TravelBiz Monitor


Tuesday, 06 July, 2010, 19 : 00 PM [IST]
Top 10 Challenges for Tourism Growth in India


The global economic meltdown compelled the tourism industry internationally to divert its focus on the BRIC (Brazil, Russia, India and China) nations. These economies, especially India weathered the downturn much better than Western countries. Indian tourism industry focused aggressively on the large domestic market, which helped reduce the impact of the economic slowdown to a huge  extent. With the global economy on the verge of a total recovery this year and travel picking up across segments, as well as the Commonwealth Games taking place in Delhi in October this year, the industry has a great opportunity to realise the full potential of Incredible India. However, the country is still faced with a number of road blocks for tourism development. Lack of proper policies and implementation, absence of single window clearance, security, scarcity of Public-Private-Partnerships and lack of circuits complete the list of top ten challenges faced by the industry. The need of the hour is for the government to address these problems and work with the industry to put India on a prominent position on global tourism map.  

Policies and proper implementation
The last Tourism Policy announced by the Government of India was in 2002. This policy gave the right to the central and state governments to individually, as well as collaboratively develop the Indian tourism sector. This policy also boosted the infusion of Foreign Direct Investment in the country. However, times have drastically changed since 2002.

Today, tourism has become more inclusive of new concepts which require the support of the government to develop and flourish. Some of these would be Cruise Tourism, Adventure Tourism, Agri Tourism or Rural Tourism. There is a need to propagate these concepts with dedicated policies formed for their development. Effective implementation of these policies will help in the growth of the industry overall. Few states like Kerala, Gujarat, Madhya Pradesh Karnataka are taking pro-active measures in policy formation and implementation. Some of them have also drafted separate policies for specific segments like Ecotourism. This has helped the states immensely to develop tourism infrastructure and increase their tourist arrivals. Such initiatives are required from other dormant states to create a uniform development of tourism infrastructure.

anil_madhok.jpgIndustry players need dynamic and far sighted policies by the government to help them boost tourism. Often, the major problem is that policies are formulated but are not clear and lack proper implementation. “Policy makers need to be more proactive in their approach to boost hospitality development in the country. There is a huge need for transparency in policy formation and clarity in their implementation. Government and industry need to work together to create strong hospitality and tourism development across the country,” opined Anil Madhok, Managing Director, Sarovar Hotels.

The industry has been eagerly awaiting the announcement and implementation of the Civil Aviation Policy since 2007. Recently, Civil Aviation Minister, Praful Patel, announced in the Lok Sabha that the Centre had implemented the Policy. However, the nitty-gritty’s of the Policy are still unclear to the industry. This highlights another issue in the policy making process in the country. Policies are usually difficult to decipher by stakeholders of the industry. Hence, little use to them.

The cruise industry has been one of the most promising industries in India, but barely noticed. Several state governments have been talking about the potential of river cruises. The country has also seen interest from several international cruise liners like MSC Cruises to initiate operations. However, none have been able to sustain operations in the country. States like Kerala have dabbled with the concept but to no major success.

070710_cs_1.jpgThis highlights the demand for a structured policy for Cruise Tourism in the country. The central government realised the potential for the same and announced the Cruise Shipping Policy of India in 2008. However, this has barely attracted any foreign cruise operators to start operations in India. Even domestic operators are pulling out. One of the major issues hampering development of Cruise Tourism in India is the lack of adequate infrastructure including deep drafted berth ports and marinas for cruise liners to operate. The country today requires a policy dedicated to Cruise Tourism which will help private and public entrepreneurs to develop this infrastructure.

Similarly, with India’s vast coastline and number of pristine beaches, the potential of Beach Tourism has not been tapped. For a long time industry players have been demanding easing of the Costal Regulatory Zone (CRZ) policy to develop Beach Tourism, but their pleas have yielded no result so far. Even though there has been efforts on part of the government, centre and individual states to come up with policies to aid development of niche segments, for example Caravan Tourism policy by the centre or Adventure Tourism policy by some states, there are host of other potential segments like Medical and Wellness which are still awaiting the formation of a proper policy. The solution is not only drafting policies but also doing it swiftly and implementing them efficiently. The latter is certainly a major challenge which is hampering tourism development in the country.    

Lack of single window clearance
The tourism and hospitality industry is not new to project commissioning delays due to non-attainment of all licenses and approvals on time. The insistent and repeated demand of the industry for single window clearance to fasten the process of development and operations has been a long standing one. However, only recently it was paid heed to and the Cabinet accorded it importance and discussed the idea.

kumari_selja.jpgSpeaking at the inauguration of the Great Indian Travel Bazaar 2010 in Jaipur, Kumari Selja, Union Minister for Tourism said, “A Committee of Secretaries (CoS) has cleared the proposal for single-window clearance of hotel projects and is currently awaiting an approval from the Cabinet.” Under the proposal, hoteliers will need to submit one uniform application for their projects. Committees will be formed at the central and state level for clearance of these projects.

