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Saturday, December 31, 2011, 18:00 Hrs  [IST]

Past-Forward: 2011’s highlights & key trends for 2012

Despite adverse global economic fluctuations and natural disasters, international travel grew commendably in 2011 with marginal regional disparities. However, the rate of growth has slowed down towards the last quarter of the year, and going into the new year, there are concerns across all quarters as to whether the industry would be able to sustain the growth because of uncertainties in the global economy. TravelBiz Monitor presents the highlights of 2011 and the key trends for 2012

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2011 was a mixed bag of surprises and shocks for the international travel and tourism industry. While the first half of the year witnessed some positive momentum in international travel, the Euro-zone crisis and the Credit crisis in the US cast its shadow on the travel industry in the second half of the year. As if this was not enough, the political crisis in West Asia and North Africa, coupled with the earthquake and tsunami disaster in Japan added to the wounds. However, notwithstanding such crises, international travel grew by a healthy 4.5 per cent in the first eight months of 2011, as compared to the corresponding period in 2010, as per UNWTO statistics, which is quite commendable.

The UNWTO also reports some startling figures in terms of international travel. Despite financial crises in the developed world, especially in the European Union, the region benefited vastly from inbound travel during the first eight months of 2011, registering a growth of around six per cent - equivalent to the overall international inbound growth of Asia. Statistics show that international travel into advanced economies grew higher than the emerging economies during this period. In Asia, while international travel in South East Asia registered a growth of 12 per cent, South Asia saw 13 per cent growth. International travel into North Asia, largely comprising Japan, had slowed down due to the natural disaster in Japan.

Going into 2012, international associations like the UNWTO and WTTC expect international travel to grow, but at a very low rate. The Eurozone crisis is believed to dampen consumer confidence in the coming year. As economic growth weakens, travel and tourism indicators are also expected to weaken in the New Year.

India Scenario
Despite the general slowdown, international travel into India remained stable throughout 2011, registering approximately 10 per cent growth during the first 10 months of the year.  As per the Indian Ministry of Tourism figures, Foreign Tourist Arrivals grew by 9.5 per cent and Foreign Exchange Earnings grew by 17.7 per cent in USD.  Domestic travel, the mainstay of Indian tourism, continued to march ahead in 2011 as well.

There have been numerous initiatives by the Central and State governments in the last year to facilitate more inbound into the country. The year began with the announcement of Visa on Arrival facility extension to travellers from four ASEAN countries – Cambodia, Philippines, Vietnam and Laos – apart from five countries that the government had extended the facility to a year earlier. There is pressure on the government to extend this facility to more destinations to enhance inbound into the country.

311211_cs_2.jpgOn Mission Mode
Tourism has never been a priority sector for policy-makers in India. However, with the new year here and the planning stage for the 12th Five Year Plan almost ending, the government seems to have woken up to the potential of the tourism sector as a generator of employment and foreign exchange. The support of sorts has come from none other than the Prime Minister, Dr Manmohan Singh. While speaking at the recently concluded 17th Summit Meeting of the SAARC country heads, the Prime Minister underlined the need for promoting regional travel. He also expressed India’s willingness to host a conclave of tour operators of the region to increase awareness and equip tour operators to promote travel in the region.

The Indian Ministry of Tourism has some ambitious plans during the 12th Five Year Plan, which will be up and about from April, 2012. It has drawn up an elaborate road map to develop about 35 tourism circuits around various destinations including pilgrim, adventure and leisure destinations. Creating Integrated Tourism Parks is another major initiative the government is looking at. It plans to set up about 20 such parks in different parts of the country on public-private-partnership basis in the next five years. The Ministry has already convened regional-level meetings of tourism ministers of different states to create a favourable tourist-friendly atmosphere in each state. On the monetary front, the Ministry is expecting an almost four-fold increase in plan funds from the government for implementing these plans in the next five years, and thereby achieve a target of 10 million inbound tourists by the end of the plan period. On the marketing front, India Tourism has plans to tap new markets while continuing its efforts in established markets. Furthermore, the Union Tourism Minister recently announced the Ministry’s plans to set up 12 new India Tourism offices to take the marketing and promotional efforts forward. The new markets include CIS countries of undivided Russia, Middle East, and Africa.

In a bid to enhance India’s image, the Ministry has taken on itself the onus of creating a clean environment through the ‘Clean India Campaign’. The Ministry, though the campaign, aims to lead the country to maintain cleanliness, initially at tourist spots and eventually, throughout India. The Ministry recently held a workshop to formulate a broad framework for launching this campaign, which is scheduled to start from April 2012.

