India Must Gear Up And Price Right: WTO

India has always dominated South Asian tourism. To continue doing so, it will have to understand the new dynamics of product pricing, placement and experience to keep fast paced Iran and Nepal at bay. The CEO's Conclave on the second day of WTI 2004 was convened to discuss just this. Alan D'Mello reports

From 565 million travellers spending 401 billion US dollars nine years ago, to 1,561 million travellers spending 2,000 billion US dollars by 2020 - if India wants a large share of the pie, it will have to understand and implement solutions in line with the new dynamics of product pricing, placement and experience. India is not the only South Asian country with growing tourism ambitions. Addressing an august gathering of chief executive officers (CEO) at the CEO's Conclave on the second day of WTI 2004, Dr Harsh Varma, regional representative of the World Tourism Organisation (WTO) for Asia and the Pacific, said he expects the country to achieve its target of five million visitors soon and even reach nine million by 2020. Warning bells however should be sounded. India is expected to lose three per cent of its 50.6 per cent market share, because Iranian tourism growing at 8.4 per cent, the fastest in the region, will grow by 11.1 per cent to 17.9 per cent. Some part will also be lost to Nepal, whose market share is increasing rapidly at seven per cent per annum, taking it from 8.7 per cent to 10.5 per cent.

Pricey India, Dicey Future

Alex Kyriakidis, partner, travel, tourism and leisure, Deloitte LLP, speaks the same truth. For the benefit of the CEOs at the Conclave, Kyriakidis concised his presentation made to international leaders at the World Economic Forum at Davos this year, wherein he emphasised that the changing socio-economic forum is changing the business and travel landscape created by the alarming incidences of terrorism and epidemics. India, as a country, should take note of this and its effects such as a heightened stress on safety and security. "Educated travellers will demand complete information, rely on the Internet for information and payment, and will have a greater understanding of the value for money concept."

But perhaps the most important market characteristic India should understand is its extreme price sensitivity. Dr Varma emphasised this factor more than once. "Everybody connected to tourism and hospitality should understand that price sensitivity will lie at the heart of every marketing operation," he emphasised. Dr Varma was specifically referring to tendency of the travel and hospitality industries to enter into damaging 'price wars' in tough times. "It is highly unlikely that the industry will return back to its pre-9/11 days. In the last two years, the traveller has been transformed. His strong knowledge and the options available may mean that a few dollars can make the difference in a sale."

Change - The Game

The highly volatile pricing is on the path to stability due in large part to the stable political situation. Many agree with WTO that Indian tourism has shown resilience in the recent past. This performance is derived mainly from the country's ability to steer clear of devastating crisis such as SARS and the American-led Iraq invasion. Pradip Madhavji, honourary consul, New Zealand Consulate, Mumbai, emphasised that the current times present the best opportunity for the sub-continent to recover its losses and set corrective measures in place to ensure the industry never finds its back to the wall again. "Partnership within the trade and between the trade and government is not an option but a requirement," said Madhavji, "The road ahead may be painfully bumpy, but it is a necessity."

There is still a lot that India has to do, key among them are the private sector's ability to compliment the government to assist in product diversification, marketing and promotion, and maximise the opportunities that information technology has to offer.

• Product Diversification - Taking the size of the country and the variety it has to offer, continuous product development to stay competitive at the domestic and global levels are essential and should be at the very heart of the planning and development process. While several new products such as Jharkhand, Chhattisgarh and Uttaranchal have emerged, India’s tourism promotion continues to focus on a few pockets. The importance of product diversification comes into play as select destinations begin displaying signs of fatigue. "India has been milking the same cow for a long, long time. We should either rest the product, enhance it or change it altogether. The aim should be to reduce the over dependence on these products. This will help spread the sector's socio-economic benefits to many parts of the country and to many layers of the local society," says Dr Varma.
• Marketing and promotion - The greater the challenge, the greater is the need for focused marketing and promotions. Largely due to the `Experience India' campaign, though only in the recent past has the Indian marketing and promotion become more aggressive, widespread and focused. The success at creating a strong image means that the trade, the private sector especially, should take responsibility for marketing their various destinations, though the process is governed by a single purpose and identity. "The Malaysian model is an excellent example of private-public partnership. 94 per cent of the promotional budget is provided by the private sector," informs Dr Varma.
• Information Technology - For a variety of reasons, India, a powerhouse for information technology, has not created an effective electronic marketing and sales medium. Ideally, India, with its vast pool of software manpower and relatively cheaper cost of operation, should have been leading tourism's digital revolution.

Dr Varma highlighted this anomaly through the Czech example. The small east European country has done exceedingly well and better than India, by accessing consumers directly through the Internet and gaining strategic significance by offering a variety of services and facilities through electronic information and bookings. Also, in optimising the digital medium, global research has indicated that the travel service provider will not be bypassed. Instead of becoming obsolete, experts have observed that the travel fraternity, in association with the government and the hospitality industry, has evolved to offer more efficient solutions and services to customers and principals.

Working the market

"If India wants to capture a larger portion of the market, it must come to terms with market realities," said Dr Varma. Sightseeing tourism will soon end, giving way to activities. This implies that long stays at monuments are a thing of the past, the informed visitor will prefer to engage in some recreational activity. While this may be true of the international travel trend, it is not true in South Asia. Globally, short-haul travel is gaining on the long-haul variety, though in these parts of the world, long-haul travel will be the main stay of the region's travel and hospitality industries. At present, long-haul accounts for 75 per cent of all the region's arrivals. By 2020, WTO expects it to grow to 85 per cent. With respect to India's inbound community many find this of interest, especially since China, soon to be the world's fourth largest tourist generating country is right in our backyard. "The Chinese will account for 100 million visitors by 2009, on the way to WTO's project figure of 130 million visitors by 2020," Varma stated.

Despite these indications, WTO and other industry watchers are backing short-haul travel for the future. This lays further emphasis on perfect product pricing. The logic behind backing short-haul travel is mainly because the work culture allows for shorter holidays rather than one long holiday. By 2020, WTO expects the short holiday practice will become as frequent as four excursions per year. In moving to shorter trips, the very profile of the traveller will change. Sightseeing itineraries will make way for leisure activities. With shorter and more activity packed trips hotels and travel service providers will have to arrive at specific products in order to be relevant. Specialisation and niche product segmenting will play greater roles in the time to come.

Key Factors for the Success of Indian Tourism

1. Political will to support tourism development

2. Development of infrastructure and superstructure

3. Transport development: international accessibility and domestic mobility

4. More active role by the private sector

5. Direct marketing by states

6. Quality and value for money