A Peek into the Indian Tourism & Hospitality Industry

The hotel & tourism industry in India is one of the most important factors in the services sector that propels growth for the country. India has seen tremendous economic and industrial growth in the past three decades. Such growth boosts the hospitality & tourism. The rich cultural and historical heritage of India is another important factor in the growth of the industry. India also offers wide range of tourist attractions like monuments, religious centers, wildlife sanctuaries, scenic spots, natural terrains, etc.

This industry provides good foreign exchange revenue for the country. In 2019, the foreign tourist arrivals in India were 10.89 million, touching a growth rate of 3.2%. In 2019, Bangladesh, US and UK accounted for 21%, 14% and 10% of all foreign tourist arrivals in India. The total FOREX earnings through all foreign tourist arrivals in 2019 were $30 billion. This sector also accounts for about 8% of the total jobs in the country. India was ranked 10th among 185 countries in 2019, for contribution of travel & tourism to the GDP. In 2019, it was estimated at 6.8% of the total economy.

According to World Economic Forum’s travel & tourism competitiveness index, India moved from 65th position in 2013 to 34th position in 2019. India ranks third in the world, in terms of investments in the travel & tourism industry. In 2018 the inflow was $45.7 billion, which was 5.9% of the total investment in the country. The FDI inflow into India in this industry from April 2000 to September 2020 was $15.57 billion.

India has seen a rapid increase in the presence of more international hotel chains, which accounts for around 47% of the market share. In India, the franchising, leasing and licensing models are becoming increasingly popular in comparison to other models of operations. The branded hotel room inventory in India has grown at 7.4% CAGR in 2014-2019. The total inventory in September 2020 was 1,35,000 – 1,40,000 units. IHCL remains the market leader with 38% of the market share in 2019. About 55% of the total organized hotels in India are in the 3-star or higher category.

The Indian government has initiated several measures and plans to help this industry grow further and thereby help in boosting the economy and the employment. 100% FDI in the hotel & tourism industry has helped it grow manifold. The government has also offered a 5 year tax holiday for 2-4 star category hotels located around UNESCO World Heritage Sites.

Indian hospitality industry is poised for a robust growth despite the setbacks due to the pandemic. The Indian human resource which is educated and well trained with good English speaking skills, contributes immensely to the growth of this industry.

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