authority, which took an adamant stand on the issue in favour of the ban initially, had to retract and revisit their guidelines allowing regulated entry into tiger reserves. The issue was a testament to the lack of coordination among various arms of the government and policy makers in the country.
Another major announcement by MoT that did not take off was launching a Global Travel Mart. While the plan was to launch India’s first Global Travel Mart on December 12, 2012, the whole initiative was put on the backburner. The travel and tourism industry was also expecting some announcement from the government in terms of expanding the Visa-on-Arrival (VoA) facility to travellers from more countries, especially some tourism source markets, which contribute to Indian inbound significantly. The government was also expected to extend VoA facilities to more airports in the country, besides the four metro airports, which did not happen. The only saving grace in terms of visa regime was the decision by the Ministry of Home Affairs, Govt. of India to lift the restrictions on multiple entry imposed in the wake of Mumbai terror attacks. The decision, which came close to the inbound season, has given a reason to cheer for the industry and the stakeholders.
Change of Guard at Transport Bhavan
The second half of the year witnessed total change at the top-level political and administrative leadership at the Transport Bhavan, the headquarters of MoT. The political dust created over the ‘Coalgate’ scam cost Subodh Kant Sahai his post as Union Tourism Minister. The cine-star-turned-politician from South India, Dr K Chiranjeevi, took over as Minister of Tourism with Independent Charge in place of Sahai. There was also a shuffle in the top bureaucracy at the MoT with new faces replacing the old ones as Secretary – Tourism, Special Secretary – Tourism, Additional Director General, etc.
Shortly after taking over the reins, Dr Chiranjeevi launched the ‘take two’ (phase two) of ‘Incredible India’ campaign with a new tagline for both international and domestic marketing, and promotional campaigns. While the tagline for the new international consumer campaign will be ‘Find What You Seek’, a simultaneous campaign with the tagline, ‘Go Beyond’, will be rolled out for the domestic consumer market. The international campaign is tailored to target all source markets.
Inbound
The inbound travel to the country did not reach the expected levels in 2012. The fortunes fluctuated sharply from over ten per cent growth in the early months to below five per cent towards the end of the year. The growth was more than the global average in the beginning, but came down as the year progressed. There are a couple of reasons for the diminishing growth. The prominent one, of course, is the poor financial sentiments in the global market. Europe, which is one of the key source markets for India, continues to be in financial distress. Except for Germany, all other key European markets, France, Italy, Spain, etc., are facing a financial crunch. Adding to this are the skyrocketing airfares, visa issues, etc.
“Inbound travel did not progress the way we expected in the beginning of the year. There was no big movement into India. There are a couple of reasons for this. One is, of course, the recessionary trends in the European market,” said Lally Mathews, Honorary Secretary, IATO and Managing Director, Vacations Travels & Tours. The skyrocketing airfares of Indian airlines are another reason for declining inbound traffic into the country. Mathews added, “It is difficult for anybody to afford the airfares now. Taxes are another major bottleneck,” he stated.
“Airfares have nearly doubled compared with last year because of increasing cost of ATF. This has negatively impacted travel sentiments of long-haul travellers,” said Gour Kanjilal, Executive director of IATO, and an industry observer. “Even hotels continued to keep their tariffs higher throughout the year, hence making packages of tour operators beyond the reach of inbound travellers,” opined Kanjilal. Indian visa regime is not tourism-friendly, forcing overseas travellers to look for easier options. “The whole visa process got complicated ever since the introduction of online application system. Most of the people who travel to India are senior citizens, who are not computer-savvy. Moreover, there is no language option other than English,” informed Kanjilal. Tour operators who send groups to India have already raised their complaints against the unfriendly attitude of the Indian consulates while processing group visas. The Far East and Middle East markets, which used to send tourists during off-season to India, did not fare well this year because of political uncertainties and tensions.
However, the travel trade is hopeful of a turnaround in the situation in the wake of the decision to lift the multiple-entry barrier for foreign tourists. This decision has been welcomed widely because it has come at the beginning of the tourism season into the country. “It’s a welcome decision and let’s hope that things will improve from early 2013 because of this decision to lift the 60-day restriction for re-entry,” said Mathews. “The decision to lift the 60-day clause would help key supporters to promote India more aggressively and reduce inconvenience for the industry and FTOs that visit India regularly to promote the country. Also, it will help in reducing unnecessary expenditure of travelling to and from India and also wastage of time of India specialists who are actively working in operations,” said Arjun Sharma, Managing Director, Le Passage to India. Rajeev Kohli, Joint Managing Director, Creative Travel, also welcomed the move and said that the decision will help in receiving more “repeat visitors”. There was a lot of confusion because of the rule and its removal will be better for all, he observed. Creating an image as a “welcoming” country for tourists is important The restrictions were against that spirit, he added. “As a destination we need to encourage repeat travel as many countries do. The easier we do this, the better for us. We need to get travellers to come back more frequently the way major global destinations have done,” Kohli said.
