JUST like any other economic sector with its diverse segments, tourism too is a major and serious business. The industry accounts for huge volumes and turnover, reflected in Table I and II.

Tourism is today’s largest industry, with the travel and tourism economy the world over contributing 10.4% of global GDP. It is also recognized as the highest generator of jobs accounting for 8.1% of the total global employment or one in every 12.2 jobs, adding 45 million jobs in the travel and tourism economy by 2014. In terms of employment, the travel and tourism economy accounts for 25 million jobs in India. This translates to a 6% share of all employment.

 

The next major component of this economic sector is ‘manufacturing’. Manufacturing in the tourism sector involves a very diverse range. Just in terms of accommodation the range can extend from niche boutique hotels to multi-rise hotels, purely experiential hotels and budget hotels all of which would be required in large numbers. It has been estimated that there is a shortfall of at least 150,000 hotel rooms in the country. If an average of three million rupees per hotel room is taken as a base figure, the investment required in this sector works out to be a staggering Rs 45,000 crore. One can imagine the huge employment opportunities generated when the country undertakes the development of roads, water supply, electricity supply, sanitation, construction and supplies to the 150,000 new rooms needed all over the country. This is in addition to the products and employment generated in the transportation sector to ensure the movement of tourists and materials needed to fulfil the requirements of this sector.

Another key word in the tourism sector is distribution. Traditionally, tourism was related to historical sites, the usual attractions like hill stations, sanctuaries, beaches or travel stops on the highways. However, starting from Kerala where destinations were created in the backwaters, on plantations or in residential homes, we have today reached a stage where the ‘creation of an experience’ knows no limitations. There is the possibility of using lake palaces, of forts being turned into museums, spas being created in the hills (like Ananda), tented hotels or even high-end resorts coming up near the small towns (like Alwar in Rajasthan). Not to forget that rural tourism can be made to flourish in the remotest of villages offering the best of experiences from the true cultural strengths of a village community.

Thus distribution in tourism experiences will assume a macro meaning and a macro opportunity for creation of economic wealth and development and equitable distribution of incomes ensuring alleviation of poverty. While research will form the backbone of the distribution system, the sheer opportunity for increasing flows from the present level of 3.37 million tourists to a target of 15 or 25 or 50 million will boost the fortunes of many an entrepreneur.

Entrepreneurship has to be the cornerstone of the ‘sales strategies’ which will have to draw on the sales network and acumen of the personnel responsible for generating turnover volumes in the tourism industry. Markets will have to be identified and focused upon. As sales strategies become more creative and innovative, we will increasingly hear of TV channels marketing tourism packages and E-ticketing as a routine. Events as a tool for marketing will become normal for social engagements. Charters and scheduled airline flights will become the necessary concomitants of tourist inflows domestically, regionally and on a trans-continental basis. Sales teams will have to identify and segregate the diverse segments, viz. senior citizens from the young salaried class, the budget tourists from the well-heeled, the risky adventurer from routine holiday-makers, the pilgrims from the sports enthusiast, and many others who would fall into their own distinct categories.

 

It will then turn out that tourism requires the most comprehensive of strategies for ‘marketing’. And this is what India has concentrated upon in the last two years. The ‘Incredible India’ marketing campaign is a 360 degrees campaign which has used the best creatives in the print and electronic media, internet and collaterals to penetrate the global market and reach the ultimate consumer. While the first year depicted India as a holistic destination – the ultimate rejuvenator of the mind, body and soul, the following year campaign concentrated on the Colours of India. So successful was the campaign that publications such as Lonely Planet declared India amongst the top five favoured destinations in a survey of 134 countries. India won the PATA Gold Awards in 2003 and 2004. Coupled with the excellent service tradition of the hospitality sector, India was declared by Forbes magazine as one of the world’s fastest growing travel markets.

The Ministry of Tourism has established an active public-private partnership and embarked upon marketing strategies which both hope to crack the US market while at the same time adopting a ‘Look East’ policy. The attempt is to generate at least one million tourists from each of the sizeable markets. Roadshows have been held in Europe and are being organized in North America. India is participating in about 200 fairs, exhibitions and travel marts all over the world to highlight the large segments of the tourism sector in India. A large number of journalists, photographers, film/TV teams, writers and stake holders in the travel industry abroad have been facilitated to familiarise them with parts of India.

