2016: A better year for the industry
While inbound arrivals to India witnessed a growth over 10 per cent in 2016, domestic and outbound segments have also registered a higher growth compared to 2015
The year 2016 seems to be a better year for the Indian tourism industry compared to 2015. The Foreign Tourist Arrivals (FTAs) during the period January – October, 2016 were 6.96 million with a growth of 10.5 per cent as compared to the FTAs of 6.29 million with a growth of 4.5 per cent in the corresponding period last year. Speaking at the WTM 2016, Mahesh Sharma, Union Tourism Minister (I/C), said that the Indian tourism outlook is certainly very promising with an upswing in the growth of FTAs in India in the recent years. The Minister said that India has set a target to achieve one per cent of international tourist arrivals through a multi-pronged approach, including proactive marketing strategies in partnership with the tourism stakeholders.
By end of the year 2016, India is expected to receive a record nine million foreign tourists in the current calendar year. “We may reach around nine million this year. A key factor behind the growth is the e-visa regime. It has now come into full implementation. It is a fact that it was announced in the end of 2014 but it could not have an effect in 2015 as initially it was done for 113 countries. Now, we have over 150 countries. Moreover, there is always a reaction time between launch and use,” Vinod Zutshi, Secretary, Ministry of Tourism, said at various industry forums.
The increase in inbound arrivals is the result of various proactive programmes implemented by the Ministry of Tourism (MoT) during the year. The expansion of e Tourist Visa from 113 countries to close to 160 countries, launch of 24×7 toll free tourist infoline, setting up of Task Force for promoting cruise tourism, Bharat Parv, hosting of BRICS Convention on Tourism, Incredible India Tourism Investors Summit, New Civil Aviation Policy and overall emphasis on infrastructure development across the country. Overall, the Ministry of Tourism and the industry have done all they can to keep the tourism numbers up through the year, making strong trends for 2016.
Emerging Scenario:
SP Jain, Managing Director, Pride Hotels, opines that the hospitality sector is showing positive growth after the recession period of 3-4 years. “We are expecting that the hospitality sector will grow with an average rate of 10-12 per cent within next 4-5 years. This is happening due to multiple reason mainly improvement in the domestic tourist and e-TV for foreign tourist and secondly the supply of new hotels has come down in comparison to earlier,” Jain adds. Echoing similar sentiments is Pradeep Kalra, Senior VP – Sales & Marketing, Sarovar Hotels. According to Kalra, the industry has experienced reasonable growth in recent years. “Going forward, the potential is immense that will enable good scope to expand with rising purchasing power, improved connectivity and initiatives taken by the Government. Fragmentation and consolidation will be key drivers of change in the industry. Domestic travellers will continue to lead the demand and with the decrease in supply, we expect upsurge in rates in the coming months,” Kalra adds. SN Srivastava, President and Co-founder, Clarks Inn Group of Hotels, says that growth in businesses and, travel and tourism is largely responsible for demand of hotel rooms and not much has changed on this front in the last few years. “Growth in domestic corporate and business travel as well as leisure markets have been strong and driving growth, both in new development and hotel business,” Srivstava says and adds that the country is on the cusp of becoming an economic superpower. However, he believes that demonetisation will have an impact on new development in the short term but that also means better revenue if new supplies are delayed.
Karan Anand—Head, Relationships, Cox & Kings, captures the emerging scenario in terms of inbound, domestic and outbound. According to Anand, the government has taken a proactive interest in the promotion of inbound tourism. “This year, the Investor Summit and the partnership with WTM were promoted extensively by the government and this indicates that they are very serious about tourism development and promotion,” he says. In the domestic tourism space, Anand opines that the government’s regional connectivity plan, if implemented efficiently, can open up huge possibilities. “Outbound is a segment which continues to grow and the challenge before us is to service the clientele. A very positive development in the last one year is the direct connectivity between secondary airports such as Jaipur, Lucknow, and Chandigarh to destinations in Thailand, Dubai and Singapore,” he adds.
