The downward spiral that the hotel sector has been on since 2008 is being accelerated by a rather poor economic and investment climate. Dark clouds have collected over the horizon once again, just as the travel sector was beginning to see a tangible comeback, thanks to increasing visitor arrivals and a rebound in domestic commercial demand following the global financial crisis.
Despite being an important sector of the economy and a promising source of employment, India’s travel and tourism industry contributes just approximately 2% of the country’s GDP. According to WTTC’s long-term forecasts, Indian tourism demand will expand at an annual rate of 8.8% over the next 10 years. India should be among the top three fastest-growing tourist markets in the world, based on the growth of previous visits. Over the next ten years, overall travel and tourist GDP is predicted to expand at a rate of 7.0 percent to 7.5 percent, with an annualised increase in travel and tourism employment of around 1.0 percent.
It is critical to assess in these times of uncertainty.
– What is a good market entrance strategy for future hotel construction?
– Has India’s potential for travel and tourism reached its pinnacle?
– What effect would a poor economic and investment climate have on leisure destinations?
My thoughts on the primary elements that will drive future travel and tourist demand in India, as well as specialised areas with unique development potential over the next five years, are as follows:
– Integrated Travel Circuits and Weekend Getaways
Around 600 million people are expected to be urbanised and reside in cities across India by 2030. While there has been a lot of attention and action on hospitality projects in metro centres, there has been relatively little development activity to exploit the potential of leisure travel, which is currently projected to be worth $250 billion. Weekend travel will be in high demand at important gateway locations, according to our forecasts, and these markets will increase at a rate of 18.0 percent to 20.0 percent annually over the next ten years. The outbound travel industry will diminish if the US currency remains high, creating more latent demand for local leisure destinations.
Weekend Getaway locations within 4-5 hours driving distance of important Tier I and Tier II cities are perfectly positioned to gain from growing demand and are suitable for the construction of boutique resorts and hotels in these uncertain times.
– Wellness and Spa Vacations
Long-term employment and age demographic trends indicate that India will generate roughly 270 million new jobs, and the country’s per capita income will continue to rise. Significantly, increased disposable income will continue to impact India’s spending growth, rather than decreased savings. This is excellent news for the travel and tourism business, as income-driven spending is expected to last longer.
Higher disposable incomes and increasing health awareness among urban residents are also projected to boost the notion of rejuvenation and wellness travel. This trend is expected to provide destination spas, wellness resorts, and wilderness retreats the boost they need.
– Travel destinations that provide one-of-a-kind experiences
From deserts to coasts, jungles to mountains, India offers a wide range of travel opportunities. Historically, most domestic and foreign leisure travel was confined around a few travel circuits centred around Delhi, Kerala, Goa, and Rajasthan. There has been a significant increase in both road and air connection to distant places over the previous decade, which has sparked a surge in experience travel.
Furthermore, most popular leisure sites have suffered from unplanned urbanisation, resulting in a reduction in the total holiday experience offered. Destinations offering unique travel experiences, such as eco-tourism, forts and palaces, adventure tourism, desert and jungle safaris, pilgrimage and spirituality-based travel lodges, and so on, will, in our opinion, offer the next big growth opportunities and will see significant increases in tourist visitations over the next ten years. Niche sectors such as culture tourism, the Great Indian Temple Circuit, health tourism, weddings, and so on will expand quickly and offer investors with spectacular profits.
– Meetings, Incentives, and Conferences (MICE)
The severe demand-supply imbalance that existed in India between 2004 and 2008 as a result of a scarcity of high-quality hotels had a negative influence on MICE travel. In most areas, there was limited accommodation availability and exorbitant prices, making it difficult to hold huge international conferences. In these marketplaces, logistical bottlenecks and a lack of sufficient infrastructure were also an issue. Several Indian state governments have recently showed strong interest in developing convention centres using the Public-Private Partnership model.
The presence of a conference centre often generates significant room night demand, and there is a significant growth opportunity for companies who pursue an aggressive marketing strategy for the MICE segment, since demand for this category is expected to revive substantially in the coming years.
Initiatives to upgrade infrastructure, ease limitations on foreign investment, and, probably most crucially, attempts to disseminate the Brand India message will stimulate demand for travel and tourism as the uncertainty subsides and the economy’s buoyancy returns. While still in its infancy, India’s travel and tourism business is becoming increasingly attractive to investors both within and outside the nation. The travel and tourism sector in India has a positive long-term outlook, which we believe will continue. India is projected to become one of the world’s fastest expanding tourist markets over the next decade, and it will be difficult to ignore.