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Tourism: India vs Asia - Views on News from Equitymaster
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  • Dec 29, 2001

    Tourism: India vs Asia

    Ever wondered why India attracts meager 2.5 m arrivals in a year in contrast to Thailand, which gets 9.5 m tourists per year with an average growth of an estimated 10% per annum. This compared to our laggard tourist arrival growth of just 3%-4% per annum that too in a good year looks appalling. India's growth in tourism has been very slow over the past few years as compared to the rest of Asia, as no concerted efforts have been made to improve infrastructure and no real marketing effort has come about. Infact, foreign tourists are wary of coming to India mainly due to lack of adequate safety measures for travel across the country.

    India is the seventh largest country in size covering an area of 3,287,590 sq. km, which comprises a wide range of heritage and beauty. In terms of land area it is 4,813 times the size of Singapore, 6.4 times that of Thailand, 3,033 times that of Hong Kong and close to 10 times the size of Malaysia. Unfortunately, when compared to the number of tourist arrivals in the country, we fail miserably when compared to Singapore, Thailand, Malaysia and Hong Kong. These destinations, on the other hand, are on the top of the global tourism map and have a flourishing tourism industry.

    India vs Asia: A snapshot
    Country Total
    visitors (m)
    Receipts from
    inbound travel (US$ bn)
    Singapore 30,360 20,948 84.0% 7.7 6.5
    Thailand 279,943 58,788 48.9% 9.2 NA
    Hong Kong 34,665 23,225 83.0% 12.9 9.3
    Malaysia 134,586 28,263 54.3% 9.8 NA
    India 67,311 18,847 57.6% 2.5 2.7
    Source: Jones Lang Lasalle Hotels report

    Agreed that in terms of economic and social development some of these destinations are way ahead of India. But India has umpteen number of tourist destinations to offer. The former does not give a believeable explanation for such a vast discrepancy in number of tourists visiting India as compared to rest of Asia. India has diverse tourist locations ranging from heritage cities in Rajasthan, to backwaters of Kerala and the beaches across the western and southern tip of the country. However, high tax charges at hotels and lack of adequate good quality economic accommodation, acts as a big deterrent for tourists.

    With poor demand growth, room capacity too is lagging way behind its Asian peers. India has room capacity of 67,311 rooms (in 2000) and even this is underutilized on an average by 30%-40%. Singapore has a total five star room capacity of 20,948, Hong Kong 23,225 and Thailand 58,788, while India only a meager 18,847 rooms. Since the early 90s to recent times, five star room supply growth has been very slow. Except for FY96 when demand surged in this segment resulting in 80% utilization levels. Further, occupancy rate in four and three star hotels is even lower at around 40% levels. In comparison, Singapore enjoyed an average occupancy rate of 84% across all hotel categories in 2000, Thailand 48.9%, Hong Kong 83% and Malaysia 54.3%. (all figures are as per Jones Lang Lasalle Hotels report).

    Considering the size of our country and its terrific tourist destinations this is pathetic when compared to the rest of Asia. India ranks among the top 60 destinations in the world but hardly contributes 1% of global tourism revenues. In terms of tourist arrivals, as a percentage of world tourism, India accounts for a miniscule 0.4% of total arrivals of around 625 million tourists per annum. This ratio has not changed much in the past decade even after liberalisation of the Indian economy in the early 90's. This implies that India's tourism sector is hardly making a dent on the global tourism map. The country has scope for tapping its vast tourist potential, which could facilitate a surge in revenues as well as provide high level of employment.

    Currently, tourism is the third largest contributor to the country's foreign exchange earnings. Considering our precarious fiscal deficit and state of the economy it is baffling that the government, despite all this, does not take up any serious measures to promote tourism. If taken seriously, this industry could turn into a money-spinner for the country, similar to our Asian counterparts.



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