Mahesh Iyer, Chief Operating Officer, Thomas Cook (India), says that the Indian travel and tourism industry has entered into an exciting era. “Young India is powering today’s travel growth story and at Thomas Cook we’ve witnessed a growing emergence of millennial travellers. Immersive travel is one of the major market trends as Indian travellers exhibiting a strong desire to experience the unique and off-beat, with engaging and enriching experiences. Moreover, middle India’s tier –II &III markets have been a strong powerhouse for us this year too and the brag worthiness of travel, coupled with rising disposable income were key drivers,” Iyer adds.
Sunirmol Ghosh, Director, Indo Asia Leisure Services, also see the emerging scenario from inbound, domestic and outbound perspectives. “Inbound has seen a very dismal scenario and I will say this is an amalgamation of the wrong and not well thought over policies of the MoT. The private enterprise has kept no stones un-turned to rev up the business but the pull strategy is almost non-existent. The decision makers at MoT have yet not understood that the foreign tourist will not buy what the country is doing for itself. Their decision making will be influenced by the media and TV reports and advertisement. Its a pity that in spite of the big talks the international marketing thrust has yet not been released in its full blown style and size. An half-hearted approach is what is failing us,” he opines. However, according to Ghosh, the domestic tourism is keeping the smiles on the face of the hoteliers in every segment. Everyone has enough business from this segment. “The outbound market has been growing with leaps and bound,” he informs.
Better performance for hotels
Rishi Puri, VP, Lords Hotels & Resorts, informs that his Group added four properties taking the hotel count to 26. “2016 began with the launch of a new property in Jammu followed by three new properties in Agra, Bangalore and Thrissur. Presently, our emphasis is on consolidation and improving existing operations but we will also, even if passively, be looking for good opportunities to expand our footprint across the country and abroad. We will shortly open another hotel property in Bharuch which will make it fifteen properties for Lords Hotels & Resorts in Gujarat alone,” Puri adds.
He reveals that Lords Hotels has registered a little over 61 per cent occupancy across the chain through 2016. “It has been a better year with six per cent increase in occupancy against the same period, last year. Although in the months to come there may be stagnation in bookings and the Christmas and New Year celebrations may be a little dampened as a consequence of the demonetisation decision made earlier in November,”Puri says.
Clarks Inn has also witnessed a robust growth in 2016 with the addition of about 16 odd properties to their portfolio that includes eight operational hotels. “We are hopeful of having 100 hotels with over 50 in operations in 2017. With the current development pipeline that we are working on, we are quite positive about achieving this target,” Srivastava says. Clarks Inn currently has a portfolio of 75 hotel properties, including 40 in operation with a footprint that covers 17 states in India and Nepal. “We are yet to have the final year-end figures, but in most of our property revenue has gone up by 7-9 per cent, with a small increase in ARR as well,” Srivastava adds.
For Pride Hotels also, 2016 has been a good year as it has added new property under the Pride Plaza Brand at Aerocity, New Delhi. “We are expecting to increase our turn-over 45 per cent to 50 per cent in comparison to last year due to the addition of Delhi property and improvement of occupancy in other hotels. We are performing around eight per cent to 10 per cent upward in comparison to last year. In the current year occupancy is increasing but the ARR is not increasing so that is the reason the bottom line showing only nominal growth,” he says.
2016 also becomes an eventful year for Sarovar. “Apart from openings in Chennai – Vandalur, Dehradun, Bangalore and Bhavnagar, we opened the first branded hotel in Palampur. We also became one of the early birds to set footprints in South Sudan by taking over the management of the Panorama Sarovar Portico in Juba. In 2017, we will step in to newer destinations such as Jaisalmer, Ranchi, Raipur, Amritsar and New Delhi – Kapashera and open our third hotel in Nairobi in January,” Kalra says.
Travel companies also bullish
While hoteliers are satisfied with the performance of their hotels, travel companies are also not lagging behind. For Thomas Cook (India), the hybrid Clicks & Bricks model was a strategy that has worked strongly in their favour in 2016. “We deployed our omni-channel presence to maximum advantage. We strengthened our online presence with a slew of easy to book-buy launches. We were also quick to seize first mover advantage with strong partnerships like Airbnb, Vista Rooms in the accommodation space; Fino PayTech for the Remittances business and agreements with MasterCard for our prepaid cards amongst others,” he informs.