Indian Outbound
Outbound from India continued to grow in 2011. With India’s rising international profile, fast-growing economy and increasing integration with the global economy, the number of Indians travelling abroad has risen phenomenally in recent years. Indians’ appetite to travel to overseas destinations for leisure is increasing like never before. As per rough estimates, around 10 million Indians travel abroad every year for various reasons, and the number is growing.  

311211_cs_3.jpgHospitality
The Indian hospitality sector has experienced modest growth in terms of occupancy, ARR and RevPARs during 2011. Notwithstanding the global financial slow down, travel into India as well as domestic travel continued as usual, except towards the end of the year, providing ample business opportunities for the hospitality sector. The year also witnessed new flow of hotel inventory into the market, which resulted in arresting the demand and supply gap in some key markets to a certain extent. At the same time, in markets like Pune, over supply of hotel inventory impacted the revenue expectations of existing hotels.

On the policy side, the central government has approved the recommendation of the Tourism Ministry for a single window mechanism for approval for hospitality projects in the country.  A new board, Hospitality Development & Promotion Board (HDPB), has come into being, giving some hope to the industry in relation to reducing the approval time lag.  

Aviation Scenario
Despite a steady growth of almost 17 per cent in passenger traffic, the Indian aviation industry has had a tumultuous year. While the national carrier, Air India, continued its loss-making run with no extra financial help from the government, the private carriers, with the exception of IndiGo, also failed to turn up profits in 2011. Mounting losses have forced Kingfisher Airlines to ground its LCC model, Kingfisher Red, in November, sending shock waves through the industry and bubbling up doubts about the survival of the brand in the market. To get some help, the leaders of five domestic airlines met the Prime Minister and apprised him of the various issues plaguing the domestic aviation industry in India, including taxes on fuel and airport charges.

The Civil Aviation Ministry has not been sitting idle though. In a move to help out struggling domestic airlines, the Aviation Ministry recently approved a proposal for allowing international airlines to buy up to 26 per cent stake in private Indian airlines. The ministry had earlier proposed a cap of 24 per cent on foreign direct investments by overseas carriers. The Department of Industrial Policy and Promotion had proposed the 26 per cent FDI by foreign airlines into the domestic industry, in the backdrop of private Kingfisher Airlines slipping into a severe debt crisis and several others facing a resource crunch. The Home Ministry and the Planning Commission have already supported the draft cabinet note in this regard. The Finance Ministry has also given the green signal to the proposal, with a rider that such investments should not violate SEBI’s takeover code. Currently, FDI of up to 49 per cent is permitted in aviation services like cargo handling, but foreign carriers are not allowed.

But even under stressful conditions, Indian low-cost brands – SpiceJet and IndiGo,  have continued to spread their wings internationally, giving ample low-cost travel options to people travelling to short-haul destinations in South and South East Asia, as well as the Middle East.


Key Trends for 2012: Domestic
Atal Dulloo
IAS Commissioner, Sec to J&K, Govt, Dept of Tourism & Culture

As far as new trends are concerned, there will be steep increase in short-duration trips with shorter notice periods. Among the segments, Golf Tourism, Adventure Tourism and Pilgrimage Tourism will attract the major traffic from the Indian domestic market. Particularly for the state J&K, we are expecting a 15 per cent increase in the Pilgrim Tourism segment. Also, we are optimistic about the adventure segment as we witnessed a 100 per cent increase this year and are expecting the same to grow by 40-50 per cent. As the J&K tourism ministry opened Golf Courses at places like Pahalgam and Gulmarg this year, it has further been the source for attracting high-end tourists to the state. We also anticipate new destinations like Yusmarg, Kokernag, Daksum and Lolab Valley to attract more tourists in 2012. The state tourism ministry is also working to launch incentive packages to attract more private players and aims to give 30 per cent and 15 per cent subsidies in capital investment to those willing to set up guest houses and adventure tourism equipment, respectively.


P P Khanna
VP, ADTOI

The Indian tourism industry in 2012 will witness trends such as, increase in domestic tourism to destinations like Kashmir, Ladakh, Kerala, Goa, Rajasthan, Gujarat and Madhya Pradesh. Segments like Soft Adventure Tourism, Pilgrim Tourism, Women’s only group travel. Regional road travel to more than one destination, perhaps combining two states, will also increase. More weddings will be taken to exotic Indian destinations than overseas, while Corporate Travel is expected to slow down a bit. Also, there will be an increase in travllers opting for frequent holidays if airfares don’t shoot up unexpectedly. The fluctuations in the dollar rate will actually decide the fate of domestic travel in 2012. A certain change in culture and tradition amongst the younger generation will make way for new trends. Furthermore, improvement in tourism infrastructure and awareness about destinations and new, improved hotels/resorts of international standard will enhance the domestic tourism market in next calendar year.

