Trends in Travel and Tourism Industry

Travel and Tourism in India
Euromonitor
April 2005
Travel and Tourism India
List of Contents and Tables

1. EXECUTIVE SUMMARY ......................................................................................................... 1
2. OPERATING ENVIRONMENT................................................................................................ 2
2.1 GDP ............................................................................................................................... 2
Table 1 GDP 1999-2004................................................................................... 2
2.2 Disposable Income......................................................................................................... 2
Table 2 Disposable Income 1999-2004 ............................................................ 3
2.3 Leisure Expenditure ....................................................................................................... 3
Table 3 Consumer Expenditure on Leisure 1999-2004..................................... 3
3. INDUSTRY ISSUES.................................................................................................................... 3
3.1 Political and Legislative Environment........................................................................... 3
3.2 Terrorism and Security .................................................................................................. 5
3.3 Sustainable Tourism....................................................................................................... 5
3.4 Positive Growth Factors ................................................................................................ 5
Summary 1 Positive Growth Factors....................................................................... 5
3.5 Negative Growth Factors............................................................................................... 6
Summary 2 Negative Growth Factors ..................................................................... 6
4. DEMAND FACTORS ................................................................................................................. 6
4.1 Leave Entitlement .......................................................................................................... 6
Table 4 Paid Holiday and Public Holidays 2004 .............................................. 7
4.2 Holiday Taking .............................................................................................................. 7
Table 5 Levels of Holiday Taking 1999-2004 .................................................. 7
4.3 Holiday Taking – Demographics ................................................................................... 7
Table 6 Holiday Taking by Demographic Groupings 1999-2004..................... 8
4.4 Holiday Taking – Length of Trip.................................................................................... 8
Table 7 Holiday Taking by Length of Trip 1999-2004..................................... 8
4.5 Holiday Taking – Seasonality ........................................................................................ 9
Table 8 Month in which Holidays are Taken 2004........................................... 9
5. TOURISM PARAMETERS ....................................................................................................... 9
5.1 Incoming Tourism Receipts............................................................................................ 9
Table 9 Incoming Tourism Receipts: 1999-2004............................................ 10
Table 10 Incoming Tourism Receipts % Growth: 2000-2004 .......................... 10
5.2 Outgoing Tourism Expenditure.................................................................................... 10
Table 11 Outgoing Tourism Expenditure: 1999-2004 ...................................... 10
Table 12 Outgoing Tourism Expenditure % Growth: 2000-2004..................... 11
5.3 Balance of Tourism Payments...................................................................................... 11
Table 13 Balance of Tourism Payments: Value 1999-2004.............................. 11
5.4 Incoming – Number of Arrivals.................................................................................... 11
Table 14 Total Arrivals: 1999-2004 ................................................................. 12
5.5 Incoming – Mode of Transport .................................................................................... 12
Table 15 Arrivals by Mode of Transport: 1999-2004 ....................................... 12
Table 16 Arrivals by Mode of Transport: % Breakdown 1999-2004................ 13
5.6 Incoming – Purpose of Visit......................................................................................... 13
Table 17 Arrivals by Purpose of Visit: 1999-2004 ........................................... 13
Table 18 Arrivals by Purpose of Visit: % Breakdown 1999-2004.................... 14
5.7 Incoming – Country of Origin...................................................................................... 14
Table 19 Arrivals by Country of Origin: 1999-2004 ........................................ 14
Table 20 Arrivals by Country of Origin: % Breakdown 1999-2004................. 15
5.8 Incoming – Per Capita Expenditure............................................................................. 15
Table 21 Per Capita Expenditure per Arrival: 1999-2004 ................................ 15
5.9 Outgoing – Number of Departures............................................................................... 15
Table 22 Total Departures: 1999-2004 ............................................................. 16
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5.10 Outgoing – Mode of Transport .................................................................................... 16

Table 23 Departures by Mode of Transport: 1999-2004................................... 16
Table 24 Departures by Mode of Transport: % Breakdown 1999-2004 ........... 16
5.11 Outgoing – Purpose of Visit......................................................................................... 17
Table 25 Departures by Purpose of Visit: 1999-2004....................................... 17
Table 26 Departures by Purpose of Visit: % Breakdown 1999-2004 ............... 17
5.12 Outgoing – Destination................................................................................................ 18
Table 27 Departures by Destination: 1999-2004 .............................................. 18
Table 28 Departures by Destination: % Breakdown 1999-2004....................... 19
5.13 Outgoing – Per Capita Expenditure............................................................................. 19
Table 29 Per Capita Expenditure per Departure: 1999-2004 ............................ 20
5.14 Domestic – Number of Trips and Expenditure ............................................................. 20
Table 30 Total Number of Domestic Trips: 1999-2004.................................... 20
Table 31 Domestic Tourist Expenditure: 1999-2004........................................ 21
5.15 Domestic – Trips by Mode of Transport ...................................................................... 21
Table 32 Domestic Trips by Mode of Transport: 1999-2004............................ 21
Table 33 Domestic Trips by Mode of Transport: % Breakdown 1999-
2004 ................................................................................................... 22
5.16 Domestic – Trips by Destination.................................................................................. 22
Table 34 Domestic Trips by Destination 1999-2004 ........................................ 22
Table 35 Domestic Trips by Destination: % Analysis 1999-2004 .................... 23
5.17 Domestic – Per Capita Expenditure............................................................................. 23
Table 36 Per Capita Expenditure Per Domestic Trip 1999-2004...................... 24
5.18 Tourism Spending ........................................................................................................ 24
Table 37 Spending on Tourism 1999-2004....................................................... 24
Table 38 Spending on Tourism: % Breakdown 1999-2004 .............................. 24
5.19 Tourism Spending – Method of Payment ..................................................................... 25
Table 39 Method of Payment for Tourism Spending: % Breakdown
2003 ................................................................................................... 25
6. TRAVEL ACCOMMODATION.............................................................................................. 25
6.1 Market Size .................................................................................................................. 25
Table 40 Travel Accommodation Market 1999-2004....................................... 26
Table 41 Travel Accommodation Market: % Growth 1999-2004 .................... 26
6.2 Sales by Sector ............................................................................................................. 26
Table 42 Travel Accommodation Value Sales by Sector: Value 1999-
2004 ................................................................................................... 26
Table 43 Travel Accommodation Value Sales by Sector: % Value
Breakdown 1999-2004....................................................................... 27
6.3 Outlets by Sector.......................................................................................................... 27
Table 44 Travel Accommodation Outlets by Sector: Units 1999-2004 ............ 28
Table 45 Travel Accommodation Outlets by Sector: % Volume
Breakdown 1999-2004....................................................................... 28
6.4 Hotels by Region.......................................................................................................... 28
Table 46 Hotels, Rooms and Beds by Region 2003.......................................... 29
6.5 Hotels by Star Ratings ................................................................................................. 29
Table 47 Number of Star Rated Hotels by Region 2003................................... 29
6.6 Hotels by Ownership.................................................................................................... 30
Table 48 Hotel Sales by Independent vs Chained Outlets: Value 1999-
2004 ................................................................................................... 30
6.7 Internet Transaction Trends......................................................................................... 30
Table 49 Travel Accommodation Internet Transactions Sales: Internet
Transaction Value 1999-2004............................................................ 31
6.8 Emerging Products ...................................................................................................... 31
6.9 Key Players – Mergers and Acquisitions ..................................................................... 31
Summary 3 List of Mergers and Acquisitions 2002-2004..................................... 32
6.10 Key Players – Revenue Rankings................................................................................. 32
Table 50 Key Players by Revenue 2003/2004 .................................................. 32
6.11 Key Hotel Players – Market Share............................................................................... 33
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Table 51 Hotel Companies by Market Share 2001-2004 .................................. 33

