Fast Track To Globalisation

On the occassion of World Tourism Day and the annual 53rd TAAI convention, Bhisham Mansukhani measures the speed at which a burgeoning and tech-savvy Indian tourism is caliberating to the rest of the globe

Globalisation is the latest buzzword and the perpetual endeavour in every industry. There is a teeming goldrush towards international synchrony on every front since the end of the cold war expunged commercial boundaries. Suddenly something is a succinct way of articulating the Indian travel trade's unprecedented hurtle towards globalisation ever since Dr Manmohan Singh gave it the opportunity less than 12 years ago to rescue the the economy from defaulting on loans. Circa 2004 finds e-ticketing to be a rampant lark, forex a copious luxury and its allocation generous. GDS and internet have converted the technophobic, no frill aviation is about to effect a paradigm shift and the Indian traveller is going far and going it alone. Internationals are being poached and posited as domos of leading hotel and airline companies. Indian travel and tourism is happening and it is going global. India is no longer an island of antiquity. It is, for all practical purposes, integrated into the worldwide web of the planet's second largest and perhaps the single most promising industry. A global comparison shows that India is now the fastest growing market, preceded by China. An initial WTO analysis for 2004 reveals that international tourism receipts went up by some US dollar 40 billion, from US dollar 474 billion to an estimated US dollar 514 billion. Now, the same WTO report reveal that arrivals to India increased by 24 per cent after a very positive performance in 2003 (15 per cent increase). In the first seven months of 2004, foreign tourist arrivals showed an increase of 24.5 per cent over the corresponding period last year. Foreign exchange earnings also witnessed a steep rise. In the first seven months of 2004, tourism accounted for Rs 11,959 crore as compared to Rs 9,071 crore in 2003 and Rs 7,908 in 2002 - a substantial increase of 32 per cent. Indiatourism's outlook for overall growth in the tourism sector and its subsequent foreign exchange earnings is positive which is expected to increase anywhere between 15 to 20 per cent.

The landmarks, opportunities discussed herein form the fulcrum of the several forthcoming reports and analysis that will culminate into ET&T's unparallel, daily coverage of the 53rd TAAI convention in Kolkatta with its the convention theme, India Unbounded. Malaysia meanwhile plays host to International Tourism Day on September 27, with a focal theme of Sports and Tourism, celebrating one of the most compelling motivations for travel that regularly witnesses battling each other for bag events like the Olympics and Football World Cup.

The Outbound Story Thickens

India's quickly maturing outbound market is now witnessing a graduation to conspicuous segmentation. India constitutes Dubai's second largest source of arrivals after the United Kingdom and contributes 16 percent of Dubai`s tourism GDP. The New Zealand tourist board says average total spend by an Indian visitor is about US$2,000 per trip per person, projected to increase to US$3,000 by 2008. Sri Lanka estimates that Indian visitors spend US$75 to US$80 per person per day on shopping. The Swiss tourist office says Indians stay in three- or four-star hotels and spend an average CHF250-CHF350 (US$200-US$280) per person per day on shopping. Visiting friends and relatives (VFR) is a segment well above critical mass given the 20 million plus population of Indians and people of Indian origin living abroad. 60,000 Indians reside in New Zealand alone. VFR segment accounts for nearly half of Air New Zealand`s Indian visitor traffic to New Zealand. Meanwhile business travel in another Indian outbound phenomenon of note, constituting 63 per cent of Hong Kong's Indian incoming. Indian business travellers also account for the largest segment of total Indian arrivals into Dubai. (Information source : WTTC).

