The Changing Face Of Brand India

India is positively happening and it’s not just the numbers that are creating the pervasive cheer. The resilient quartet that is the Department of Tourism (DoT) can take a bow. Bhisham Mansukhani delves further...

Himmat Anand

An embarrassment for many years, Indian inbound tourism is finally looking up and the pervasive ‘feel good’ factor that has presently imbued the entire nation can’t nearly hog all the credit. India is being noticed and visited and concurrently, problems on the ground are being dealt with due to an earnest conviction by the government. Is this perhaps the turn of the tide that the collective ebullience of a weathered industry was hoping for? Inbound returns for 2003 edged towards the three million figure, notching 2.7 million, up from over 2.3 million in a forgettable 2002. Ecstatic reception for this increase is perhaps misplaced but there is an extensive melting pot of fact and opinion to suggest that Indian Inbound is arriving, if only just. The growth has been above 18 per cent, hotel rooms and airline seats are hard to come by and plenty yet in the offing. 2004 also witnessed monumental aviation reform and hospitality growth swelled on the back of a trilogy of favourable budgets. Going forward, things can only get better.

Odds On Inbound

2002 was a historic year for international tourism with annual tourist numbers breaching the 700 million mark (703 million). The largest growth was witnessed in the Asia Pacific region that rose to second as the world’s most visited region overtaking the Americas. Over the last four years, the strongest growth has been registered in Asia. World Tourist Organisation (WTO) predicts 1.5 billion international tourist arrivals by 2020 who will generate revenues of up to US$ 2000 billion, which translates into just below US$ five billion daily. India is expected to experience growth rates double that of Europe and the Americas. China is poised to overtake France by then with over 130 million tourist arrivals. In 1995, long haul accounted for only 18 per cent of total tourism travel but by 2020, this figure will grow to 24 per cent indicating that Europeans and Americans will increasingly prefer to travel to regions far and away. Long haul contributes to 75 per cent of all of South Asia’s tourist arrivals and augurs just right for India. India is expected to receive close to nine million tourists by 2020 and its growth rate year on year leading up to it is forecasted as 5.9 per cent.

Home Safe

Electoral harakiri, communal instability, the stigma of fundamentalism and confrontational brinkmanship took their turns to scuttle the growth of Indian inbound over the past decade. Lately however, India has staved off all of the above and has been able to concentrate resources towards promotion rather than countering travel advisories. A SARS free status and a successful Incredible India campaign of precaution against bird flu have earned India sufficient brownie points with international travellers. Thomas Cook India CEO and MD, Ashwini Kakkar opines, “The international travel trade is diversifying its risk. If there is one thing that the last eventful 18 months have taught them it is that they cannot put all their eggs in one basket. For instance, if you put 33 million international tourists in China and SARS and avian flu break out, they’re up the creek without a paddle. They’ve been sending 80 million tourists into the city of Paris. What if something goes wrong. The damage to the tour operator is long term. The risk, practically speaking, needs to be mitigated. Of course, the choice is eventually one the tourist has to make. India’s record of security in the context of the last three years and its burgeoning English speaking population hasn’t gone unnoticed.”

Couple that with the ‘Incredible India’ campaign and the nation’s public relations record is a slate cleaner than that of giant neighbour China though India is still catch up kid, statistically speaking. Himmat Anand, COO, SITA - Inbound concurs. “The pent-up demand of the last two years and the effects of the Incredible India campaign has put ‘Brand India’ at a high with the traveller. Stability within the country and with its neighbours have also been decisive factors.”

Meher Bhandara, GM, corporate communications, Travel Corporation India(TCI) feels that the introduction of new tourism products like the Deccan Odyssey, eco-tourism, wellness tourism, medical tourism etc will increase special interest tourism into India. “The extensive Incredible India campaign by the Department of Tourism in major tourist generating areas has contributed significantly to increase in inbound. At the same time, the travel trade has worked in tandem to capitalise on the campaign by introducing and promoting tour programmes overseas.”

Her bullishness does not abate there. “The increase in the promotional budgets of state tourism departments and the Department of Tourism will lead to even more vigorous efforts in innovative promotions. Aggressive promotions by Goa, Kerala, Rajasthan which have seen the results, will serve as examples to other states to invest in the industry, leading to employment generation. Domestic tourism will keep growing due to increase in investments in tourism infrastrucure, improved economy, introduction of competitive fares, no frill airlines, more rail capacities,” beams Bhandara.

Blue-Eyed & How!

Ashwini Kakkar

Three great budgets later, industry peers have probably burdened tourism with the infamous and earlier inconceivable cliche of ‘blue-eyed boy’ given that the Nehruvian socialists had put tourism just under lighthouses on their priority list at a grand number 264 just after having driven the Brits away. Today, tourism shares the cramped spotlight with IT. 2003 saw Hotel Expenditure Tax (HET) abolished, the service tax concession extended, benefits of amalgamation under Section 72A of Income Tax Act and section 10(23 G) extended to the hospitality industry thereby incentivising much needed additional inventory. The increased allocation for tourism in Union Budget 2003-2004 from Rs 225 crore last year to Rs 325 crore, a jump of 44 per cent, set the tone for things to come.

Kakkar comments, “The government has no doubt, become proactive. We have prospered through the virtue of some very erudite ministers such as Arun Shourie, Jaswant Singh, Yashwant Sinha, Jagmohan and nonetheless A B Vajpayee, who have given the tourism industry much reason to hope. The above have understood the importance of tourism. They know that tourism creates maximum jobs (one of every 12), it is a GDP multiplier and foreign exchange earner. To put the optimism in context, for India’s first 55 independent years, tourism was not mentioned in any five year plan.”

