2016: A year of hope and enthusiasm
While 2015 dubbed as a tepid year for tourism in India, industry is full of optimism that 2016 will be far better with trends projecting an upward growth
The year 2015 seems to be flat year for the tourism industry despite India moving 13 positions ahead from 65th to 52nd rank in Tourism and Travel Competitive Index as per the World Economic Forum Report. The growth rate of foreign tourist arrivals slowed down to 4.5 per cent during January – November 2015, as compared to 10.2 per cent during the corresponding period of the previous year. This is despite the fact that e Tourist Visa was extended to 113 countries. No doubt, around 3.41 lakhs of tourists availed this facility till November but the growth in inbounds was not on the expected lines despite Rupee continued to hover around 65 against dollar. The Prime Minister too visited more than two dozen countries and invited people to visit India but overall scenario remained the same. News about intolerance and negative media publicity in India deemed the destination unsafe.
Undeterred by these hindrances, the Ministry of Tourism and the travel and tourism industry is hopeful of a good recovery in 2016. The Ministry and industry has identified the reasons for the slow growth and measures are being taken to remove these obstacles. Moreover, the new Tourism and Aviation policy is expected to be announced soon that will give the much needed boost to tourism growth. “The perception about tourism in India, in the world scenario changed in the last year and the positive results are expected to be fructified in the coming days with a significant rise in the inbound tourists to various destinations in the country,” states Mahesh Sharma, Union Minister of State for Tourism and Culture (I/C) and Aviation. He said a new tourism policy aiming at robust growth in the sector is likely to be unfolded shortly. “We are in the process of finalisation of the policy and it will be out soon. Aim is to make robust growth in the sector expanding the horizon,” Sharma said.
There have been several other initiatives taken by the government to give a push to the tourism industry. Eight projects have been sanctioned under National Mission on Pilgrimage Rejuvenation and Spiritual Augmentation Drive (PRASAD), during the year 2014-15 and 2015-16, two for Mathura and one each for Gaya, Puri, Amritsar, Ajmer, Kamakhya and Amravati at an estimated cost of Rs 187.81 crores. “The Ministry of Tourism has launched a ‘Welcome Booklet’ for distribution at immigration counters to tourists arriving at international airports. The booklet is intended to be a helpful aid for foreign tourists immediately on arrival,” a statement released by the Ministry said. 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.
2015: A Challenging year for industry
Subhash Goyal, President, Indian Association of Tour operators, opined that 2015 was challenging year, however, the future of tourism industry looks robust. “The year 2015 has been one of the most challenging years in the history of tourism in India. During these tiring time, each one of us have had to revisit our strategies, reorient our organisation, streamline our process and revitalise our companies to gear up to deal with the challenges. The going has been tough for all of us, but during the tiring time under slow growth, we evolved into much stronger entities with better capabilities to be competitive,” Goyal said. He added that 2015 has made us look at international markets in a much more serious way and tried to become an integral part of global tourism market. “It became Explore and Research ingrained in our strategic intent. It is in this context, we initiated series of roadshows in new markets hitherto not explored by us with the sole objective of capturing the global opportunity. We also organised “know India” workshops/seminars and had interaction with overseas Tour Operators. Despite challenges of global uncertainties, India possess the competitive advantages of cost, diverse products specially quality hotels. While the road ahead will be fraught with challenges, the world is certainly for taking and we are ready to grab the opportunity,” he added. He hopes that the year 2016 will be very fruitful for the industry. “Global Tourism is put under control, countries in Europe come out of recession and India gets its due share in international tourist arrivals,” he opined.
Rajeev Kohli, Joint Managing Director, Creative Travel also feels the same. “2015 was a challenging year in the world of travel. From uncertain economies to natural calamities, from acts of war and terrorism to political instabilities, the world saw much happen over the past year, affecting the way people travelled,” Kohli said.