While this comes as a welcome move for the industry, its implementation is eagerly awaited. The government had planned to develop a single window clearance for speedy delivery of licenses for projects in Delhi- NCR region. Attaining licenses and approvals for tourism and hospitality projects is a major issue for private entrepreneurs. These approvals are not restricted to hotel and tourism infrastructure development projects.

kaveer_shahani.jpgIn Maharashtra itself, a company needs to acquire 132 licenses to develop a star category hotel. Art and cultural events, festivals, concerts attract domestic and international tourists. Events like Mardi Gras, Oktoberfest, Edinburgh International Festival attract huge amount of tourists’ year-on-year. However, India lacks such festivals except major college festivals like Mood Indigo, which attracts crowds from across the country. “Organising one festival or entertainment event in India requires a minimum of 30 licenses to be procured. The absence of a single window clearance to obtain all the approvals becomes a major obstacle,” stated Kaveer Shahani, Founder & CEO, Groove Temple Entertainment.

The government’s move for the single window clearance and rationalisation of licensing and approvals process will not only help in developing tourism and hospitality infrastructure fast, but also attract new players in the market, while elevating Indian tourism to international levels.

The terror attacks that struck Mumbai in November 2008 lead to a strong blow to tourism in the country. Security has been among the major problems for tourism growth for a number of years. For more than a decade Jammu and Kashmir, known as ‘Paradise on Earth’ and a popular destination was completely cut off for tourism due to insurgency. The scenic North East region was also similarly affected by insurgency for many years. While, in recent years normalcy has returned to both these regions, barring a few incidents, and also tourist traffic, terror attacks like the ones in Mumbai bring forth a question mark about safety and security in the mind of international tourists. The violent Maoist movement in central and some eastern parts of India is also marring the image of the country as a safe destination.     

India is a vast country and travel advisories issued by Western countries against travel to the country has been protested against as the incidents have been in pockets and do not affect the entire nation. However, the Mumbai terror attacks have been an eye opener for the government and its security measures. Security at tourist spots, airports and hotels has been beefed up to regain the confidence of travellers. But these measures cannot be knee jerk reactions for a brief period. A long term strategy has to be put in place. With the Central Industrial Security Force (CISF) act being amended to enable the force’s deployment in private sector and joint venture enterprises on cost-reimbursement basis, the government has put five star-hotels much lower on the CISF’s priority list.

arjun_sharma_new1.jpgPost the terror attacks in Mumbai, reputed hotel chains including Taj and Trident have sought CISF cover. Manjari Jaruhar, Additional Director General, CISF said, “Hotels are low on our priority right now. They have security from the state governments and they can always hire private security on their own.” While IT, power and oil industries have been put on the top priority list, five-star hotels are on the third priority as of now. Post the terror attacks in Mumbai, reputed hotel chains including Taj and Trident have sought CISF cover. “Safety and security is another area of concern which needs improvement along with strengthening of the tourist police,” said Arjun Sharma, Chairperson, WTTC India Initiative.

Apart from making the destination safe, the tourism industry is faced with another challenge, cyber crime. The issue of online security for the travel industry is becoming critical as some of the biggest frauds have been detected in this segment. The penetration of Internet is increasing rapidly and travel is among the major segments for online spend. Online Travel Agents (OTAs) are registering an impressive year-on-year growth. However, a majority are still not convinced about the security of online transactions. There is a need for the industry to make the process of online bookings more secure and transparent and create awareness about the same.

himanshu_singh.jpgEfforts in this regard have been initiated. Travel Agents Federation of India (TAFI) along with India Payment Card Risk Council (IPCRC) organised an event in end of May this year to create awareness about E-Commerce Security for Travel Industry. It was a part of the Cyber Safety Week 2010 organised by Mumbai Police and NASSCOM. Speaking at the event about card payment frauds and cyber crimes which affect the travel industry, Nandkumar Saravade, Chairman, IPCRC said, “The issue of online security for the travel industry is becoming critical as some of the biggest frauds have been detected in this segment. However, the general population is not aware of its risks. Hence, there is a dire need to create awareness among customers so that they are more alert.” Himanshu Singh, Managing Director India, Travelocity stated that though fraud rates in India are as low as 0.001 per cent, it is essential to build repository of intelligence and make it available to all stakeholders. “The purchase time of tickets online should also be kept to the minimum. Online transactions worth about Rs 30,000 crore are conducted in India. It is essential to lay guidelines and enforce it so that both the travel industry and customers can avoid risks safely,” stated Singh.