Indian skies have so far had too much neglect to look down upon. In 2004 of turnarounds, it too was looked up to. The Naresh Chandra committee on civil aviation kick-started the much vaunted process of reform in the sector under the earnest aegis of a minister who has managed to hold on to the portfolio for more than one Christmas, Rajiv Pratap Rudy. Resultantly, Rudy implemented some of the committee’s key recommendations like allowing domestic carriers to fly international routes using bilateral unutilised by the national carriers and permitting FDI into domestic carriers.

So though the skies weren’t altogether cleared, the sun did break a bit through the clouds and domestic carrier operations will not only boost seat capacity but also pave the way for India’s induction to the current phenomenon of regional tourism that is already benefiting its south Asian neighbours. The abolition of the 15 per cent Inland Air Travel Tax (IATT) and Foreign Travel Tax (FTT) of Rs 500 alongside an excise duty cut on Aviation Turbine Fuel (ATF), expected to cheapen airfares by 20 per cent, confirmed the 2003-04 fiscal as Indian aviation’s finest and not devoid of promise given that there’s yet another earnest process of metro airport privatisation underway. Also just in, the government has revised its charter policy to allow unlimited outbound charters from anywhere in the country on any capacity aircraft provided the incumbent flies in two for taking out one. This development could nearly halve airfares on certain high-density routes such as Mumbai-London.

And there was one for the road too. The National Highway Development Project (NHDP) announced in 1998 is the PM’s most ambitious ever. It initially involved the monumental 5,846 km Golden Quadrilateral project, involves four-laning of highways between Delhi, Mumbai, Chennai and Kolkata. That project was bolstered in the 2003-04 budget by an announcement by the FM to develop a further 7,300 kms north-south corridor over and above the ongoing NHDP project. The entire project is slated to be ready by 2007 and is expected to put India on or at least close to par with international surface transport standards. The central government will spend up to Rs 16,000 crore for the national highway road upgradation project announced by the Finance Minister Jaswant Singh in the Union budget of 2003-4. The estimated cost of the entire project is Rs 58,000 crore and private investment for a sizable portion of the project testifies to a governmental conviction to partner the other side.

Rooms Rooms Everywhere!

According to HVS International’s 2003 report on Indian hospitality, 63 hotels are currently under development while another 20 are being converted by various mid-market brands. Delhi alone has 13 new hotels in various stages of planning. HVS International has reported ‘real optimism’ for the first time in its six years of Indian hospitality surveys. There is plenty of demand to increase the supply of hotel rooms across the quality board. A study on Indian hospitality and tourism, ‘Tourism 2020 Vision’ released by the World Tourism Organisation (WTO) in September last year stated that if the government and the industry wish to exploit the potential of the 8.90 million tourists expected by 2020, the number of hotel rooms across all segments will have to increase by a whopping 375 per cent, from the present 80,000 to 300,000 rooms.

More Will Come

That misplaced status of celebration isn’t lost on the trade. India is expected to receive nine million tourists in 2020, the same year that China is expected to breach 130 million. The disparity between the two neighbours is staggering but the bullish undertone for India’s inbound is to be found in an attitudinal change and an emergence of a set of conditions in which the country can highlight its strength. Kakkar elucidates, “The country does have demographic advantages if not the infrastructure to enhance it adequately. The writing is firmly on the wall - the world is discovering India. The Lonely Planet Guide has mentioned India as one the world’s third best to travel. International scribes are brimming with articles pertaining to the sub-continent. Couple that with a rupee baring its weakness to the dollar is magnetising unprecedented levels of foreign direct investment (FDI) and infrastructure. Let’s face it. Indian hospitality is as good as any and the people that do manage to get here are well taken care of. In 2004, the growth will exceed 15 per cent and the spend will rise by 25 per cent. It’s been a long time coming. China earns US$ 30 billion a year from tourism. Why should India be stuck at US$ 3 billion. We could catch up with China in less that ten years.”

Anand, tapers the enthusiasm with cautions, “Inbound tourism in India, without doubt is doing well. But the comparative platform of ‘well’ is, in my opinion, not very balanced .The year 2003 ended at inbound figures over 15 per cent higher than the previous year - comparisons being done with a period when our incoming numbers were at an all time low.”

Anand isn’t however ready to conclude with scepticism, forecasting that, “For 2004, the outlook of the industry is very optimistic. I expect the country to show an increase of at least 20 per cent over 2003 figures, given that everything is going right for the country - a booming upper middle class, high disposable incomes and a bullish Sensex. This, along with the increase in arrivals, is bringing back the feeling of strength and positive determination which had sunk to lowest levels in the last two odd years, and provides us with an excellent launch pad to make this the best ever year for inbound tourism.”

According to Bhandara, “Indian inbound is doing well and holds a lot of promise in future. Tourism Shining in India seems to be in order! TCI has had a 45 per cent increase in inbound already.”

The Tenth Plan devoted an entire chapter to tourism, recognising its ‘vast employment generating potential’. The plan also betrayed an allocation of Rs 2,900 crore (0.72 per cent of the total outlay) which was a substantial improvement over the 0.16 per cent average of the earlier plans. So what we have here is a convergence of private and public faith pouring into inbound tourism. Now it’s time for international tourists to do the same.