Although, India was affected by the global economic turmoil in the second half last year, the country is still expecting a Gross Domestic Product (GDP) growth rate of five to six per cent in 2008-09. An analysis has shown the service sector to be the main contributor in the last fiscal. The entire service sector provided an input of 57 per cent with the trade and hotels segment alone contributing to about 11 per cent of the GDP in 2008-09, according to a report by Q S Consultants.
The Delhi-based consultancy firm's latest research report, Economic Snapshot - India 2009 provides a macroeconomic view of the Indian growth story in the last financial year; it focuses significantly on the Indian tourism and hospitality sector’s growth potential. Speaking with TravelBiz Monitor about the same; Sunil Rao, Executive Director, Q S Consultants stated, “Tourism and hospitality have emerged as the major contributors to India’s GDP and the numbers have risen over the years. Tourism will drive the economy upwards in the coming years.”
The survey stresses upon the domestic tourism market’s importance. Inbound tourist arrivals saw a steep drop during end 2008. While, Rao believes that the inbound travel situation is expected to exist until the end of 2009, hotels across India are now shifting their focus to tap the domestic market. Through direct and multiplier effects, domestic tourism can contribute to employment generation, economic development and growth in areas like Medical Tourism. Vacation Tourism is another growth segment triggered by domestic demand. There is a huge lack of good quality, affordable rooms to cater this segment in India, added Rao.
While the market is observing a slump, analysts feel that in terms of new hospitality and tourism infrastructure development, this is the right time to venture into the market. “Property valuations are yet to reach realistic levels. There is not much activity as there are not enough assets ready to be deployed. Now, we find that established hoteliers are looking at portfolio expansion, rather than new market entrants, unlike the last few years. Deals will continue to take place, even if at a slower pace,” Rao informed. 2008 also saw government initiatives to build infrastructure with a focus on the Public-Private-Partnership (PPP) model. The government has granted approval to two airport projects, each in Udaipur and Amritsar, along with a tourism project in West Bengal, which deals with revitalisation of the old mint complex and tourism infrastructure development.