Destination Marketing Comes Home

Several International Tourism Boards (ITBs), new as well as old, have poured resources into promoting the Indian outbound through good times and bad. Malaysia which initially positioned itself as a affordable and accessible shopping destination has diversified its product for the Indian traveller, with eco tourism and a slew of entertainment option and even dabbled with regional tourism opportunities with Hong Kong. Hong Kong meanwhile, which enjoyed sizable VFR from India has sought to grow its Indian inbound lately by plastering itself on the Indian silver screen by promoting directly to Bollywood filmakers, barracking them to film on the Oriental island. Dubai Tourism and Commerce Marketing (DTCM) has a calendar of events including its monumentally successful Dubai Shopping Festival and a now gathering activity and adventure based tourism product which it is marketing to the Indian tourist. South Africa's `It's Possible campaign' which coincided its decadal freedom celebrations and country's successful bid for the 2010 FIFA World Cup has India conspicuously on the radar. Qatar, Canada, Turkey, Cambodia, Taiwan, Brazil, Russia, Greece and Egypt among many more positioning themselves as a Indian outbounder halt and mirror the sheer global relevance of the Indian sensibility and socio-economic trends. The total spending of all tourism boards put together was Rs 20-25 crore in 2002. Simply, more the NTOs, more the investments into the Indian outbound story and they all seem to agree to every cent being worth spending.

All That's Well

An embarrassment for many years, Indian inbound tourism is finally looking up. 2004 has also witnessed monumental aviation reform and hospitality growth swelled on the back of a quartet of favourable budgets. India is expected to experience growth rates double that of Europe and the Americas. 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. Nehruvian socialists had put tourism just under lighthouses on their priority list at a grand number 264 but tourism today shares the cramped spotlight with IT. The Naresh Chandra committee on civil aviation's reccomendations have revolutionised domestic aviation and the abolishment of the Inland Air Travel Tax (IATT) and Foreign Travel Tax (FTT) alongside an excise duty cut on Aviation Turbine Fuel (ATF) is expected to cheapen airfares by 20 per cent, The estimated cost of the National Highway Development 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. The International Tourism Bourse, (ITB) Berlin the world's biggest travel exhibition witnessed in excess of 100 destination management specialists, hoteliers, national carriers and tourism functionaries, operating out of the Indian pavilion in the Asian section of ITB.

A Wealth From Health

With conservative figures estimating half a million annual tourists with the chief purpose of either treating or enhancing their health, India has a lot to smile about with regard to its health tourism potential. The smile has gotten wider as two external agencies, McKinsey and Messe Berlin have revealed that a 25 per cent growth in India's medical tourism segment could render the players richer by Rs 5-10,000 crore. Messe Berlin feels that India can expect to earn US$ one billion in foreign exchange from medical tourism by 2012. A huge population from the Middle-East comes to India for gynecological treatments and abortions (as abortions are considered illegal there). Further India's treatment costs are almost a sixth of that in the US and Europe and reforms such as visa-on-arrival and a streamlining of hospital facilities could vault India's global share further up. In any event, India is in the global reckoning for potential leadership in tourism's latest revenue stream.

Indian Yes To No Frill

The no frill airline phenomenon which was initiated by Sir Fredi Liker's Sky Train is set to descend on Indian domestic aviation on a canvas larger than the single, runaway success of Air Deccan. The airline has signed up for 11 Airbus aircraft of which three A320s are already operational, now flying on most of India's high density routes like Mumbai-Delhi and Bangalore-Delhi and offering online early bird fares of as low as Rs 500. Kingfisher airlines has also joined Air Deccan in the country's default no frills hub for the new domestic aviation trend, Bangalore. The number of flights operated by low cost airlines worldwide increased by 50 per cent from 2000 to 2003 to 42,490 per week. While, in the last 20 years, China's domestic air travel market has grown by nearly 1000 per cent, India's market is yet to double. The hike in FDI in domestic aviation to 49 from 40 per cent will allow major private players raise more raise capital and drive valuable investment into the sector. The decision to privatise and modernise Delhi and Mumbai airports is further expected to boost the aviation industry in general though a five per cent tax on leased aircraft and engines has however put a needless spanner in the works. Also, the cost of ATF becomes higher in India compared to the international market because of the very high sales tax and it impacts operation cost heavily. In the face of this, the most unequivocal assertion of insulation to persistent government levy came from the senior management of a leading domestic airline: All we need for flying to South East Asia is permission.

E-ticketing Already!

All the intial apprehension about the penetration in the travel trade seems as far back as the ice age. E-ticketing in India is turning out to be more of an inevitability than a fancy with CRS majors Galileo and Amadeus have begun e-ticketing. Galileo currently has 20 airline partners while Amadeus has 11. By end the of 2004, 11-15 per cent of bookings generated is expected to translate into e-tickets. The industry expects the future of e-ticketing to be a bright one considering that the 70 per cent strong corporate traveller share of the overall market is predominantly tech-savvy. Jet Airways also made history in this regard, becoming the first domestic airline in India to have launched e-ticketing and has thereby propped Indian domestic aviation a notch higher towards the global template since travelling on an e-ticket is now becoming a global practice welcomed and appreciated by all travellers.

