2 years into the pandemic - How is the future looking for Tourism Sector?

(An article based on the Tourism and Hospitality Report by IBEF, published in September 2021)

The tourism industry in India is emerging as one of the largest service-sector industries making the highest profits in the country and it still has enough potential to keep growing because of our cultural heritage, flora and fauna, medical treatments like Ayurved and other therapies, adventure sports and much more. Just like several other countries across the globe, tourism is an extremely crucial source of foreign exchange.

The pandemic hit the industry significantly and brought it to a standstill. With the coronavirus cases going down, the Government of India and the hospitality sector is trying to resuscitate tourism across the country. Various steps have been taken to achieve that goal. After the COVID-19 pandemic hit the country for the second time in 2021, in September the Government of India finally allowed passengers from around the world to travel to India, following the precautionary protocol while traveling and after arriving, but only if they have taken two doses of any coronavirus vaccine. Foreign Tourist Arrivals (FTAs) in India by 2028 is projected to increase by a big number. Based on current data, it has been predicted that by then, the revenue generated by Foreign Tourist Arrivals in India would be around 59 Billion USD.

The following chart shows the amounts of capital investments in the tourism sector in the past few years and that forecasted for the Financial Year 2028:

On the other hand, domestic tourists are also highly expected to encourage and boost the growth of the travel industry, especially after the COVID-19 pandemic. The Government of India, along with the State Governments in the country have been taking initiatives to create a surge in domestic tourism. The Ministry of Tourism, Government of India, signed a Memorandum of Understanding (MoU) with Indian Railway Catering and Tourism Corporation to nourish the hospitality and travel industry. It has also signed a Memorandum of Understanding with online travel companies that currently are the market leaders, such as Easy My Trip, Cleartrip, Yatra.com, Make My Trip and Goibibo. New airports have been launched in some cities by the Prime Minister of India, Mr. Narendra Modi. An added funding of Rs. 1,854.67 crore (269.22 Million US Dollars) was approved for new projects under the Swadesh Darshan scheme which aims to promote, develop and harness the potential of tourism in our country. The chart below shows the collective spending of the Government of India on tourism in the past years and the forecasted spending for the Financial Year 2028.

The travel and tourism sector of India has immense prospective for development and growth. International hotel chains and other firms from the tourism and hospitality industry are trying to expand their businesses in our country. Even the Indian hotel groups are buying new properties in different states and Union Territories to build more of their hotels and resorts in those locations.

Some examples of International hotel chains that have recently invested or are as of now in the process of investing in the Indian tourism sector are-

1. Singapore-based Raffles Hotels & Resorts opened its first hotel in Udaipur, Rajasthan, on August 2, 2021. Raffles’ parent organization is Accor, a French multinational hospitality company. Puneet Dhawan, Sr. Vice President of Operations - India & South Asia, Accor said “The rich cultural heritage, the regal past, and the grand architecture that gives the city of Udaipur its splendor, all contribute to the new Raffles Udaipur experience.”

2. Secondary and tertiary markets remain a focus for Marriott International. In September 2021, Marriott signed 22 new hotel agreements in South Asia – comprising India, Bhutan, Bangladesh, Sri Lanka, Maldives and Nepal – in the past 18 months and is planning to add more than 2,700 rooms to its portfolio.

3. Wyndham Hotels & Resorts has announced plans to open a 300-room hotel near the Mumbai International Airport in the summer of 2022.

4. Hilton plans to add 18 hotels pan India by 2021, along with 15 operational hotels under its brands—Hampton, Hilton Garden Inn, Conrad, Hilton Hotels & Resorts and DoubleTree by Hilton. On October 22, 2020, Hilton launched its first DoubleTree by Hilton brand in Jaipur, Rajasthan.

5. In April 2021, Dream Hotel Group announced plans to invest about US$300 million in the next 3-5 years for development of the cruise sector in India.

Following are a few examples of Indian hotels chains and hospitality firms that are trying to grow their businesses significantly-

1. Fern Hotels & Resorts is India’s leading environmentally sensitive hotel chain. In January 2021, Fern announced plans to open 8 new hotels in the first half of 2021. The new hotels will be opening in Gujarat, Maharashtra, Madhya Pradesh and Andhra Pradesh.

2. Choice Hotels India is a wholly-owned subsidiary of Choice Hotels International. It currently has 35 operating hotels in India. In February 2021, the hospitality firm announced plans to open 10 hotels in locations such as Bengaluru, Indore, Kochi, Manali, Rishikesh, Udaipur, Kolkata, Chennai and Bareilly.

3. Taj Hotels, which is one of India’s biggest hotel chains, is aiming to expand its portfolio of properties by 36% in the next 3-5 years. Puneet Chhatwal, Managing Director and CEO, Indian Hotels Company Limited (IHCL) said, “If we could add 70 contracts during and pre-pandemic in three and half years, there is no reason why we can’t add another 80 in the next 3-5 years. So, our portfolio then becomes a portfolio of 300 hotels.”

Hotel chains continue to strike into new business segments and are starting up new initiatives to stay in sync with their missions and yet being dynamic in between the Covid-19 waves and repeated losses because of them. Companies that have diversified into new territories and rolled out new offerings since the pandemic outbreak including ITC Hotels, Radisson Hotel Group, Marriott International and the ones mentioned above are ready to continue with those initiatives despite the decline in overall profits. Thus, because of these companies and many State and Central Governments’ initiatives, there is evidently a continued growth in investments in the tourism and hospitality sector of India and it will very soon be flourishing once again.

Written and Illustrated by Deepshi Srivastava