6.12 Key Hotel Players – RevPAR ....................................................................................... 33
Table 52 Key Hotel Players by RevPAR 2003/2004 ........................................ 33
6.13 Forecast Sales by Sector .............................................................................................. 34
Table 53 Forecast Travel Accommodation Sales by Sector: Value
2004-2009.......................................................................................... 34
6.14 Forecast Outlets by Sector........................................................................................... 35
Table 54 Forecast Travel Accommodation Outlets by Sector: Units
2004-2009.......................................................................................... 35
7. TRANSPORTATION................................................................................................................ 35
7.1 Market Size .................................................................................................................. 36
Table 55 Transportation Market 1999-2004 ..................................................... 36
Table 56 Transportation Market: % Growth 1999-2004................................... 36
7.2 Sales by Sector ............................................................................................................. 36
Table 57 Transportation Sales by Sector: Value 1999-2004............................. 37
Table 58 Transportation Sales by Sector: % Value Breakdown 1999-
2004 ................................................................................................... 37
7.3 Airline Capacity and Utilisation .................................................................................. 37
Table 59 Airline Capacity by Type 1999-2004................................................. 38
Table 60 Airline Utilisation by Type 1999-2004 .............................................. 38
Table 61 Airline Utilisation by Type : % Breakdown 1999-2004 .................... 38
7.4 Airline Sales by Seat Class........................................................................................... 38
Table 62 Airline Volume Sales by Seat Class 1999-2004 ................................ 39
Table 63 Airline Volume Sales by Seat Class: % Breakdown 1999-
2004 ................................................................................................... 39
7.5 Airline Sales by Distance ............................................................................................. 39
Table 64 Airline Volume Sales by Distance: % Breakdown 1999-2004 .......... 39
Table 65 Transportation Sales: Internet Transaction Value 1999-2004............ 40
7.10 Key Players – Passengers Carried .............................................................................. 41
Table 67 Key Players by Numbers of Passengers Carried 2003/2004 .............. 42
7.11 Key Airline Players – Market Share ............................................................................ 42
7.12 Forecast Sales by Sector .............................................................................................. 42
Table 68 Forecast Transportation Sales by Sector: Value 2004-2009 .............. 43
8. CAR RENTAL ........................................................................................................................... 43
8.1 Market Size .................................................................................................................. 43
Table 69 Car Rental Market: 1999-2004 .......................................................... 43
Table 70 Car Rental Market % Growth: 1999-2004 ......................................... 44
8.2 Fleet Size and Number of Operators............................................................................ 44
Table 71 Structure of Car Rental Market 1999-2004........................................ 44
8.3 Sales by Sector and Location ....................................................................................... 44
Table 72 Car Rental Sales by Sector and Location: Value 1999-2004 ............. 45
Table 73 Car Rental Sales by Sector and Location: % Value
Breakdown 1999-2004....................................................................... 45
8.4 Rental Duration ........................................................................................................... 45
Table 74 Car Rental Average Duration by Sector 1999/2004........................... 45
Table 75 Average Car Rental Duration: % Breakdown 1999/2004 .................. 46
8.5 Time of Booking ........................................................................................................... 46
Table 76 Time of Booking: % Breakdown 2004 .............................................. 46
Table 77 Car Rental Sales: Internet Transaction Value 1999-2004 .................. 47
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8.9 Key Players – Fleet Size............................................................................................... 47
Table 79 Key Players by Size of Fleet 2001-2004............................................ 47
8.10 Key Players – Average Daily Rate............................................................................... 48
Table 80 Key Players by Average Daily Rate for Car Hire 2003 ..................... 48
8.11 Key Players – Market Share ........................................................................................ 48
Table 81 Key Players by Market Share 2001-2004 .......................................... 48
8.12 Forecast Sales by Sector and Fleet Size....................................................................... 48
Table 82 Forecast Car Rental Sales by Sector: Value 2004-2009..................... 49
Table 83 Forecast Car Rental Fleet Size 2004-2009......................................... 49
9. TRAVEL RETAIL .................................................................................................................... 49
9.1 Market Size .................................................................................................................. 49
Table 84 Travel Retail Market: 1999-2004....................................................... 50
Table 85 Travel Retail Sales % Growth: 2000-2004 ........................................ 50
9.2 Outlets by Sector.......................................................................................................... 50
Table 86 Travel Retail Outlets by Sector: Units 1999-2004 ............................. 51
Table 87 Travel Retail Outlets by Sector: % Volume Breakdown 1999-
2004 ................................................................................................... 51
9.3 Travel Agencies – Services .......................................................................................... 52
Table 88 Travel Agency Value Sales by Service: % Breakdown 1999-
2004 ................................................................................................... 52
9.4 Travel Agencies – Type of Holiday and Destinations .................................................. 52
Table 89 Travel Agency Value Sales by Type of Holiday: %
Breakdown 1999-2004....................................................................... 53
Table 90 Travel Agency Value Sales by Destination: % Breakdown
1999-2004.......................................................................................... 53
9.5 Travel Agencies – Exchange Services .......................................................................... 54
Table 91 Travel Agencies Offering Exchange Services 1999-2004 ................. 54
9.6 Tour Operators – Source of Sale ................................................................................. 54
Table 92 Tour Operator Value Sales by Source of Sale: % Breakdown
1999-2004.......................................................................................... 54
9.7 Tour Operators – Type of Holiday and Destinations ................................................... 55
Table 93 Tour Operator Value Sales by Type of Holiday: %
Breakdown 1999-2004....................................................................... 56
Table 94 Tour Operator Value Sales by Destination: % Breakdown
1999-2004.......................................................................................... 56
9.8 Exchange Services – Sales by Outlet and Type ............................................................ 56
Table 95 Exchange Service Value Sales by Outlet: % Breakdown 2003.......... 57
Table 96 Exchange Services Value Sales by Currency vs Traveller’s
Cheques: % Breakdown 2003............................................................ 57
9.9 Online Travel Agencies................................................................................................ 57
Table 97 Travel Retail Sales: Internet Transaction Value 1999-2004 .............. 57
Summary 4 List of Mergers and Acquisitions 2002-2004..................................... 58
9.12 Key Travel Agencies – Revenue and Market Share...................................................... 58
Table 98 Travel Agents: Revenue Rankings 2003/2004................................... 59
Table 99 Travel Agencies: Market Share 2001-2004 ....................................... 59
9.13 Key Tour Operators – Revenue and Market Share ...................................................... 59
Table 100 Tour Operators: Revenue Rankings 2003/2004 ................................. 60
Table 101 Tour Operators: Market Share 2001-2004 ......................................... 60
9.14 Key Exchange Services – Revenue and Market Share ................................................. 60
Table 102 Exchange Services: Revenue Rankings 2003/2004 ........................... 60
Table 103 Exchange Services: Market Share 2001-2004 ................................... 61
9.15 Forecast Sales and Outlets .......................................................................................... 61
Table 104 Forecast Travel Retail Value Sales: 2004-2009................................. 62
Table 105 Forecast Travel Retail Outlets by Sector: Units 2004-2009............... 62
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10. TOURIST ATTRACTIONS ..................................................................................................... 62