Cox & Kings also sees 2016 as a very productive year as it has seen the growth on the expected lines. “Going into 2017, we are very bullish on the opportunities that lie ahead of us. The year 2016 was a significant year for Cox & Kings in terms of the overall business growth and we grew more than the industry average. There is a significant growth in demand for travel from tier II & III cities,” he says and adds that the company expanded its school tours segment with some distinct offerings. “Besides this, we are promoting various destinations in Maharashtra too through Deccan Odyssey. Several new concepts like ‘weddings on wheels’ were introduced specially for Deccan Odyssey,” Anand reveals.
However, Ghosh candidly admits that they have struggled to keep floating. “We have managed to sail through the crisis when the inbound was down 25 per cent through our huge agents network and regularly opening up new markets for us. Its a pity that the Govt is still sleeping and has no clear cut policy in place to promote Destination India. In 2017, we will be happy to do our numbers as much as last year. We will now even have to take the hit of drop in outbound business due to the demonetisation,” Ghosh adds.
Domestic V/s Overseas
According to Ghosh, the domestic market has emerged as a saviour for the tourism industry, followed by outbound and the worse has been the inbound. “Domestic conferences and outbound incentives has become stronger for us even after the demonetisation we do not see any drop in this segment. The contribution of inbound V/s outbound in our overall business is almost 1:1. But in the inbound, we can not take into account the cost of the airfares to India and back. But in the outbound the international airfare is part of the top line,” Ghosh says.
Kalra informs that the mix of business is specific to locations. Bengaluru, Hyderabad, Mumbai and Delhi NCR have strong contributions from overseas markets. “Amongst leisure destinations Agra, Jaipur, Jodhpur, Goa, Pondicherry too are driven by inbound tourism in winter months,” he says.
Most of the Clarks Inn hotels are located in business hubs largely catering to domestic corporate and business travellers. “Even hill stations where we are expanding our footprints are not much visited by foreign tourists. So it’s a very small percentage really but we are outlining strategies that will help us boost our inbound share,” shares Srivastava
“Our properties in Jaipur, Agra, Jodhpur and Bangalore have maximum foreign check-ins. Also locations including Dahej, Ankleshwar, Rajula and Bhavnagar record high number of foreigners but as business check-ins. It is in the leisure properties that we have witnessed most domestic check-ins including our properties at Thrissur, Saputara, Gir, and Silvassa,” Puri says.
Marketing Strategy
For Thomas Cook (India), the marketing delivery for 2016 was both sharp and strategic with their holiday campaigns like “Bachat ka Badsha” to inspire the innate value-seeker psyche of Indians travellers, its quirky and trending #Nomorefakeations; Travel Smart, Drive Easy campaign to drive the significant shift to card payments. “We chose apt media to optimise ROI- so a clever blend of OOH, online, print, TV and radio. 2017 will include unerring focus on innovative and impactful marcom to drive our business objectives,” Iyer says. Ghosh aims to consolidate the company’s business.
“Our strategy for the coming year will be to strengthen our online distribution segment which has seen an exponential growth. Secondly, we are also aggressively focusing on expanding our footprints both in destinations unrepresented so far and overseas particularly Africa,” Kalra says. Clarks Inn is lining up to strengthen their sales and marketing plans. “A strong Media campaign, Print and online for sure, but we are also considering electronic, and Public Relation exercise to reach to various segment of trade and consumers,” Srivastava adds. Lords Hotels, which recently participated in WTM London, plan to participate in the Pacific Asia Travel Mart (PATA) where it will even look at strengthening our network and possible mergers in the APAC regions.
Blurb :
“We may reach around 9 million this year.” – Vinod Zutshi
“The hospitality sector will grow with an average rate of 10-12 per cent.” – S P Jain
“We are hopeful of having 100 hotels with over 50 in operations in 2017.” – S N Srivastava
We will now even have to take the hit of drop in outbound business due to the demonetization.” – Sunirmol Ghosh