For the B2B travel business in 2015, Sunil Kumar, President, Travel Agents Association of India, said that the growth has been steady with competition getting severe. “There is greater realisation by many for a strong need to shift into the B2B vertical and those who have done it, seem more content and see a stronger future than the B2C segment. With a growing industry that is consistently encouraging more players – particularly smaller ones – to enter into this domain, B2B will be a much stronger base to sustain success,” Kumar opined. Commenting on 2016, Kumar said that 2016 for the industry must offer greater governmental support as well. “It is time that the government reviews to acknowledge this industry with more incentives and encourage us to spearhead bigger tasks that can place India on the fore-front, globally. We have done our bit. For the trade, 2016 will be a bigger opportunity. A challenge that an Indian traveller currently face is the growing rate of the Dollar. This is a setback. Thought it may sound difficult to accomplish, if dollar steadies at Rs 60, it can be a good boom,” Kumar added.
Ankur Bhatia, Executive Director, Bird Group said it differently. “The long -term outlook for the Indian tourism and hospitality continues to be positive highlighting a huge growth potential. According to the Ministry of Tourism, the industry saw a phenomenal growth of 1073.8 per cent in tourist arrival facilitated by the introduction of the E-visa scheme to 113 countries. The cascading effect of this on the hospitality sector has resulted in an increase in the occupancy ratios and average room rates,” Bhatia said. He added that while the government has implemented several schemes and policies, there lies a huge gap in terms of travel facilities, infrastructure, hotels and recreational outlets. It is imperative to market brand India globally to create a huge impact and attract high-end international tourists.
Hotels anticipate for a better 2016
Hotels in India which fared comparatively well in 2015 are hoping for an encore in 2016 as well. According to a report released by HVS Global in September 2015, hotel occupancies in India stand at 60.3 per cent. This is the first time in five years that pan-India hotel occupancy has crossed 60 per cent. During 2010-2014, occupancies have ranged between 57 per cent and 58 per cent.
According to KB Kachru, Chairman, South Asia, Carlson Rezidor Hotel Group, rate has been a concern in 2015 because the number of rooms available in some pockets has increased. “So, there is a competition and rate has been rationalised. In 2016, we see already a swing in business in India. They have started coming as average booking period of two to three months have shown improvement. There is a happy feeling that things are looking positive.”
“The share of the business has increased and The Leela Mumbai has done robust business in the last year. Occupancy has been positive; we have seen a definite growth in the business sector as well individual travellers. In the coming year, we are very positive that the overall business will grow, both in terms of occupancy and average rates,” Sameer Sud, General Manager, The Leela Mumbai, said.
Hotels in different city are also hopeful for a better business in 2016. For Courtyard by Marriott, Agra, 2015 has been extremely positive on ARR front, however the overall occupancy was not on the expected lines. “As 2015 was the first year of operations for us, the hotel has gone through the ramp up phase wherein the occupancies have grown month on month but clearly below what we expected. The hotel missed a good chunk of structured piece of business, e.g, series movements which would kick in next year,” Abhishek Sahai, General Manager, Courtyard by Marriott Agra, said. However, Sahai is expecting a better 2016. “We expect to see higher occupancies that would lead to better RevPAR for the hotel in 2016. While the footfall in the city from foreign nationals has been seeing a downward trend, the focus from the government on tourism will play a key role to change the trend to positive. However, the domestic segment is expected to rise next year as well, that would add to the occupancies across the hotels in the market,” Sahai added.
Another city, Pune is also expecting a good 2016. “The year 2015 was a benchmark year for us being second year of fully operational hotel. The hotel has delivered on occupancy by two basis points against fair share and outperformed the competition by 25 basis points. The year 2016 is looking like another fabulous year. The demand in the city is on rise and a lot of MNCs are investing in expansion and plant setups in Pune and its vicinity. A lot will depend on 2016 budget presented by government but as the signs are positive for hospitality sector, so are we expecting the things to move positively. Business travel will again witness its dominance in contribution to hotel occupancy along with slight increase in leisure segment. The expectation from 2016 is very clear that we should achieve our targeted year on year growth for both topline and bottomline. The hotel has been a success story, all credit to our team and owners, and we want to build on that,” Sahdev Mehta, General Manager, Doubletree by Hilton Pune said.