10.1 Market Size .................................................................................................................. 62
Table 106 Tourist Attractions Market: 1999-2004 ............................................. 62
Table 107 Tourist Attractions Market % Growth: 1999-2004 ............................ 63
10.2 Sales by Sector ............................................................................................................. 63
Table 108 Tourist Attractions Sales by Sector: Value 1999-2004 ...................... 63
Table 109 Tourist Attractions Sales by Sector: % Value Breakdown
1999-2004.......................................................................................... 64
10.3 Visitors by Sector ......................................................................................................... 64
Table 110 Tourist Attractions Visitors by Sector: 1999-2004 ............................ 65
Table 111 Tourist Attractions Visitors by Sector: % Breakdown 1999-
2004 ................................................................................................... 65
10.4 Internet Booking Trends............................................................................................... 65
10.7 Key Players – Visits ..................................................................................................... 66
Table 112 Major Tourist Attractions by Visitors 2002-2004.............................. 66
10.8 Forecast Sales and Visitors by Sector.......................................................................... 66
Table 113 Forecast Tourist Attractions Sales by Sector: Value 2004-
2009 ................................................................................................... 67
Table 114 Forecast Tourist Attractions Visitors by Sector: 2004-2009 .............. 67
11. KEY STRATEGIC ALLIANCES ............................................................................................ 68
11.1 Trends .......................................................................................................................... 68
12. GROWTH COMPANY PROFILES........................................................................................ 68
12.1 Kuoni Travel (India) .................................................................................................... 68
Summary 5 Kuoni Travel India: Key Facts........................................................... 68
Summary 6 Kuoni India: Summary of Key Events 1999-2004............................. 69
Table 115 Kuoni India: Financial Summary 1999-2004..................................... 70
12.2 Jet Airways................................................................................................................... 70
Summary 7 Jet Airways: Key Facts ...................................................................... 70
Summary 8 Jet Airways: Summary of Key Events 1999-2004 ............................. 71
Table 116 Jet Airways: Financial Summary 1999-2004..................................... 71
12.3 ITC ............................................................................................................................... 72
Summary 9 ITC Ltd: Key Facts ............................................................................ 72
Summary 10 ITC Hotels: Summary of Key Events 1999-2004 .............................. 73
Table 117 ITC Hotels: Financial Summary 1999-2004 ...................................... 73
12.4 Air Deccan ................................................................................................................... 73
Summary 11 Air Deccan: Key Facts....................................................................... 74
Summary 12 Air Deccan: Summary of Key Events 2003-2004.............................. 74
Table 118 Air Deccan: Financial Summary 1999-2004...................................... 75
12.5 Air Sahara.................................................................................................................... 75
Summary 13 Air Sahara: Key Facts ........................................................................ 75
Summary 14 Air Sahara: Summary of Key Events 1999-2004............................... 76
Table 119 Air Sahara: Financial Summary 1999-2004....................................... 76
13. FUTURE OUTLOOK ............................................................................................................... 76
13.1 Indian Ocean Earthquake ............................................................................................ 76
13.2 Market Opportunities................................................................................................... 77
Summary 15 Opportunities for Growth and Investment ......................................... 78
13.3 Tourism Receipts and Expenditure .............................................................................. 78
Table 120 Forecast Incoming Tourism Receipts: 2004-2009 ............................. 79
Table 121 Forecast Outgoing Tourism Expenditure: 2004-2009........................ 79
Table 122 Forecast Domestic Tourism Expenditure 2004-2009......................... 79
13.4 Balance of Payments.................................................................................................... 80
Table 123 Forecast Balance of Tourism Payments: Value 2004-2009 ............... 80
13.5 Number of Arrivals ...................................................................................................... 80
Table 124 Forecast Visitor Arrivals: 2004-2009 ................................................ 81
13.6 Number of Departures ................................................................................................. 81
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Table 125 Forecast Visitor Departures: 2004-2009 ............................................ 82

13.7 Travel and Tourism Markets........................................................................................ 82
Table 126 Forecast Sales by Travel and Tourism Markets: Value 2004-
2009 ................................................................................................... 82
13.8 Developments in Internet Transaction Sales................................................................ 83
Table 127 Forecast Sales in Travel and Tourism Markets: Internet
Transaction Value 2004-2009............................................................ 83
14. DEFINITIONS........................................................................................................................... 83
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TRAVEL AND TOURISM IN INDIA
1. EXECUTIVE SUMMARY
Booming industry
Indian travel and tourism experienced a boom during 2004. There was a surge in arrivals and
departures as well as robust expansion in domestic tourism. After growing by 15% in 2003, the
number of incoming arrivals rose by a hefty 22% in 2004 over 2003. Not surprisingly, incoming
tourism receipts also rose sharply by about 16% in 2003 and 32% during 2004.
Strong government support
The strong support provided by the government played an important role in boosting tourist
arrivals. In particular, the Incredible India publicity campaign implemented by the government
during 2002-2004 proved successful in attracting tourists by highlighting the diverse attractions of
India. There was also a major improvement in the tourist infrastructure through both private and
government initiatives.
Resurgence in departures
During 2003, departures declined by 9%, mainly because of the troubled situation in the Middle
East, which is the main destination for Indians, as well as the Severe Acute Respiratory Syndrome
(SARS) crisis which adversely affected travel to South East Asian countries. However, this decline
will be more than compensated for by trends during 2004, when departures are expected to rise by
20%. The rising incomes of affluent and upper-middle-income consumers led to the increasing
popularity of holidays abroad and contributed to growth in departures.
Local holiday spirits
Domestic tourism is also expected to grow robustly in 2004 though not to the same extent as
international arrivals and departures. Growing incomes as well as improvements in tourist facilities
contributed to the expansion in domestic tourism.
Sky wars
The major changes in the airlines industry had a strong influence on transportation. Intense
competition between private and government-owned carriers took the form of cuts in air fares. A
major development was the commencement of operations of India’s first low-cost no-frills airlines
company, Air Deccan, in 2003. With Air Deccan expanding its network to a national footprint in
2004 and offering very low fares, competition increased for other carriers. This will undoubtedly
provide a further impetus to the growth of tourism in India.
Upbeat hoteliers
Hoteliers are currently upbeat, due to the surge in arrivals and domestic travel towards the end of
the review period, which drove up occupancy rates in popular hotels in India. The top Indian hotel
companies concentrate on luxury hotels but there is growing realisation of the potential of budget
hotels. With rapidly growing business potential in south Indian cities, the number of hotels in the
south rose and is now close to the number in western India which was traditionally the leader.
Forced diversification
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While travel agents are profiting from the tourist boom, a number of them feel threatened due to
cuts in commissions from international airlines. These cuts were motivated by airline companies
seeking to cut costs and encourage travellers to book directly, especially through the internet.
Hence, many travel agents, unduly dependent on such commissions, are attempting to diversify
their operations by providing other travel services.
Bright prospects
The Tenth 5-year plan (2002-2007) of the government treats tourism as a major engine of economic
growth and employment generation. Under the Plan, total resources of Rs29 billion were allocated
towards tourism. Given the strong emphasis of the government on the promotion of tourism and
improvement of the tourist infrastructure and the vast untapped potential of India as a destination,
there is little doubt that future prospects for Indian tourism are bright.
2. OPERATING ENVIRONMENT
2.1 GDP
The GDP growth performance of the Indian economy over the review period needs to be
understood in the context of the major changes in government policies during the 1990s. The 1990s
represented a watershed for the Indian economy as Indian policy makers seriously embraced
economic reforms. In particular, the government implemented wide-ranging liberalisation policies
relating to industry, imports, foreign investment, finance and other areas. This played a major role
in driving the Indian economy on to a higher growth path. During the review period, annual growth
in GDP in current prices averaged almost 10%. In recent years, India emerged as one of the fastest
growing economies in the world.
As regards recent trends, these were influenced by agriculture, which still plays an important role in
the Indian economy. During 2002, deficient monsoon rains adversely affected agriculture and hurt
economic growth. However, in 2003, with normal monsoons in most parts of the country, there was
a strong revival in economic growth with GDP growth of 12% in current prices or 8% in constant
terms. During 2004, agricultural output is expected to be about the same or marginally lower than
last year, while industry and service remain buoyant. Hence, GDP growth for 2004 is estimated at
11% in current prices, which is slightly lower than GDP growth in 2003.
Table 1 GDP 1999-2004
Rs million
Current % growth
1999 19,368,300.0 -
2000 20,895,000.0 7.9
2001 22,821,400.0 9.2
2002 24,695,600.0 8.2
2003 27,721,900.0 12.3
2004 30,882,418.4 11.4
Source: Euromonitor from National Statistics
2.2 Disposable Income