 
Mamta Shah
Director, Sanskruti Holidays

Domestic travellers are showing interest in theme-based packages. Clients are open to new ideas and want to explore. Senior citizens and Single Ladies form a big segment; they have money and time at their disposal, but have many apprehensions regarding their safety, health cover, weather and comfort. Wine and food enthusiasts are looking for wine cruises and wine tours in both domestic and international destinations. Art, Tribal, Agro, Health & Healing packages are in demand. Factors such as awareness, availability, and info will support these trends. There is a demand for something new, so innovation, application and proper organisation will help in arousing interest and intrigue among clients. Along with routine, time-tested destinations, travellers will look for the unexplored interiors of Kerala, The Buddhist circuit, Khajuraho temples and wildlife of MP, besides the coastal regions of Maharashtra and Gujrat. Leh-Ladakh will be in high demand among adventure tourists. The North Eastern states, Kerala, Gujarat and Jharkhand are expected to receive more domestic tourists in 2012.

 
Shailesh Nair
MD, Mystikal Holidays Pvt Ltd

Self-Drive Holidays: With the number of cars increasing steadily, this trend is likely to go up in the coming years. It will lead the way and will be instrumental in bringing in the tailored packages concept in the near future. From a simple self-drive holiday where you stay at motels and hotels en-route, people are going to graduate to mobile homes as the infrastructure falls in place.

Short Vacations: Instead of one long vacation, many would be opting for multiple short vacations.

Cruises: Cruise Tourism will scale up as more options are made available; there is fabulous scope, but not many takers. If the atmosphere is conducive and the authorities are willing to be flexible, many would be happy to jump in. Currently Cruise Tourism in India is in troubled waters as only a few have tried their hands and withdrawn.

Student Holidays: We are seeing an existing market behaving in a different way. Organised student group tours, previously the responsibility of educational institutions, is now slowly passing over to students themselves who have started managing holidays on their own. This is an interesting change and we see this trend gaining momentum.

Pooled Vacations: This is not something new but the numbers are looking up. This will also bring in changes in the way the hotels look at family holidays.

Today, people across all segments travel for holidays, but the mid segment out numbers the rest. With numerous luxury hotels and resorts opening, there is going to be a definite hike in the Indian luxury segment.

 
Key Trends for 2012: Inbound
Subhash Goyal
President, IATO

The Middle East is politically disturbed, popular Southeast Asian countries are not favourable repeat destinations, and Nepal, Sri Lanka and Maldives are mostly visited as added destinations with India packages. So, in the global scenario, India as a holiday destination is well placed for 2012 among travellers from Europe, the USA and even South Asian countries.

India has maintained an average growth of 10 per cent, much better than the average worldwide growth. It is affordable with the dollar appreciating and has several destinations that encourage repeat visits. Charter services to Goa and other destinations have been growing, while several new airlines have started operations as well. Tourists visit India in large numbers during the December to March period – the peak seasons, so we are very optimistic for about 15 per cent growth. The government has also increased its promotional budget and is doing more road shows in major source markets and participating in global travel fairs.

It is the leisure segment that consists of the major component in inbound tourism. The VFR segment will see maximum growth as this traffic persists through the year – recession or no recession. Footfall from markets like China, Korea and Russia is growing. Good air-connectivity has made mobility easier, resulting in round-the-year tourist movements which were earlier restricted to Mid September-March.

 
Rupal Zaveri
CEO, Active Tours and Travels

Inbound traffic is growing from all over the world, with the US, UK and China being the largest markets. I don’t expect this to change in 2012. What will change is the number of bookings. We expect to see a 20 per cent rise in bookings this year. What makes this impending growth most evident is the fact that flights coming into India are never empty. Business traffic, especially, is on the rise. Leisure and corporate travel are the ones that, I believe, will do the most business in 2012. We have been receiving a number of queries for Rajasthan, Bengaluru, Sikkim, Darjeeling and Kozhikode (Calicut), and hence believe that these are among the markets that will see maximum footfall in 2012.

 
Satyajit Desai
General Manager - Inbound Tours, Kesari Tours Pvt Ltd

        • An increase in NRIs travelling to India vis-à-vis what we serviced in 2011 and an increase in online inquiries/bookings.

        • A come-back interest in Medical Tourism, which for some time in the last year or so, was low; Eastern-European are countries expected to grow more than Western-Europe, possible because of the recession in the latter as Eastern-Europe has faced less of an impact.

