When the Bhartiya Janta Party revealed tourism as part of its manifesto before the elections, the industry foresaw a trend that would propel India’s tourism scenario to new heights. When the party came to power, they did not disappoint. With the new government claiming its seat at the Centre, the industry’s unanimous response to any question about the foreseeable future became “optimistic”. Spokesperson from every facet of the industry was heard betting big on the tourism scenario based on the premonition that the market sentiment towards India would change with the new government.
Not only did the external markets become keener to invest in India since the new Government came to power, the Centre took the measures that the industry has been awaiting for a long time. While the introduction of Tourist Visa on Arrival gave the industry a reason to celebrate at the start of the year, they rang in the end with more initiatives, including e-ticketing for the Taj Mahal in Agra and Humayun Tomb in New Delhi, in addition to an ‘Incredible India Helpline’ and ‘Welcome Cards’ for tourists, the Swacch Bharat Swachh Pakwan programmes and the mega destination development, among others.
“2014 will go down in history as the year of two very different halves for the travel and tourism industry. While travel sentiment was on a relatively low note in the first half, with the industry struggling to achieve any growth, the second half was a revelation, with general sentiment turning given greater political certainty. From July, the travel industry has clocked double-digit growth every month. Both business and leisure travel by Indian travellers is on the upswing and up nearly 15 per cent year on year,” opined Rakshit Desai, Managing Director, India, FCm Travel Solutions and Flight Shop.
Needless to say the industry has entered 2015 quite upbeat about what is to come. According to Rajesh Magow, Co-founder & CEO-India, MakeMyTrip, 2015 looks bright as the long-term growth perspective for India’s travel market remains robust. The year 2014 saw some landmark moments for the Indian aviation industry be it the launch of AirAsia India, coming in of Vistara airlines, which will soon launch its India operations, or Jet becoming a full service carrier. These new investments will definitely have a positive impact on the landscape of Indian travel and tourism industry, he added.
“Also, the Government’s intent to develop new airports in tier I and II cities through public-private partnership models and introduction of e-visas will provide tourism sector a much-needed boost. The Rail budget also announced an outlay of Rs. 1000 crores for rail connectivity in the North-East region which will expedite tourism-related infrastructure development in the region. The Government has further demonstrated support for the travel and tourism industry by allocating Rs. 100 crores for the development of archaeological sites. Executed and then marketed rightly, this will undoubtedly attract a new set of inbound tourists to the country,” Magow added.
Online players feel the advantage
2014 infused renewed hope in the travel fraternity, with players celebrating steps that were sure to boost tourism. According to Manmeet Ahluwalia, Marketing Head, Expedia India, with a renewed market sentiment, Indians spent more on travel this year, as compared to 2012 and 2013. Rampant airfare sales by both LCCs and full service carriers, further excited Indian travellers.
“The country is also growing as a travel destination and there has been an increase in the inbound tourist traffic, especially with the 30 days tourist visa on arrival and extension of VoA and Electronic Travel Authorization to citizens of 43 countries. The government’s clear focus and impetus on policies that will develop better infrastructure has also pushed development in areas like Northeast that have a huge potential as a destination for both domestic and inbound tourists. The Rupee gain also pushed up the outbound traffic especially to Europe in 2014,” he opined.
Sharat Dhall, President, Yatra.com believes that the travel and tourism industry in India continues to grow by leaps and bounds, with the company being extremely bullish on the market in lieu of the government easing visa policies for international travellers, more international carriers coming into India and a couple of new airlines entering the domestic market.
Smart phones take centre stage
The growth in technology and innovation cannot be ignored, and the travel industry agrees. When asked about the biggest trend they foresee in 2015, the respondents unanimously voted the growth of the online space, especially the mobile. Jeet Sawhney, MD, Abacus opined that the content available to travel agents and their customers has become much more fragmented on the net and it has created multiple systems for travel agents to book different groups of products.