Robust economic growth over the review period meant that disposable income also rose rapidly.
During the 1999-2004 period, annual growth in disposable income in current prices averaged 7%.
The fundamental driving force for rising disposable incomes was strong growth in the various
economic sectors, especially industry and services, aided by the government’s ongoing economic
reforms and liberalisation policies. In addition, government policies also made a direct contribution.
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In particular, the reduction in various types of taxes boosted the extent of household income
available for consumption or saving.
Table 2 Disposable Income 1999-2004
Rs million
Current 1999-2004 % growth
1999 14,237,622.1 -
2000 14,965,546.2 5.1
2001 15,735,605.0 5.1
2002 17,393,501.2 10.5
2003 18,778,423.6 8.0
2004 20,293,457.5 8.1
2.3 Leisure Expenditure

GDP and disposable incomes grew much faster than population growth during the review period.
This led to a rise in per capita incomes which spurred consumer spending, including leisure
expenditure. India's population grew at the annual rate of nearly 2% during the review period. With
a huge population of over 1 billion, this meant an addition of about 20 million people every year.
Naturally, this resulted in increased expenditure on a variety of leisure activities, especially travel
both within the country and overseas. A growing population, coupled with increasing per capita
incomes, led to an average growth of leisure expenditure of 12% per annum in current prices over
the review period.
Table 3 Consumer Expenditure on Leisure 1999-2004
Rs million
Current Constant
1999 142,637.4 142,637.4

2000 171,120.0 164,538.5
2001 187,230.0 173,605.4
2002 204,710.0 181,813.6
2003 229,148.6 196,068.2
2004 246,109.0 201,898.6
3. INDUSTRY ISSUES
3.1 Political and Legislative Environment
A new National Tourism Policy was announced by the government in 2002. This policy envisages a
framework which is government-led, private-sector-driven and oriented towards community
welfare. The policy is based on the government creating the legislative framework and basic
infrastructure for tourism development, with the private sector providing the quality product and the
community providing active support. The overall vision of the development of tourism embodied in
the new policy is proposed to be achieved through five key strategic objectives:
• Positioning tourism as a national priority
• Enhancing India’s competitiveness as a tourist destination
• Improving and expanding product development
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• Creation of world class infrastructure

• Effective marketing plans and programmes
The tenth 5-year plan (2002-2007) of the government also places considerable emphasis on
tourism. Among other things, the Plan attempts to:
• Position tourism as a major engine of economic growth;
• Harness the direct and multiplier effects of tourism for employment generation and economic
development;
• Provide a major thrust to domestic tourism, which will act as a spring board for the growth and
expansion of international tourism;
• Position India as a global brand to take advantage of the burgeoning global travel and trade and
the vast untapped potential of India as a destination;
• Create and develop integrated tourism circuits based on India’s unique civilisation, heritage
and culture in partnership with states, private sector and other agencies.
Under the Tenth Plan, total resources of Rs29 billion were allocated towards tourism. Out of this,
Rs3 billion was spent during 2002-2003. During 2003-2004, an allocation of Rs3 billion was made
for tourism.
The 2003-2004 Union Budget also announced a number of measures to promote Indian tourism.
Major policy announcements made in the budget speech are outlined below.
Tax structure rationalisation
Expenditure tax on hotels was abolished. Along with this, the finance minister also appealed to the
state governments to withdraw the luxury tax.
Certain functions such as conferences and banquets, where a substantial meal is served, were made
exempt from the service tax of 8%.
Customs duty on imported liquor was reduced from 182% to 166%. This is expected to largely
benefit the 5-star and 5-star deluxe hotel categories.
Investment
The hotel industry was given Infrastructure status. Infrastructure funding attracts a lower rate of
interest as compared to prime funding rate for non-infrastructure industries. In addition, financial
institutions receive tax breaks on the income from the interest on hotel project loans. This will
increase the funds available to hotels in the 3-star and above category, to which this legislation
applies specifically.
Mergers and acquisitions
In addition to receiving Infrastructure status, another bonus for hotel operators, which were
previously reserved for manufacturing industries only, is the benefit under section 72 (A) of the
Income Tax Act. This allows a company to carry forward accumulated losses and unabsorbed
depreciation to the company with which it is merging or divesting. This will encourage
consolidation in the hospitality industry, help loss-making hotel companies release resources
blocked in loss-making assets and encourage smaller hotel units to enter franchisee agreements with
established hotel groups, which will improve quality standards and occupancy rates.
Infrastructure
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Funds and incentives are being provided for the airports at Bangalore and Hyderabad, which are
proposed to be built with the help of the private sector. Resources were also allocated for the
modernisation of the airports at Delhi and Mumbai. Four global standard international convention
centres are also proposed to be established through private-public partnership. These are to be
located in Delhi, Mumbai, Goa and Rajasthan.
3.2 Terrorism and Security

India’s relationship with neighbouring Pakistan has been tense for many years, with periodic flare-
ups into armed conflicts. The main bone of contention was Kashmir, where Pakistan provides
support to insurgents and terrorist activities. This had an adverse impact on tourist flows to
Kashmir, which in the past was a major tourist destination because of its diverse attractions such as
snow-capped mountains, forests, lakes and houseboats. In order to revive tourism in this area, the
government implemented a package to help affected operators such as houseboat owners, hotels
and guest houses.
3.3 Sustainable Tourism

The National Tourism Policy 2002 places considerable emphasis on promotion of eco-tourism. The
government also set up a National Committee on Eco-Tourism and Mountains to work out details
for managing the fragile eco-system and to consider projects and programmes for development of
eco-tourism in India.
During 2003-2004, Rs49 million was sanctioned for setting up the Indian Himalayan Centre for
Adventure and Eco-Tourism in Sikkim. The UNDP also agreed to provide US$2 million to the
Department of Tourism for implementation of the Endogenous Tourism initiative. The project seeks
to promote local culture and craft based eco-tourism for sustainable livelihoods and integrated rural
development during the tenth 5-year plan.
3.4 Positive Growth Factors