Outbound
India continued to entice more destinations and destination promotion agencies throughout the year. While the existing national tourism boards and representative offices have stepped up their engagement with the Indian market in the last one year, new tourism boards have started ground work for a share of the Indian outbound pie. Argentina, Bulgaria, Portugal, Slovakia, Denmark, etc., are waiting for the right opportunity to enter the Indian market. India, along with China and other constituents of the BRICS, is currently the attractive market for outbound travel. While outbound growth from Europe and the US is stagnating, tourism agencies are looking at BRICS to drive the future growth in a big way. “Compared to the economic crisis in America and Europe, economic fundamentals are strong in the Asian market in general and Indian market in particular. We are witnessing an exponential growth in the Asian market and have recorded a growth of 25 per cent (gross) in the first year of operations in Asia after opening a regional office in Singapore in August, 2011. Singapore, the Philippines and Malaysia are our key markets in the Asia-Pacific region now. But we are confident that India would emerge as the number one market for us in a couple of years’ time,” said Nicholas Lim, Regional Director – Asia, Trafalgar, a guided tour specialist of Europe.
Even long-haul destinations like the US have recognised the importance of India outbound to achieve their short- and long-term targets in tourism growth. While the US had a more or less flat growth in terms of inbound from major source markets, the Indian arrivals to the US has registered consistent growth of over ten per cent in the last few years. Brand USA is expecting to double the Indian arrival figures from the current over-six-lakh travellers to 1.3 million annual visitors by 2016. Tourism strategists of other developed markets like Great Britain, France, etc., also pin a lot of hope on Indian outbound. “Indians are looking out for niche tourist destinations round the world and are ready to experiment. Starting from Australia, New Zealand and Pacific Islands, and moving westwards, Indians want to travel to Fiji, Bora Bora Island, Hamilton, Hayman Island, Queenstown, etc. With the information that is available from various sources, today’s traveller is on the lookout for recommendations, which will fulfill what he/she is out to accomplish. Be it fun, relaxation, adventure, nature or sports,” stated Guldeep Singh Sahni, President, Outbound Tour Operators Association of India, and Managing Director, Weldon Tours & Travels.
However, there has been certain shift in travel patterns of Indian outbound travellers in 2012 because of various reasons, the most prominent being devaluation of Indian currency against the dollar, rise in airfares, etc. Sunil Hasija, Executive Director, TUI India, conceded that there was a dip in demand for long-haul destinations from Indian outbound travellers. “We saw a dip in travel to Europe and the Americas. Due to the rising exchange rates consumers looked at options that were closer to home. Also, the customers who in a normal scenario would undertake two to three holidays a year opted for lesser number of holidays and/or travelled to more domestic destinations,” Hasija added.
Karan Anand, Head-Relationships, Cox & Kings Ltd, had a different take on the issue. The travel sentiments, especially outbound, he said continued to be “robust” in the Indian market despite adverse conditions. “The devaluation of the rupee has had an impact on the overall cost of the tour package and so has been the increase in airline tax and surcharges that they impose on the customer. Of course, that has not dimmed one’s appetite for travel. Many customers traded down to beat the cost blues. The other noticeable trend has been that people opted for apartment stays that worked out to be less expensive than booking a hotel room,” pointed Anand.
Expressing similar views, Madhavan Menon, Managing Director, Thomas Cook India Ltd, said that despite the doom predictions for the travel industry, the Indian outbound holiday maker continued travelling like never before. The defining thing was ‘value’ across groups. “At Thomas Cook India our strategy included launching innovative consumer-centric products and tours across price points (super budget to premium), and this has worked strongly in our favour,” he informed.
Aviation
2012 was a turbulent year for the aviation industry in India. The domestic industry continued to bleed in the absence of any outright policy from the government in terms reducing the operating cost, opening up the domestic sector for Foreign Direct Investment (FDI), etc. By the time the decision on FDI by foreign airlines in Indian domestic carriers came in, it was too late, at least for Kingfisher Airlines, as the airline had already nosedived into a debt crisis. The national carrier, Air India, which was on life support by the government, had to face yet another pilots’ strike mid-way through the year, which aggravated its financial crisis. In a recent conference on aviation industry organised by CAPA, speakers observed fundamental inconsistencies in the running of airlines in India. The fuel cost in India is said to be up to 60 per cent higher compared to other markets.