  • An increase in the pre-purchase of rooms, which will play a role in competitive pricing /rock-bottom pricing to overseas clients

  • Hotels expected to be more proactive, supportive, create a win-win situation and join hands with Tour Operators for mutual gains and for business development.

The opening of more channels for inbound flow, cohesiveness and mutual understanding with vendors and trade partners, flexibility of rates, inviting overseas agents on educational trips to India with government support, and also support from hotel partners and service providers Pan-India are some of the factors that will form the trends in 2012. Leisure-FIT segments and ad-hoc groups will definitely increase in 2012.

 
Key Trends for 2012: Outbound

Özgür Aytürk,
Culture & Tourism Counsellor for India, Turkey

Change in Destination Perception: Traditionally, Indians would identify Turkey with the Blue Mosque along with Grand Bazaar and Spice Bazaar. But due to promotional activity by the Ministry of Culture & Tourism on a regular basis, an interest and awareness about newer destinations and products has been created, whereby more people are visiting places like Cappadocia, Pamukalle and Antalya.

Change in Demographic pattern: Earlier, Turkey was perceived as a family-oriented place where small groups of 10 to 12 people would visit historical and cultural spots. This has changed and today’s travellers fall in the 18-35 years age group with more interest in exploring and shopping.

Change in Product Portfolio: Earlier, Turkey was being promoted as a historical and cultural place, which has changed since we started promoting newer products like winter sports, conference and convention destinations, wedding venues, shopping, etc.

Change from a transit point to a fully fledged destination: Very little was known about Turkey beyond Istanbul till the time we set up shop in India. It was counted as more of a transit point where people would stop over on their way to Europe/US. But post our office being set up, awareness was generated through our promotional campaigns, trade and media FAMs, consumer campaigns, cultural shows, trade shows, etc and today, more people have started opting for full-fledged tours exclusively on Turkey.

Change in traveller profile: Earlier, turkey was identified as a leisure destination meant for FITs. But recently, we have seen a lot of corporates sponsoring their partners or their employees to Turkey. We attribute this to more hotels with international-standard conferencing facilities, better transport, opening of the second international airport in Istanbul (Sabiha Gocken Airport) and internationally competitive pricing.

 
Paramjit Bawa
Regional Manager - India & Middle East, VisitBritain

Value-for-money travel, while always there, is now the single biggest factor in a traveller’s criteria set. As economies continue to struggle, value-for-money will continue to be ever more significant as a factor. Another significant trend is that the travel bug is biting people; irrespective of income or social standing. This is the most significant and encouraging trend in Indian outbound. Air connectivity and aviation infrastructure needs to keep pace and airlines will have to fight harder to stay competitive and profitable. Currency exchange rates will also play a role in determining travel trends, although it is difficult to say how significant a factor they will be, due to the uncertainty in the international finance markets.

From Britain’s point of view, the 2012 Olympic & Paralympic Games will provide an added incentive for leisure travellers to visit, albeit more from European or American countries. VFR has always been a strong component of travel from India to Britain and this is an edge we have over our competitor destinations. With a healthy resident Indian population in the UK, we expect VFR to remain strong and consistent.

 
Key Trends for 2012: Online and Aviation
Phaninder Sama
CEO, RedBus

Mobile bookings
There will be good traction on the mobile with new payment mechanisms from banks and telcos. The RBI just removed the maximum cap on payments through mobile, which should help mobile bookings. With the smartphone revolution, there will be a price reduction in data plans. This will result in many customers migrating to internet over the mobile. OTAs will see this traffic complimenting traffic from PCs.

Tier-II/III cities consumption growth
Internet travel consumption in Tier II/III cities will see the beginning of growth. There’s a good growth in e-commerce (electronics, apparel, shoe etc.,) in Tier-II cities. This is driven by the mismatch between aspiration and availability. Once these customers have a good experience of buying over the internet, they will start to buy travel too.

Faster growth rate of the category
With the retail e-commerce revolution, many customers will be added to the “online transacting base”. There are estimates of there being 300 million internet users by 2013 in India (three times the current number). This will lead to a massive move towards online transactions. Currently 10 per cent of Indians have online presence and seven per cent of them transact online, compared to China where 30 per cent have online presence and 25 per cent transact online. We can see our percentage adoption too, moving towards that of China’s because of lower cost of data usage, mobile phone usage and the trust building due to the e-comm revolution.