Currently, Indian tourism is booming with a rapid growth in tourist arrivals during 2003 and 2004
and the continuing rise in domestic tourism. In the readers’ awards for 2003, Conde Nast Traveller,
the international travel magazine, selected India as one of its top ten preferred global destinations.
In January 2004, India was among the top five favourite international destinations in a survey
conducted by Lonely Planet, the travel publications company.
A number of factors contributed to these positive trends. After the decline in arrivals during 2001
and 2002, it was only to be expected that there would be a revival in inflows. However, there were
more positive reasons for the influx. One was a major improvement in tourist infrastructure through
both private and government initiatives. Rising household incomes with sustained economic growth
also led Indians to allocate more resources to leisure travel.
The government’s marketing efforts also proved successful. The Department of Tourism launched
the Incredible India publicity campaign during 2002-2004, which proved successful in highlighting
the diverse attractions of India. A major objective was to brand the country and position it as a
high-value, upmarket destination with a wide variety of attractions.
As elaborated above, the government adopted a policy framework that strongly favours promotion
of the tourism industry in coming years. The National Tourism Policy announced by the
government in 2002 and the tenth 5-year plan (2002-2007) contain elaborate measures to remove
constraints and boost the tourism industry in collaboration with the private sector.
Summary 1 Positive Growth Factors

Positive factors: Boom in tourist arrivals during 2003 and 2004
Strong growth in domestic tourism
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Tenth 5-year plan (2002-2007) recognises

tourism as a major engine of economic growth
New National Tourism Policy announced by the
government in 2002
The Incredible India campaign undertaken by
the Department of Tourism during 2002-2004
provides lot of publicity and marketing for Indian
tourism.
The Union Budget for 2003-2004 provides a
host of incentives for tourism
Burgeoning institutes and programmes for HR
development in tourism industry
Source: Euromonitor from Department of Tourism annual report, 10th Plan document, trade press
3.5 Negative Growth Factors

Poor infrastructure was traditionally a major constraint to the growth of Indian tourism. For
instance, many airports are in poor shape and present a poor image of India for tourists when they
arrive in the country. The quality of roads in many tourist centres leaves much to be desired.
Moreover, many tourist attractions are poorly maintained. A number of them were inadequately
developed, promoted and marketed.
There is also the problem of inadequate hotel supply in a number of tourist areas. Many state
governments, under whose jurisdiction most tourist centres fall, were lukewarm in allocating
enough resources to the development of tourism because of an inadequate appreciation of the
benefits.
Another problem is that there is a large unorganised force involved in providing various types of
tourism services. The quality of their services if often very poor because of inadequate regulation
by the authorities.
Air travel within the country is meanwhile expensive because of the high cost of aviation turbine
fuel and constrains domestic travel.
Summary 2 Negative Growth Factors

Negative factors: Poor infrastructure (such as airports, roads etc.)
Inadequate hotel supply in many tourist areas
Security issues
Poor maintenance of tourist sights
Inadequate marketing of many tourist
attractions
Many unorganised operators offering poor-
quality services
High cost of air travel within the country
Source: Euromonitor from 10th Plan document, trade press
4. DEMAND FACTORS
4.1 Leave Entitlement
Leave entitlement differs between the private and public sectors. On average, employees in
organised employment are entitled to about 30 days of paid leave. Being such a culturally and
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religiously diverse country, many of the public holidays are related to religious occasions. Since the
Hindu calendar is not fixed, the holidays fall on different days each year. Other than about 19
national public holidays in the year observed by central government offices in Delhi, there are state
government declared holidays specific to each state.
Table 4 Paid Holiday and Public Holidays 2004
Days
2004
Days 49.0
Paid holiday 30.0
Public holidays 19.0
Public holidays (on working days) 17.0
Source: Euromonitor from Government of India data and trade sources
Note: State-specific holidays are not included
4.2 Holiday Taking

Of the country’s population, only about 3% of the population travel for leisure. Given India’s low
per capita income, the rural population and lower-middle income consumers are for the most part
unable to afford leisure holidays. There is also a great deal of variation in the extent of leisure travel
of inhabitants residing in various states. For instance, in urban Rajasthan and Madhya Pradesh only
1-2% of all overnight stay trips are estimated to be for leisure, compared to 39% in urban Orissa,
30% in urban West Bengal and 27% in urban Kerela.
Holiday taking is mainly the domain of the affluent in India. The national Travel Survey conducted
by the National Sample Survey Organisation in 1998, found that only 9% of trips by the rural
population and 14% of trips by urban inhabitants, by journey of purpose, are undertaken for leisure
purposes. In comparison, travel for social purposes such as attending functions hosted by relatives
and friends and for religious reasons or pilgrimage is much higher.
Table 5 Levels of Holiday Taking 1999-2004
% population
Holiday takers Non-holiday takers
1999 2.2 97.8

2000 2.5 97.5
2001 2.6 97.4
2002 2.9 97.1
2003 3.2 96.8
2004 3.4 96.6
Source: Euromonitor from Department of Tourism, NCAER
Note: Only domestic leisure travellers were considered as holiday takers
4.3 Holiday Taking – Demographics

Of the total number of foreign tourists that visit India, males outnumber females. During 2003, an
estimated 64% of tourists were males. This share is expected to fall marginally in 2004. Although
India has a lot to offer to the foreign tourist, it is not popular with females travelling alone. The
reason for this is the fear of harassment. In addition, local tradition may require female tourists to
dress more conservatively than they are used to.
Most Indians going abroad are male, constituting 82% of the traffic. Indian society is a male-
dominated one. About 29% of Indians travelling abroad do so for business purposes. These are
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mainly male travellers, representing the dominance of males in employment. Furthermore, few
women travel alone without their spouses.
The percentage of women among domestic tourists is meanwhile estimated at around 30% but is
slightly higher in the urban areas than in the rural areas.
India is a popular budget holiday destination among individuals in their twenties and thirties. These
age groups account for about half of total arrivals. Business travellers are also generally aged below
50.
Table 6 Holiday Taking by Demographic Groupings 1999-2004
% population
1999 2000 2001 2002 2003 2004
Male 65.0 61.9 62.7 64.6 64.0 63.5

Female 35.0 38.1 37.3 35.4 36.0 36.5
Age
Over 65 1.5 2.1 6.9 7.7 8.0 8.5
50-64 15.6 21.4 22.3 21.5 22.0 22.5
35-49 43.5 38.6 31.8 31.6 31.5 31.0
25-34 25.5 22.6 20.7 19.7 19.5 19.0
15-24 11.0 11.4 11.1 10.3 11.0 11.0
0-14 2.9 3.9 7.2 9.2 8.0 8.0
Source: Euromonitor from Department of Tourism
Note: Inbound tourists only
4.4 Holiday Taking – Length of Trip

According to official sources, the estimated average length of stay of tourists in India is 20 days,
which is high when compared to the international average. However, this figure is somewhat
misleading because arrivals also include non-resident Indians (NRIs) settled abroad. Many NRIs
regularly visit India for extended stays with their relatives. However, there are also many other
foreign tourists to India who are serious travellers and explore many parts of India rather than just
visiting a few tourist centres.
Nearly half of the total domestic leisure trips are weekend trips. An important reason for this is that
if leave is taken on both sides of a weekend, then the weekend is also counted as leave by most
companies. This means that the employee loses two more days of leave. As such, Indian nationals
are more likely to either start their trips on a Saturday or to end on a Sunday, to avoid losing the
additional two days of leave.
Table 7 Holiday Taking by Length of Trip 1999-2004
Trips, ’000
1999 2000 2001 2002 2003 2004
Over 7 days 1,972.8 2,751.0 2,862.0 3,365.6 4,235.4 4,768.8