“Convergence is therefore a major trend – and we are part of it, launching new for agents to retail thousands of travel related products using a single B2B2C platform. Another trend is the blending of a personalised service element into the mobile experience. Abacus is looking at that and will be rolling out new mobile solutions for travel agents and their travellers next year. We already have Abacus TripCase and Abacus TripCase Connect meeting corporate demand,” he added.
Dhall too stated that online travel booking is still a growing sector in India. He opined that, while people have got used to booking a flight online, the company is now seeing the rapid online adoption of hotels bookings take place. “This is an extremely exciting space for us as a business and a lot of our product and marketing efforts are going to be focused on this line of business. The entire idea of planning a holiday online has also gained momentum in the recent years and we are seeing bookings for both Domestic and International holidays take place online. Growth in smartphone users is extremely rapid and we are seeing traffic and bookings via the mobile grow exponentially,” he added.
Going a step further in what is available online, Makemytrip became the first OTA to offer a Hindi version of flights search on mobile (site). Furthermore, native payments and wallet were launched on mobile app to improve the payment experience. “Mobile will continue to drive the growth of the OTA industry. Mobile bookings will soon overtake bookings through other devices. SMS/messaging-platform based booking services are taking off in China, and perhaps a developer or entrepreneur will find a way to create a market for this in India. Wearable Technology will enhance the traveller experience, enabling them to find “just-in-time” deals and handy information when they land in a city,” he opined.
Anil Parashar, President & CEO, InterGlobe Technology Quotient stated that the travel booking sphere has been undergoing a major transformation, due to the technological advancements and digital tools which caused the travel consumers’ journey to go online. The competition in the online booking industry has evolved with time. Online Travel Agencies are becoming more popular, as travel consumers seek one-stop shops to compare different brands, products, packages and prices, he added. He listed online and mobile technology; personalisation and customisation; and content marketing as some of the prominent trends in online booking.
However, Magow believes that a key challenge for 2015 will be to understand as to how best the industry can leverage the rapidly expanding mobile space for customer engagement as well as brand building. Also, there is an increased need to encourage public-private partnerships in the travel space to ensure better services and products for the traveller, he added.
Citing a solution to the issue, Sawhney revealed that Abacus has identified a need to bring multiple booking platforms together. “It comes back to the content and convergence question addressed earlier. We are working to ensure Abacus agents can package any number of different air and non-air products together, with opaque pricing, for the benefit of their customers without the need to switch platform,” he said.
Aviation sees a silver lining
It’s no secret that, while the rest of the industry pats each other on the back, the aviation industry in India is still struggling to carry its own weight, despite India poised to become the third largest aviation market in the foreseeable future. With Spicejet in trouble and GoAir possibly heading towards turbulence of its own, the year seems a challenge for the industry. In his speech on Global media day in Geneva, Tony Tyler said that partnership with governments is critical for the industry, and while there are some very enlightened governments that understand the strategic value of aviation connectivity. There are others that are not. In a more general sense, he added, aviation is a highly regulated industry, and IATA’s positive safety record shows how important it is to have effective regulation.
Speaking with T3 about the Indian aviation sector, Amitabh Khosla, Country Director – India, IATA opined that the high-cost environment in India has resulted in an even more challenging landscape for India’s carriers. Despite the recent fall in jet-fuel prices, Indian carriers pay 25-30 per cent higher than their counterparts each time that they uplift fuel, the result of the high levels of state sales tax on jet fuel.
“The all-round increase in the airport costs in India that has been given effect under the watch of an independent regulator is also contributing to the woes of the Indian carriers. A myopic view of allowing the air transport value chain in India – airports, fuel suppliers among others – to profit at the expense of the airlines is crippling the competitiveness of India’s airlines. And it is compromising the strategic priorities that a strong Indian airline industry can deliver for the country,” he opined.