Hospitality Served Hot

While 2002-03 saw Indian hospitality's profits dip by 15 per cent 2004 registered a stunning 226 per cent turnaround surge. A study on Indian hospitality and tourism 'Tourism 2020 Vision', conducted by World Tourism Organisation (WTO) and released last year, revealed that if the government and industry needs to exploit the potential of 8.90 million tourists expected by 2020, the number of hotel rooms across all segments will have to increase by 375 per cent - from 80,000 rooms to 300,000 rooms. And the recent Hotel Values in India 2004 report by HVS shows that average hotel values across key cities in India increased by 33 per cent. The highest increase in room values was seen in Bangalore with 66 per cent, Jaipur with 43 per cent and Hyderabad with 48 per cent. A sudden surge in the budget segment in the wake of brand launches by the Taj Group's and Sarovar will finally fill an overdue chasm between the the class and crass which remained the most hackneyed critique on Indian hospitality. The proliferation of service apartments by Marriott and Taj and upcoming properties by real estate behemoth CB Richard Ellis, Oakwood Worldwide, the indigenous IDEB Construction Projects (P) Ltd and lately Ascot, signals the percolation of another global trend. India's billion dollar plus liquor industry has seen consumption of whisky vault by 20 per cent per annum with estimates of beer consumption trebling within the next decade. Further, the Hotel Expenditure Tax (HET) abolishment still stands and the benefits of amalgamation under Section 72A of Income Tax Act and section 10(23 G) extended to the hospitality industry is incentivising much needed additional inventory. Moreover, hospitality in 2004 has found itself witness to a melting pot of international trends coming, polarised to India's uninterrupted potential and in simple terms, a substantial augmentation of room inventory is a spin-off that will unerringly elevate India’s share of the international tourism pie.

Agent Vs Airline, Game On

The exacerbating law of averages decree at least a single stymie in a coalesce of positives and the recent stand off between agents and airlines which rarely ends with agents standing firm together, this time surprised. Lufthansa rescinded its thrust for a two per cent cut in agent commissions to seven to five but with a zero commission regime taking route in most of the developed world, its percolation into India is, by the admittance of some agents itself, an inevitable rather than impossible. There are certain economic realities that also need to concurrently play out for globalisation to transpire herein which ironically may only add to the overheads of airlines who claim a commission cut is imperative to offset costs. Clients will have to use more internet and more plastic, both of which will add to the airline tab while the travel agent will actually be better off, relieving a fee for every service he delivers, rather than a wafer thin commission. That evolution is clearly light years away and could well be presumed to be the time frame for commission cut deferment. The jury is out on a limb while for the two embattled travel partners, things will never be the same again.

Letting Sense Prevail

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, so said Dr Harsh Varma, regional representative of the World Tourism Organisation (WTO) for Asia and the Pacific. International Tourism Day hosts Malaysia's model is a classic example of a private-public partnership. 94 per cent of its promotional budget is provided by the private sector. Returning to India's exuberance, allowing the bonhomie of positive factors to overshadow the eyesore is to learn nothing from hindsight. Too often have the elements come together in happy coincidence to abet the Indian dream of globalisation and yet something sinister has parodied any eulogy inked for Indian tourism. This sinister factor is a combination of anomalies in an otherwise earnest mix. Domestic carriers are being allowed to fly overseas but are being buffeted with a tax on lease aircraft. Inbound tourism has outperformed over its previous year but has just about matched 2002 figures. Hotel and airline inventories are still below par to accommodate any substantial growth in inbound tourism while uncertainties about an adequate climate of cost economics for the sustenance of no frill airlines is potential hanging fire looming over India's latest set of aviating neophytes. So although Malaysia is rather appropriately hosting World Tourism Day 2004 with a central theme of sport and tourism, all Indian tourism really needs is to allow its turnaround to continue its course without abetment. India would then make for quite appropriate hosts to World Tourism Day.