4-7 days 1,342.0 1,650.8 2,009.0 2,487.8 2,823.0 3,246.9
1-3 days 880.0 1,100.0 1,217.8 1,463.6 1,764.7 2,130.8
TOTAL 4,194.8 5,501.8 6,088.8 7,317.0 8,823.1 10,146.5

Source: Euromonitor from trade sources
Note: Indian leisure domestic travellers only
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4.5 Holiday Taking – Seasonality

The peak season for inbound tourism encompasses the months of November, December, January
and February. The lean months are April, May and June. Foreigners avoid visiting India during the
summer but prefer to make trips during their vacations and when the weather is more tolerable.
There is no primary collection of data regarding the seasonality of holiday taking in outbound and
domestic travel. A popular time for outbound travel is the summer months, from April to June.
Since April is the beginning of the fiscal year, business is slow and generally picks up in the second
quarter. During this time, working adults are able to take time off, especially since students also
have summer holidays. Furthermore, since Europe is the most favoured destination among Indians,
the summer months are ideal for getting away from the Indian heat and enjoying continental
weather.
The peak seasons for domestic travel correspond with the school calendar. The summer sees
students off for more than a month, allowing them to travel with their parents. September and
October also see an increase in domestic travel. A number of religious holidays fall during this
time, as does a break from school in the form of Dusserah holidays.
Table 8 Month in which Holidays are Taken 2004
Month of holiday
Travellers ’000 Travellers (%)
January 322.4 9.6

February 341.4 10.2
March 282.3 8.4
April 218.7 6.5
May 188.9 5.6
June 206.0 6.1
July 274.1 8.2
August 258.9 7.7
September 223.0 6.6
October 288.8 8.6
November 330.4 9.8
December 420.2 12.5
TOTAL 3,355.4 100.0
Source: Euromonitor from Department of Tourism publication
Note: Inbound tourists only
5. TOURISM PARAMETERS
5.1 Incoming Tourism Receipts
Indian tourism is booming with a rapidly growing influx of tourists since 2003. As a result, foreign
exchange receipts from incoming tourists rose by nearly 16% in current value terms in 2003. This
boom continued in 2004. During January-August 2004, receipts grew by a hefty 36% compared
with the corresponding period of 2003. For the full calendar year 2004, the estimated full-year
growth is 32%. The fundamental determinant of incoming tourist receipts in India is the number of
tourist arrivals rather than any major change in spending patterns.
A fall in tourist arrivals during 2001 and 2002 affected the growth of incoming tourist receipts
during the review period. As a result, the annual growth in receipts during 1999-2004 was 11%,
which is much less than during 2003 and 2004. Total foreign exchange earnings for 2004 are
estimated to be about Rs217 billion.
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Table 9 Incoming Tourism Receipts: 1999-2004
Rs million
Current Constant
1999 129,510.0 129,510.0

2000 142,380.0 136,891.4
2001 143,440.0 133,009.4
2002 141,950.0 126,089.7
2003 164,290.0 140,583.2
2004 216,862.8 177,919.2
Source: 1999-2003 Reserve Bank of India, Department of Tourism, 2004 Euromonitor estimates
Note: 2004 data is the estimated figure
Table 10 Incoming Tourism Receipts % Growth: 2000-2004
% growth
Current Constant
2000 9.9 5.7

2001 0.7 -2.8
2002 -1.0 -5.2
2003 15.7 11.5
2004 32.0 26.6
5.2 Outgoing Tourism Expenditure

Outgoing tourism expenditure increased rapidly over the review period at an annual rate of 17%.
There was a decline in 2001 from 2000, although this was more than made up for by a 54% rise in
2002 from 2001. In 2004, it is estimated that outgoing tourism expenditure will rise by 26%
compared to the previous year. However, this should again be seen in the context of a small decline
of 4% in expenditure in 2003 from 2002. The estimated outgoing tourism expenditure of Rs203
billion in 2004 represented a 119% total increase over the review period.
There are several reasons for the rapid growth in outgoing tourism expenditure. With economic
growth and a rise in disposable incomes, growing numbers of Indians are holidaying abroad.
Moreover, the increasing globalisation of the Indian economy, with economic liberalisation and
industrial growth, made it imperative for Indian businessmen to travel abroad frequently.
The growth in outbound tourism expenditure might have been even greater if not for the terrorist
attacks of September 2001, which saw various Western nations coming down hard on visa
applications from overseas. Many visa applications from Indian nationals were either delayed or
turned down outright.
The actual spending of Indians going abroad may be even higher than official figures indicate, due
to the existence of a thriving black market for foreign exchange. Indians are able to convert
unaccounted income into foreign exchange without going through government channels.
Table 11 Outgoing Tourism Expenditure: 1999-2004
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Rs million
Current Constant
1999 92,680.0 92,680.0

2000 131,360.0 126,296.2
2001 108,690.0 100,786.4
2002 167,610.0 148,882.6
2003 161,100.0 137,853.5
2004 202,986.0 166,534.4
Note: 2004 data is the estimated figure
Table 12 Outgoing Tourism Expenditure % Growth: 2000-2004
% growth
Current Constant
2000 41.7 36.3

2001 -17.3 -20.2
2002 54.2 47.7
2003 -3.9 -7.4
2004 26.0 20.8
5.3 Balance of Tourism Payments

Incoming tourism receipts normally exceeded outgoing tourism expenditure over the review period.
The only exception was 2002, because of the decline in tourism receipts coupled with a hefty rise in
expenditure. During 1999-2003, because outgoing tourism expenditure rose more rapidly than
incoming tourism receipts, the balance shrank. However, the high expected growth in receipts in
2004 will result in a substantial surplus again.
The shrinking surplus in the balance of tourism payments during 1999-2003 did not worried the
government because of the comfortable overall balance of payments position. In fact, during the
review period, the Reserve Bank of India liberalised its policies relating to the annual quantum of
foreign exchange that Indian tourists are permitted to utilise for trips abroad. This was raised from
US$3,000 to US$5,000 in 2000 and again increased to US$10,000 in 2002, which is still the limit
prevailing in 2004.
Table 13 Balance of Tourism Payments: Value 1999-2004
Rs million
Receipts Expenditure Balance
1999 129,510.0 92,680.0 36,830.0

2000 142,380.0 131,360.0 11,020.0
2001 143,440.0 108,690.0 34,750.0
2002 141,950.0 167,610.0 -25,660.0
2003 164,290.0 161,100.0 3,190.0
2004 216,862.8 202,986.0 13,876.8
5.4 Incoming – Number of Arrivals