The downfall of Kingfisher Airlines had a negative impact on the image of the aviation industry in the country, said Ankur Bhatia, Executive Director, Bird Group, and Chairman, CII’s Core Committee for Aviation. “2012 saw Indian aviation industry going through some prominent challenges, which hindered its projected growth. The downfall of Kingfisher Airlines has left a negative impact on the Indian aviation industry. Additionally, the increasing oil prices, decline in passenger traffic and liquidity constraints have completely jeopardised the economies of some airlines and continued to strain and drain the limited financial resources of airlines,” he stated. The first six months of 2012-13 have witnessed a double-digit drop in the aviation sector and the market has shrunk by four to five per cent.
The slew of measures taken by the government, like permitting 49 per cent FDI by foreign airlines into Indian domestic carriers, licence to import ATF directly, as well as lifting the cap on international routes for domestic carriers, towards the end of the year are yet to bring results on the ground. “Looking at these changes, 2013 looks bright as growth is projected with the increase expected in the passenger demand and traffic. Furthermore, with the FDI coming, the Indian aviation sector is capable of growing 120-130 per cent as more international carriers will look to invest in domestic airlines. Therefore, there is an urgent need to have a strong regional infrastructure, as foreign airlines will look at a strong infrastructure base first, before investing,” Bhatia said.
While airport infrastructure in the country has started improving with private participation, hefty airport development fees and user development charges being levied by the operating companies are becoming big concerns for both airlines as well as air passengers. The Delhi International Airport Ltd, increased airport charges by almost 450 per cent this year, which was criticised by the industry as a whole. IATA has termed India as the “worst performing” domestic air traffic country in the world. The agency has noted an almost 12 per cent plunge in domestic air travel in India over the last year.
Travel Trends
Irrespective of the general negative sentiments in the market, people continued to travel for leisure, business, meetings, etc. In the absence of major inbound movements, travel trade stakeholders started recognising the value of domestic travel in a big way. Regional, intra-state, and domestic travel started getting prominence across markets. Even MoT started looking at regional markets to offset the short fall from long-haul markets. The MoT even convened a summit of tourism stakeholders of the SAARC region in Delhi to mull various steps that need to be taken to improve tourism exchanges between countries of the region.
Most of the stakeholders whom TravelBiz Monitor contacted affirmed a positive trend towards leisure travel among people. “Indians are looking at holiday options that provide more local experiences. We are seeing a trend where customers are asking for more to do than just sight-seeing and shopping. Also, more and more customers are experimenting with more off-beat destinations,” said Hasija. Despite negative market sentiments, TUI India had registered positive growth in 2012, and expanded into new verticals like Sports Tourism this year, he added.
“One of the trends that we have observed is that people have now started taking multiple vacations. It is not confined to one holiday per year but maybe two or three or four holidays per year. What this means for us as a tour operator is to constantly engage the customer and ensure that he has a memorable experience. We live in an age of information overload and people are now looking at different travel ideas. We need to come up with packages that appeal to people, be they affordable packages or luxury experiences,” informed Anand.
The Incredible Indian traveller is evolving at an unbelievable pace, and creating new and engaging products to keep pace with him/her is a delightful challenge. From see-as-much-as-you-can multi-city trips, Indians are moving to leisurely experiential mono destination holidays. Besides a long summer vacation, we have observed numerous short-haul trips too. Travel has moved from the theoretical, to the emotional and personal domain, said Menon.
The OTAs have also witnessed positive trends in terms of purchasing travel products online. The number of consumers visiting online sites for travel information has increased more than 30 per cent in 2012, said Rajesh Magow, Co-Founder, MakeMyTrip. With the decreasing growth in air side of the business, OTAs have increasingly been shifting their focus to non-air side travel products as well as packaging of destinations and itineraries. “2012 has been an interesting year for the online travel business. The year witnessed consolidation and emergence of global players in the India market. The growth in gross bookings too continued in 2012 despite a difficult operating environment,” Magow concluded.
Enumerating other trends that have emerged in the last one year, Magow said that travel consumers largely wanted to combine their hobbies with holidays to make vacations more experiential. “MakeMyTrip was one of the first online portals to offer such a holiday package. Access channels have evolved with the growing dependency on smartphones, and today, more and more people are booking via mobile -this trend is here to stay for the coming years,” he added.
“The Indian consumer has evolved over the last few years when it comes to buying travel products online, especially the new generation of internet-savvy consumers,” informed Neeraj Singh Dev, Head – Outbound Holidays, Yatra.com. “These consumers have access to all sources of travel information and they pick the best deal after searching all possible channels. So, the challenge before us is to cater to this market by designing value for money itineraries and products,” he said. Moreover, this market has the confidence to swipe their credit cards. Irrespective of the fluctuations in currency rates, the Indian travellers have stuck to their preference of destinations. “Yes, of course, they might have shorten the length of stay from 15 days to ten days, and instead of staying in a luxury hotel, to a quality, three-star property,” he said.
