This report profiles India’s tourism industry, discussing market trends through 2013 and outlook for 2014 and beyond. The report also highlights leading players in the sector including Indian Hotels Company Ltd, Eastern India Hotels Ltd and Thomas Cook India Ltd.

Tourism has played an important role in the development of the Indian economy. It is a service-oriented sector which not only generates foreign exchange earnings for the government, but creates substantial job opportunities and is a means of livelihood for millions of Indians. The industry involves a plethora of service providers in both organized and un-organized sectors which include travel agents, tour operators, guides, hotels, guest houses, inns, restaurants and other allied services. Tourism also helps to stimulate other sectors like agriculture, handicrafts, communication, transport, aviation and construction.

2013 was a tough year for the Indian tourism sector. The country saw a subdued growth in foreign tourist arrivals (FTAs) as well as lower growth in foreign exchange earnings due to steep depreciation of the Indian rupee. Moreover, high inflation led to an increase in the operating expenses of the players in the sector thus eroding their profit margins. However, domestic tourism was not much affected by the slowdown and recorded a resilient growth in spending during the year. The decline in outbound tourism in 2013 was a blessing in disguise as it helped to reduce India’s current account deficit.

The sector has shown some signs of improvement in 2014 with higher growth in FTAs. Going forward, FTAs in the country are expected to grow but the target set by the planning commission for the year 2016 seems out of reach as of now. However, further investments in the sector and a favorable environment may help to reduce the gap. India’s domestic tourism has seen a consistent double digit growth in recent years. The domestic tourist traffic is expected to beat the 12th plan target set by the planning commission.

Key Points:

• According to the World Travel and Tourism Council, domestic tourism spending grew at a CAGR of 6% during 2008-2013 while foreign exchange earnings grew at a CAGR of 8%.

• During 2006-2013, the number of foreign tourist arrivals (FTAs) in the country grew at a CAGR of 7%. FTAs grew by 4.3% year on year in 2013 which was lower than the historic growth rate as well as lower than the 5.4% growth recorded in 2012.

• During 2008-2013, spending on domestic travel and tourism grew at a CAGR of 5.5%. In 2013, it recorded a year on year growth of 6.8% over the 2012 figure.

• During 2006-2013, foreign exchange earnings (FEEs) from tourism saw a double digit CAGR of 11.1%. However, foreign exchange earnings from tourism recorded a year on year growth of only 2% in dollar terms.