The current boom in the Indian tourism is strikingly reflected in trends in incoming arrivals. During
2003, the number of incoming tourists grew by 15% compared with the previous year. The first
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eight months of 2004 saw a further surge in arrivals with number of tourists increasing by 26%
during January-August 2004 compared with the corresponding period of 2003. For the full calendar
year 2004, the estimated growth is 22%.
A number of factors contributed to the rapid growth of tourist arrivals since 2003. After the decline
in arrivals during 2001 and 2002, it was only to be expected that there would be a revival in
inflows. Moreover, as a SARS-free country, India was an attractive destination in the Asian region.
However, there were more positive reasons for the influx. One was a major improvement in tourist
infrastructure such as airports and highways through both private and government initiatives. The
government also launched the Incredible India publicity campaign in 2002, which proved
successful in highlighting the diverse attractions of India.
In the earlier part of the review period, Indian tourism was hit hard by various national and
international events. The Kargil war of 1999 obviously cut deep into the inbound tourist numbers.
Though a relatively quiet year, 2000 saw the tourists coming back again. Unfortunately, the events
of 11 September 2001 in the US followed by the security crisis in the wake of the terrorist attack on
the Indian parliament put paid to the Indian tourism industry’s hopes in 2002, which saw a 6%
decrease in arrivals over 2001. Apart from the global economic slowdown and people refusing to
board flight, with almost all inbound tourists in India arriving by air, 2002 saw domestic problems
like the Gujarat riots and terrorist attacks in Jammu, which also hurt Indian tourism.
Table 14 Total Arrivals: 1999-2004
'000 people
% growth
1999 2,481.9 -
2000 2,641.2 6.4
2001 2,537.4 -3.9
2002 2,384.4 -6.0
2003 2,750.3 15.3
2004 3,355.4 22.0
Source: 1999-2003 Department of Tourism, 2004 Euromonitor estimates
5.5 Incoming – Mode of Transport

In 2004, 84% of all inbound tourists arriving in India are expected to do so via air. This is due
largely to geographic and political reasons. The mountain ranges of the north make road travel
difficult and India does not have strong relations with either neighbouring China or Afghanistan.
However, road travel is the second largest mode of arrival, accounting for an estimated 15% of all
arrivals in 2004. This is because most Bangladeshis, who form one of the most significant groups of
inbound tourists by nationality, come into India via road. Tourists from Nepal also add considerably
to this. These numbers would be much larger except for India’s tense relations with Pakistan, since
most Pakistanis who visit the country do so via road.
India has a few other smaller neighbours but due to their economic conditions and small
populations, tourist numbers are negligible. Though India has a very long coastline, India receives a
negligible number of seafaring tourists as no country, except Sri Lanka and Pakistan, has a coast
within close proximity of the Indian peninsula. This effectively rules out commercial sea travel, as
it would be very costly and time consuming.
Table 15 Arrivals by Mode of Transport: 1999-2004
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'000 people
1999 2000 2001 2002 2003 2004
Air 2,436.8 2,214.4 2,210.1 1,952.8 2,324.0 2,829.8

Land 45.1 426.4 304.5 417.3 405.7 506.6
Rail - - - - - -
Sea - 0.4 22.8 14.3 20.6 19.0
Arrivals by mode of 2,481.9 2,641.2 2,537.4 2,384.4 2,750.3 3,355.4
transport
Source: 1999-2002 Department of Tourism, 2003-2004 Euromonitor estimates
Table 16 Arrivals by Mode of Transport: % Breakdown 1999-2004
%
1999 2000 2001 2002 2003 2004
Air 98.2 83.8 87.1 81.9 84.5 84.3

Land 1.8 16.1 12.0 17.5 14.8 15.1
Rail - - - - - -
Sea - 0.0 0.9 0.6 0.7 0.6
Arrivals by mode of 100.0 100.0 100.0 100.0 100.0 100.0
transport
5.6 Incoming – Purpose of Visit

Business and leisure tourists form the two most significant groups. In 2004, business travellers were
estimated to account for 32% of total arrivals while the share of leisure tourists was 43%. Since
2001, the share of business travellers increased. This reflects the growing globalisation of the
Indian economy.
Besides the rising share of business travellers, another interesting trend is that growing numbers of
such travellers are destined to cities other than Mumbai and Delhi, which are the traditional
destinations for such visitors. In particular, many visit the southern cities of Bangalore, Chennai and
Hyderabad, since these cities attracted a great deal of foreign investment during the review period.
The other notable aspect is that arrivals visiting relatives/friends saw a sharp drop in 2002. This
could be due to the communal violence in Gujarat, which kept away the Gujarati NRIs (Non-
Resident Indians), who probably form the largest Indian expatriate community, away from their
homeland.
Table 17 Arrivals by Purpose of Visit: 1999-2004
'000 people
1999 2000 2001 2002 2003 2004
Business 505.9 792.4 608.1 755.8 882.6 1,083.8

Leisure 1,044.4 1,162.1 1,004.7 1,037.0 1,210.2 1,435.2
Visiting friends/ 612.9 422.6 674.3 377.9 446.3 626.2
relatives
Others 318.7 264.1 250.3 213.7 211.2 210.2
Arrivals by purpose of 2,481.9 2,641.2 2,537.4 2,384.4 2,750.3 3,355.4
visit
Source: 1999-2004 Euromonitor from Department of Tourism data
Note: Others includes pilgrimage, social and religious functions, study and health. Inbound NRIs also
included
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Table 18 Arrivals by Purpose of Visit: % Breakdown 1999-2004
%
1999 2000 2001 2002 2003 2004
Business 20.4 30.0 24.0 31.7 32.1 32.3

Leisure 42.1 44.0 39.6 43.5 44.0 42.8
relatives
Others 12.8 10.0 9.9 9.0 7.7 6.3
Arrivals by purpose of 100.0 100.0 100.0 100.0 100.0 100.0
visit
Note: Others includes pilgrimage, social and religious functions, study and health. Inbound NRIs also
included
5.7 Incoming – Country of Origin

The largest number of arrivals from a single country is from Bangladesh, which accounted for an
estimated 17% of all arrivals in 2004 followed by UK and US which had shares of 16% and 13%
respectively. However, most Bangladeshis come to India to look for employment, although this
data is not well differentiated and therefore the total figure is counted as tourists.
The largest number of tourists by region, as expected, is from south Asia, accounting for almost a
quarter of all international arrivals in 2004. Outside South Asia, UK citizens account for the largest
group, which is probably because India was the principal colony of the erstwhile British colonial
empire and over 350 years’ association is still reflected by the number of Britons and ethnic Indians
now settled in the UK coming to the subcontinent.
Table 19 Arrivals by Country of Origin: 1999-2004
'000 people
1999 2000 2001 2002 2003 2004
Australia 73.0 54.0 52.7 50.7 56.1 75.4

Bangladesh 344.4 414.4 431.3 435.9 491.2 555.0
Canada 73.5 84.0 88.6 93.6 106.6 117.0
France 96.6 100.0 102.4 78.2 96.8 124.2
Germany 90.7 83.9 80.0 64.9 74.5 103.4
Israel 23.4 25.6 28.8 25.5 26.4 34.1
Italy 54.0 50.4 41.4 37.1 46.2 60.1
Japan 90.7 98.2 80.6 59.7 76.4 106.2
Malaysia 48.3 60.5 57.9 63.7 67.4 78.1
Nepal 37.6 38.8 41.1 43.1 49.4 55.1
Netherlands 54.7 46.4 42.4 31.7 34.3 55.1
Pakistan 45.4 54.9 52.8 2.9 42.9 51.5
Singapore 55.1 46.6 42.8 44.3 44.9 61.5
South Korea 19.2 23.4 27.2 29.4 34.3 35.0
Sri Lanka 119.3 129.2 112.8 108.0 106.4 151.3
United Arab Emirates 16.8 22.6 21.5 22.0 29.0 29.2
United Kingdom 372.5 432.6 405.5 387.8 427.2 531.3
USA 244.8 348.3 329.1 348.2 400.1 437.3
Others 621.9 527.4 498.5 457.7 540.2 694.6
Arrivals by country of 2,481.9 2,641.2 2,537.4 2,384.4 2,750.3 3,355.4
origin
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Table 20 Arrivals by Country of Origin: % Breakdown 1999-2004
%
1999 2000 2001 2002 2003 2004
Australia 2.9 2.0 2.1 2.1 2.0 2.2