Tourism development in the country, especially infrastructure has been bogged down by lack of Public-Private-Partnerships (PPP). While PPP model in recent times has gained pace in tourism sector, there is a desperate need to refine the model to make it successful. Archana Capoor, Chairman and Managing Director, Tourism Finance Corporation of India Ltd said, “PPP model enables the public sector to benefit from commercial dynamism, the ability to raise finances in an environment of budgetary restrictions, innovations and efficiencies, harnessed through the introduction of private sector investors who contribute their own capital, skills and experience.”   

To provide momentum to infrastructure construction in the country, the government has formulated policy framework for PPP model, effected regulatory changes, established institutional procedures and drawn the road map for implementing the PPP projects. For instance, major airports across India, the new ‘Maharaja Express’, etc are some successful examples of PPP model in India. However, there are still hurdles faced by this model to successfully operate in India.

nikhil_thakurdas.jpgIndia has witnessed a spurt in growth by using PPP model in various segments of tourism, aviation and hospitality industry. However, the model faces major hurdles which make private developers think twice before investing in PPP business. The biggest challenge in PPP model is the time. According to private players, time period for the process of allocation and implementation of the project is unpredictable and often not viable. According to Nikhil Thakurdas, Director, CruiseBay; the PPP model can be used to accelerate infrastructure development and faster implementation of projects in the tourism industry. He said, “There is a lack of clarity on incentives and tax benefits offered by the government for PPP projects. While the Planning Commission and Finance Ministry have cleared the ground for issuing policy, the implementation ministries have not kept pace with the process. This creates bottlenecks and hampers the speed of implementation and thus growth as well.

The PPP model needs to be refined further and the government needs to resolve certain issues to allow the private sector to earn a reasonable RoI (Return on Investment) along with certain tax benefits and incentive packages. The government has provided tax holidays and land for construction in certain PPP projects in India. However, government can look for further opportunities in PPP model. For instance, there is no dearth of projects in the airport sector as several airports in India have been or need to be upgraded. Government can work on PPP model for airport maintenance, airport security, communications, designing the interiors, etc. A successful infrastructure development strategy depends crucially on implementation. Both the central and state governments have to accord top priority to strengthening the implementation capabilities.  There is certainly a need for detailed PPP policy and planning.

Creating circuits
The Golden Triangle (Delhi-Agra-Jaipur) is India’s only circuit which is world famous. For a vast country like India with diverse tourism offerings, development of circuits for various segments like heritage and culture, adventure, religious, eco, beach, wellness, agri and rural etc. is required to showcase the country properly and cater to greater number of tourists according to their interests. Creating circuits will also give a boost to niche tourism segments and help in prioritising destination development and infrastructure.  

“It is important for Ministry of Tourism (MoT) to identify circuits and bring them up to international standards, if that is not possible at least to a level acceptable to tourists. Circuit identification can be undertaken with the help of tour operators as they know exactly what tourism product will work in the market,” stated Rakesh Lamba, President, Association of Domestic Tour Operators of India. Circuits within a state can help promote lesser known destinations and inter-state circuits can help states create synergies in areas like sharing resources for marketing the circuit, offer a wider range of products and destinations and leverage on each others USP’s to attract huge tourist traffic.

e_m_najeeb_new.jpgThe idea of connecting a region and marketing it jointly for example South India has been talked about but has not witnessed any concrete results. The challenge is for various state governments to come together and work in collaboration. Speaking about the potential of promoting inter-state destinations, E M Najeeb, Chairman, ATE Group said, “India is a diverse product and each state has varied offerings. The need of the hour is for the states to come together and strategise on building these destination with adequate infrastructure and strong marketing plan. With specifics to South India, formation of South India Tourism Promotion Body will help chalk out the necessary strategies to promote the destinations. Also a master plan to identify potential tourist locations, attractions, infrastructure needs and investment opportunities, formation of an investment cell, land banks and a ‘South India Tourism Finance Corporation are a must.”

vijay_thakur.jpg“The destinations that have potential lack necessary infrastructure and are in dire need for more hotel rooms, good roads and waterways, wayside amenities, uninterrupted water and power supply, information centers etc. The destinations also require good connectivity and this requires coordination by the states,” opined Vijay Thakur, President, Indian Association of Tour Operators.
While few states have realised the potential of developing circuits and have in recent times chalked out a few, there is a need for Master Plan by MoT for Circuit Tourism.  The Master Plan will be able to address the issues raised by Thakur and if implemented accurately will help take Indian tourism to the next level.