The ITC Rajputana, Jaipur, however, has a flat 2015. “We’ve remained flat on occupancy and seen a growth in ARR in all segments owing to growth in occupancy in Transient displacing Groups in H1. In Q3 however, MICE has grown displacing transient, resulting in flat occupancies but marginal growth in ARR. We expect overall 10 per cent growth in our business in 2016,” Raghunathan Murali, General Manager, ITC Rajputana, Jaipur said.
Even Delhi hotels have similar expectations. Luv Malhotra, JMD, The Suryaa, New Delhi, feels that the hospitality industry is showing signs of improvement. “Competition is increasing and room inventory in Delhi is on the rise as well. For us, ARRs were better as compared to the last year and we expect it to rise in 2016,” Malhotra added. However, Sanzeev Bhatia, General Manager, The Metropolitan Hotel & Spa, opines that 2015 was a much better year than 2014. “There was not much increase in ARR but increase in occupancy was good resulting in better revenue. With so many positives like e visa, Make in India scheme, growth in Indian economy, investments from international companies and all other developments, we are expecting 2016 as a rocking year for our industry,” Sanzeev Bhatia said.
Aviation industry up their ante
Helped by falling global crude oil prices and growing traffic in 2015, aviation is set to get a shot in the arm with the Cabinet expected to clear a new policy in January. The year saw a dramatic turnaround of Spicejet after its former co-founder Ajay Singh decided to step in and invest Rs 800 crore. It also saw the entry of Vistara, a joint venture between Tata Sons and Singapore Airlines, besides a reversal of India’s downgrade to category II by the US Federal Aviation Administration, and the listing of IndiGo. “The aviation market has also experienced a buoyant growth with IndiGo receiving a successful listing and valuation of current domestic airlines increasing significantly. Additionally, the recent initiatives by the government in the latest draft aviation policy to enhance regional connectivity and subsidise air travel on these routes, along with the development of airports in Tier-I and Tier-II cities projects have been aimed at creating an enterprising and an optimistic view of the industry. However, the industry still faces grave challenges when it comes to aggressive price cuts, high interest payments, insufficient infrastructure and shortage of skilled and trained manpower that needs to be addressed. Furthermore, the reduction in ATF prices and state tax reforms is yet to be experienced by airlines and passengers,” Ankur Bhatia said.
While the Indian aviation industry is bound to experience continued growth in 2016, there are issues that still need addresal. “The cost of air transport is still high for nearly 40 per cent of the upwardly mobile middle class, a majority of the country’s population. In the light of the same, India would be only well placed to achieve its vision of becoming the third-largest aviation market by 2020 and the largest by 2030, with the right infrastructure, policies and relentless focus on quality, cost and passenger interest,” he added.
Reinventing products
Anil Parashar, CEO, ITQ, said that ITQ considers gaining satisfied travel partners irrespective of boundaries is the biggest achievement for the company in 2015. “And in 2015, we have been able to prove ourselves time and again at being the best at what we do. Where 2015 has been a year of consolidation, 2016 is with lots of hope and enthusiasm. We will continue to keep our focus on reinventing travel commerce in order to provide more benefits and efficiency to our partners. Our latest addition, Smartpoint 6.5 stands testimony to the revolutionary products we are introducing in order to make travel businesses across all borders, more manageable and hassle free. It comes with enhanced features that intelligently manage travel business and aids travel consultants in their business to provide efficient services to their customers,” he opined.
For Expedia too, 2015 has been a great year and 2016 promises to take the experience to a whole new level, with travellers evolving, and OTAs coming out with new products to cater to this new breed of travellers. “Experience and experiment have become the new trend. A lot of sports related activities have caught the interest of people and we will notice an increase in demand for offbeat places and activities. Trends like taking long road trips or cruise holidays which offer a lot of activities like indoor games, swimming, movies, and live entertainment, are also getting DINK segment and group travellers interested,” Manmeet Ahluwalia, Marketing Head, Expedia India, said.