 

The markets of Japan, Australia, Thailand, Malaysia, Singapore, Hong Kong and China are being separately targeted to provide short-haul tourists. Products like the Buddhist circuit in UP, Bihar, MP, Ajanta-Ellora alongside other cultural circuits and destinations are being developed in the country to attract these visitors. A promotional campaign entitled ‘Walk with the Buddha’ focuses on the Buddhists from South East Asian countries. On the other hand ‘medical tourism’ and the cool climate of the hills and Himalayas are being highlighted in the neighbouring countries of the Middle East/Gulf regions. Innovative packages are being provided to cover new markets from Russia and CIS countries, from Israel and Turkey, Spain and Portugal and the Scandinavian countries. The number of tourists already generated by the top 10 countries has undergone a drastic change.

 

Tourism as an economic sector has to interface with a large number of other economic, social and administrative sectors in part because tourism itself has to address various dimensions. For instance, the first demand is ‘regulatory’, i.e., how to regulate and standardize the product so that each customer knows what to expect and simultaneously ensuring that satisfaction levels are maintained at a constant high. Another requirement is to rationalize the different taxation regimes in different parts of the country. As against the ground reality of different taxes in each state, the need is to ensure uniformity in taxes and ensure that the rates are kept low such that as a nation/destination, India is able to compete with all the surrounding countries.

This in itself has two dimensions. One is to remain internationally competitive. Equally important is to remain competitive within the nation. It has been estimated that more than six million Indian tourists went abroad in 2004. Even if they each spent as little as US$ 2000 on an average, it implies that Rs 30,000 crore was spent by them abroad, more than what India earned from foreign tourists in 2004. It is in this context that different Indian states will have to make themselves more attractive to tourists so that they may spend this money within the nation.

At the state tourism ministers conference in March 2005, the deputy chairman of the Planning Commission pointed out that every tourist has a pre-decided budget. Lower government taxes means that much more money is being spent in the market directly by the tourists. It therefore makes good economic sense for states to lower taxes and allow funds to flow freely to the population. That can possibly be one of the best methods to reduce poverty.

 

A third area of concern is the interface with the financial sector. Tourism is one industry where cash flows are vital because the product has to be manufactured, sold and utilized on a daily basis and any unutilized product is pure dead stock. Equally, in a sector which is volatile and characterized by long term investments, debt management assumes great importance. To this one can add the vagaries of foreign exchange fluctuations, average room recovery rates, as well as seasonal fluctuations. The net result is that the tourism sector has to work on thin margins in a very competitive global environment.

While regulatory, taxation or financial issues impact tourism as a sector, there are administrative and environmental considerations which also impact on each individual unit. The environment around each tourism product is highly sensitive because while a factory may be efficient and its results determined to a large extent by its ‘internal dynamics’, any tourism product is to a large extent controlled by ‘external dynamics’. In a large country such as India, the tourism sector faces many externally influenced factors like security, law and order, delinquency, social disparities and inequalities, all of which impact on the successful operation of the entire sector or any unit.

 

Yet tourism can be (i) the largest creator of employment, and one which provides an opportunity from the unskilled to the highly-skilled; (ii) the medium to provide stability to the growth of the middle-class because it distributes incomes equitably; and (iii) an instrument to utilize counter-balancing attractions like the snow-clad mountains and the sun-dry deserts, hill stations and surfing beaches, from adventure to culture and from sports to holistic healing. Indian tourism, therefore, urgently requires a visionary thinker who can undertake systemic changes, implement them and create economies of scale, even if this involves developing ‘special zones’ covering a large area and a minimum size of the product, like what has happened in Goa, in the Kerala backwaters, in Tirupati or Jammu or what was characteristic of hill stations earlier.

The effort should be to create a shelf of projects adding up to 10,000 rooms at a destination or circuit in all categories of hotels, guest houses and home-stay accommodation so that all categories of tourists can avail of the destination in a safe and free environment. Such a policy creator must necessarily work in sync with other decision-makers to ensure a ‘delivery system’ capable of making big ticket interventions that produce large sized projects which can be marketed to all tourists, both domestic as well as foreign.