Incredible India

After the airlines and hotel industry started showing signs of a slowdown on weak external cues and high inflation, the tourism industry of India seems to have followed suit. If the ministry of tourism figures are anything to go by, growth rate of foreign tourist arrivals in the country has been steadily going down since the beginning of the year. Industry experts and tour operators blame the combined ills of inflation, rising airfares, high hotel room rates along with slowdown in the US economy for this. The threat of terrorism attacks in the country also seems to have taken its toll on the attractiveness of India as a tourist destination.
In July 2008, the number of foreign tourist arrivals in the country stood at 4.29 lakh, a growth of 7.4% over the last year's figure of 3.99 lakh tourists. However, a quick comparison with the figures of 2006 reveals that last year tourist arrivals in the month of July grew by an impressive 18.5% compared to the number in 2006.
Not just July, the trend is similar for almost all months except for the month of May. The growth rate for both 2008 and 2007 for this month remained at 8.6%. From January to July this year, a total of 31.48 lakh foreign tourists have set foot in the country, an increase of 10.6% over the same period last year. In 2007, the number of foreign tourist arrivals in India grew at 15.3% as compared to the figure in the year 2006.
It may be interesting to note that while the growth rate in tourist arrivals has gone down, the increase in foreign exchange earnings for the period of January to July 2008 has gone up by 1.9% compared to the growth percentage last year. During this period in 2008, the total foreign exchange earning jumped by 17.4% at Rs 29,695 crore compared to Rs 25,289 crore earned last year. That, again, was an increase of 15.5% over the same period in 2006. According to Subhash Goyal, chairman, Stic Travel Group, the sky rocketing tariffs of hotel rooms in the country, which have partially hit the foreign tourist arrivals this year, are also responsible for the increase in the foreign exchange earnings. "The fluctuations in the value of the rupee against the dollar this year could also be responsible for the trend," he said.
In the last couple of years, India has emerged as one of the most expensive destinations in the world in terms of hotel rates and it has outpriced itself compared with other Asian destinations like Malaysia, Thailand and Singapore. According to Arjun Sharma, managing director of travel and tour operator, Le Passage to India, "Since 2005, hotel room rates in the country have been increasing at an average of 30% every year."
"Though there has been a slight correction in the rates due to the recent soft bookings, the real effect of the slowdown will only be clear in the first half of 2009. According to our estimates there will be further slowdown in the tourism industry," Sharma added.Rising airfares is another important factor leading to a slowdown in domestic travel as well as foreign tourist arrivals. According to the second quarter report of American Express Asia Pacific Business Travel Monitor, fares within Asia Pacific destinations are up 9% quarter-on-quarter and although fares to the Americas were flat this quarter, there has been a 32% year-on-year increase for this destination.
The slowdown in the US economy could add to Indian tourism industry's woes. The US is the top tourist generating market for India according to the ministry of tourism and accounted for 15.72% of the total foreign tourist arrivals in the country in 2007, closely followed by the UK at 15.67%. "India doesn't have a very conducive environment for tourism and we as a country are hugely dependant on long-haul holidays from North America and Europe for most of the foreign tourist arrivals," said Sharma.
Industry experts are of the view that the whole region including India has been in a state of turmoil with an earthquake in China, protests in Tibet, political upheaval in Sri Lanka, Nepal and Pakistan.More than anything else, the serial blasts in the country this year and last in Mumbai, Jaipur, Ahmedabad, Bangalore and Hyderabad have taken a toll on the overall travel sentiments of people.