The highly anticipated and recently launched Vistara is slightly more upbeat about 2015, its first year of operations. Phee Teik Yeoh, CEO, Vistara believes that the Indian Aviation sector has an immense growth potential and With the new government’s investor friendly outlook and vision, we believe the Indian aviation is going to take a positive turn very soon. Agreeing that India faces challenges to growth by way of high ATF costs, need for low cost infrastructure and restriction on international flights (5/20 rule), he added that Vistara is heartened to see the government’s resolve to address them and we welcome the government setting actionable goals which would result in industry’s growth and development.
“I truly believe the aviation sector in India is on the cusp of a change, in keeping with the transformation in the broad business & economy sentiment. In fact, I can already see the signs of transformation. India is a high potential aviation market and is set to emerge as the third largest aviation market in the world by 2020 (FICCI-KPMG). A recent CAPA study also stated that the number of domestic airline seats per capita was very low in India, just 0.07 compared with 3.35 for Australia, 2.49 for the US, 1.38 for Canada, 1.05 for Japan. All of this means the Indian aviation sector is moving very rapidly in the right direction,” Yeoh said.
Ankur Bhatia, Executive Director, Bird Group too opined that the Indian aviation industry is on a high growth trajectory, albeit with a short term despair. He stated that, although world class airports have been developed by AAI and the private sector, there are significant challenges related to land acquisition, various regulatory approvals and finalization of airport tariffs that remain unaddressed. Further, air-travel has still not percolated to the masses as less than 1 percent of Indian population avail it as a mode of transport. “There is an immense potential for growth of the Indian civil aviation industry provided certain structural deficiencies are corrected,” he opined.
Khosla believes that Airlines create substantial value for consumers – passengers and shippers; for businesses; for the broader economy and others in the value chain. But airlines have been unable to generate sufficient profit and maintain a sustainable business. This has led to airlines being forced to cease operations in the past – and there are similar worries being played out now in India. “The government must steer aviation policy in a coordinated manner which addresses the underlying problems and allows Indian airlines the ability to do what they can do best – provide connectivity, foster business and tourism growth, and support the broader national economy,” he concluded.
New hope checks in
The hotel industry is another facet that faced a rocky year in 2013-14, and has only later in 2014 seen a slight upswing. They are no different from the rest of the sector that believes that a new market sentiment has reinstated optimism in the industry. Shantha de Silva, Head of South West Asia, IHG revealed that, in the past year, IHG has sensed an increase in business confidence with a number of announcements by the government to help India grow as a preferred travel destination. She added that it has been heartening to see an increase in the government’s recognition of the vital role hospitality plays in generating integral foreign exchange dollars and creating significant employment opportunities in India.
“Positive sentiment, strong political dispensations and an economy promising to do some magic came together and resulted in a great 2014 November. We believe this was the turning point for Indian hotels and better days lie ahead. We look at 2015 with renewed hope and expectation,” opined Ajay Bakaya, Executive Director, Sarovar Hotels.
Speaking of the trends observed in the India market, de Silva stated, “We have also observed a significant increase in the number of domestic travellers in India this year and it has led us to focus on developing our midscale presence in the country to cater to this growing group of travellers. Another trend we’ve observed is the rise of business travel which has emerged as one of the significant segments of travel and tourism industry in India. Finally, a key focus for us in 2015 will be on strengthening our loyalty programme – IHG Rewards Club – in India. India is one of our focus markets and we are committed to growing our brands here. India holds our third largest pipeline globally, behind only the US and China.”
Bakaya believes that Tourist Visa on Arrival (TVoA) and Electronic Visa will propel tourism in India, and with the new government aggressively inviting ‘Make in India’ entrepreneurs, opening up of FDI in insurance and others to follow, business travel increase can already be felt in metro locations.
“We appreciate the TVoA development as the schemes have opened its doors to the citizen of some of the major markets namely-USA, Germany and Japan, which means that India has just become much more accessible to people from three of the world’s four largest economies. From the point of view of the hotel industry, this is a welcome change as this will help in increasing the inflow of tourists. People from these countries need not plan their travel well in advance as such, increasing the number of people who will choose India for short getaways,” Bakaya added.