 
Nikhil Ganju
Country Head-India, TripAdvisor

Travel Reviews set to get more ubiquitous
Travellers are becoming increasingly self reliant in their travel planning process with more people increasingly searching online on destination and accommodation information, creating their own itineraries and making their own bookings. Traveller reviews have played a significant role in empowering travellers to make this change.

Rise in online hotel bookings
One big change the online bookings segment will see in 2012 is a rise in hotel bookings. With the flights segment reaching saturation in terms of growth, OTAs have been shifting their focus increasingly towards accommodation sales. 2012 should see a large impetus to driving online hotel bookings from OTAs which may translate into bigger and better deals for travellers.

Suppliers reach out to travellers
2012 will see online travel search getting more broad-based and beyond the stronghold of the OTAs. We will see direct suppliers like hotels, airlines getting more active with attractive offers and promotions for travellers.

 
Deep Kalra
CEO and Founder, MakeMyTrip.com

A key trend going forward would be mobility. With the increasing usage and popularity of smartphones, more and more people are turning towards the mobile device. The more interesting aspect is that the mobile is being used for purposes apart from search and surfing. M-commerce is certainly an industry to be reckoned with and will be a major driver for growth for other related sectors as well.

Inclusive growth will be yet another rising trend in 2012. Improved web connectivity and financial inclusion will surely modify the pace and pattern of economic growth. For instance, the concept of mobile wallet has now become a reality and it is extremely easy and convenient to transact through the mobile device now. Focusing on inclusive growth may perhaps fuel ambitious initiatives like distance education. Touching rural communities and including them in the growth story could soon become a reality.

Another interesting trend is the preference for online means for planning and booking a holiday. Recent studies and surveys have revealed that more and more Indian travellers are turning towards online means of purchasing travel and holidays. Even in times of the recent economic slowdown, people are opting for a holiday, perhaps since it provides the much needed break. The impact on travel habits is that people are undertaking short-haul and more frequent holidays. Railway tickets are being booked online, and options like Cash on Delivery are being exercised; this testifies that it is not just the card-holding upper-middle class Indian that is surfing the internet. In 2012, we can surely look forward to more travel and exploitation of online sources for planning travel.

 
Neelu Singh
COO, Ezeego1

Mobile commerce is one segment that is supplementing OTAs with considerable growth in the past few years, as people are accessing the internet through their smart phones today. According to a report by ABI Research, it is estimated that by 2015, shoppers from around the world will spend about USD 119 billion on goods and services bought via mobile phones. Hence, exploiting the mobile platform becomes very crucial to sustain in this constantly changing and competitive market.

Apart from mobile, we see a lot of Indian customers slowly moving and adapting to new media like iPads, podcasts and especially to social media for planning their travel. This trend is unquestionably set to grow in the coming years and will definitely act as an enhancer in the growth process of the OTA industry in India.

The third trend we see is non-air online bookings. We expect people to buy more of non-air products. With flexible payment options like Cash on Delivery available, we definitely see this trend growing this year.

 
KD Row
Executive Director
(Sales & Marketing) - India Region, Air India

I believe the domestic aviation market will continue to show growth in 2012 as it has done in 2009 and 2010. Margins will be hard-pressed in 2012 and customers will not spend as freely as they used to. The Dollar and Euro situation is not helping the aviation industry both in India and globally. Lastly, the dark horses in 2012 will be fuel prices across the world. They will be extremely unpredictable.

 
Sunil Kallyat
Regional Manager - Commercial,
Western India,
Emirates Airlines

India’s aviation sector has tremendous potential. As long as international shocks such as the cost of fuel, environmental tax, government and institutional spending, etc. do not take a turn for the worse, India’s travel industry should continue its double-digit growth. Competition will remain a key driver in keeping costs down and players are likely to offer ever-more aggressive offers in order to preserve market share.
In all, a very tough year for aviation salesmen, and an even tougher one ahead!

 
Samyukth Sridharan
CCO,
SpiceJet

The first trend we will see in the aviation industry in 2012 is capacity addition in Tier-II and Tier-III cities on a larger scale. Metro cities in India are maxed out and we will see more connectivity between the smaller cities with increased LCC presence. The yield environment will also continue to be challenging. Lastly, fuel prices will continue to remain at the same level or higher in 2012.

 
Key Trends for 2012: Hospitality
Param Kannampilly
Chairman and MD,
Concept Hospitality

        • Increased business travel owing to the rupee’s depreciation and improved relations with neighbouring countries. The Open Sky policy and Visa-on-Arrival facility will help.

        • Improved travel from SAARC countries.

        • Slight increase in the NRI and PIO travellers due to layoffs and better purchasing power.

        • Slight improvement in MICE travellers.

 
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