Bangladesh 13.9 15.7 17.0 18.3 17.9 16.5
Canada 3.0 3.2 3.5 3.9 3.9 3.5
France 3.9 3.8 4.0 3.3 3.5 3.7
Germany 3.7 3.2 3.2 2.7 2.7 3.1
Israel 0.9 1.0 1.1 1.1 1.0 1.0
Italy 2.2 1.9 1.6 1.6 1.7 1.8
Japan 3.7 3.7 3.2 2.5 2.8 3.2
Malaysia 1.9 2.3 2.3 2.7 2.5 2.3
Nepal 1.5 1.5 1.6 1.8 1.8 1.6
Netherlands 2.2 1.8 1.7 1.3 1.2 1.6
Pakistan 1.8 2.1 2.1 0.1 1.6 1.5
Singapore 2.2 1.8 1.7 1.9 1.6 1.8
South Korea 0.8 0.9 1.1 1.2 1.2 1.0
Sri Lanka 4.8 4.9 4.4 4.5 3.9 4.5
United Arab Emirates 0.7 0.9 0.8 0.9 1.1 0.9
United Kingdom 15.0 16.4 16.0 16.3 15.5 15.8
USA 9.9 13.2 13.0 14.6 14.5 13.0
Others 25.1 20.0 19.6 19.2 19.6 20.7
Arrivals by country of 100.0 100.0 100.0 100.0 100.0 100.0
origin
5.8 Incoming – Per Capita Expenditure

Incoming per capita expenditure grew steadily over the review period at 24%. An important factor
which contributed to this rise during 1999-2002 was the weakening of the rupee against the US
dollar. With the rupee gaining ground in 2003, the growth in incoming per capita expenditure was
marginal. However, during 2004, with the boom in tourism, a substantial increase is expected.
Table 21 Per Capita Expenditure per Arrival: 1999-2004
Rs
1999 52,181.80
2000 53,907.31
2001 56,530.31
2002 59,532.80
2003 59,735.30
2004 64,630.98
5.9 Outgoing – Number of Departures

With the exception of 2003, the total number of departures grew year after year during the review
period, rising at an annual rate of 5%. This trend growth was thought to be in part due to the strong
underlying economic growth of the country as well as loosened controls over the scope and extent
of travel restrictions on Indian nationals.
During 2003, departures declined by 9%, mainly because of the troubled situation in the Middle
East, which is the main destination for Indians, as well as the SARS crisis, which adversely affected
travel to South East Asian countries. However, this decline will be more than compensated for by
trends during 2004 when departures are expected to rise by 20%. The rising incomes of affluent and
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upper-middle-income consumers led to the increasing popularity of holidays abroad and contributed
to a growth in departures.
According to the last International Passenger Survey of 1996-1997, Indians going abroad are
predominantly male, constituting roughly 80% of the traffic. 72% were in the age group of 25 to 44
years and only 1% was above 65 years.
Table 22 Total Departures: 1999-2004
'000 people
% growth
1999 4,114.8 -
2000 4,415.5 7.3
2001 4,564.5 3.4
2002 4,940.2 8.2
2003 4,500.0 -8.9
2004 5,400.0 20.0
5.10 Outgoing – Mode of Transport

Most of the outbound tourism from India is air bound, constituting 99% of the total. Road travel
comes in a distant second at less than 1%. The steep up and down movement in outbound rail travel
is caused by the fact that most of the outbound rail traffic is for Pakistan and Indo-Pak relations
have blown hot and cold for some time. Periodically, the rail and bus routes to Pakistan were shut
due to strain on diplomatic ties.
Historically, India had strained relations with two of its biggest neighbours, China and Pakistan.
Therefore, road and rail routes were not developed. Most of the road passenger traffic outbound is
to Nepal and Bangladesh, with whom diplomatic relations are more cordial.
Table 23 Departures by Mode of Transport: 1999-2004
'000 people
1999 2000 2001 2002 2003 2004
Air 4,083.4 4,349.6 4,483.5 4,893.1 4,463.3 5,338.4

Land 30.0 35.6 37.3 45.6 34.3 43.0
Rail 1.1 29.7 42.4 - - 16.7
Sea 0.3 0.6 1.3 1.5 2.4 1.9
Departures by mode of 4,114.8 4,415.5 4,564.5 4,940.2 4,500.0 5,400.0
transport
Note: No international departures take place by river
Table 24 Departures by Mode of Transport: % Breakdown 1999-2004
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%
1999 2000 2001 2002 2003 2004
Air 99.2 98.5 98.2 99.0 99.2 98.9

Land 0.7 0.8 0.8 0.9 0.8 0.8
Rail 0.0 0.7 0.9 - - 0.3
Sea 0.0 0.0 0.0 0.0 0.1 0.0
Departures by mode of 100.0 100.0 100.0 100.0 100.0 100.0
transport
Note: No international departures take place by river
5.11 Outgoing – Purpose of Visit

Travel for business purposes constitutes the most important reason for departures, accounting for an
estimated 28% of total departures in 2004. This share fluctuated over the review period, depending
on the health of business in the country. For instance, in 2003, when GDP grew at an unusually
high rate, the share of business travel peaked at 30%. Over the entire review period, business
departures grew at an annual rate of 6%.
There is a large Indian diaspora spread worldwide. Hence, not surprisingly, visiting friends/relatives
is the second largest purpose of travel, representing an estimated 20% of departures in 2004.
Departures in this grew at an annual rate of almost 8% over the review period.
Leisure travel accounted for about 16% of departures in 2004. Although this share declined after
the events of 11 September 2001 in the US, it picked up subsequently, especially with relaxations
of visa regulations in the US.
Finally, there are many other purposes of travel, which are estimated to have represented as much
as 37% of departures in 2004. An important component of this consists of Indian students going to
North America, Australia and Europe for higher studies. There are also many pilgrim travellers,
especially to Mecca.
Table 25 Departures by Purpose of Visit: 1999-2004
'000 people
1999 2000 2001 2002 2003 2004
Business 1,126.0 1,154.8 1,179.4 1,340.0 1,355.2 1,495.4

Leisure 660.1 679.9 691.4 750.5 767.5 853.1
Visiting friends/ 776.6 807.0 823.4 959.1 1,019.8 1,082.1
relatives
Other departures 1,552.1 1,773.8 1,870.3 1,890.6 1,357.5 1,969.4
Departures by purpose 4,114.8 4,415.5 4,564.5 4,940.2 4,500.0 5,400.0
of visit
Note: Others includes students, meeting, incentive and convention travellers, as well as pilgrim
travellers to Mecca
Table 26 Departures by Purpose of Visit: % Breakdown 1999-2004
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%
1999 2000 2001 2002 2003 2004
Business 27.4 26.2 25.8 27.1 30.1 27.7

Leisure 16.0 15.4 15.1 15.2 17.1 15.8
relatives
Other departures 37.7 40.2 41.0 38.3 30.2 36.5
Departures by purpose 100.0 100.0 100.0 100.0 100.0 100.0
of visit
Note: Others includes students, meeting, incentive and convention travellers, as well as pilgrim
travellers to Mecca
5.12 Outgoing – Destination

The Middle East continues to be the top destination for Indians going abroad accounting an
estimated share of 8% of the total departures in 2004. This is largely due to the number of
expatriate Indians working there. The trend is no different in Dubai, when considered separately, as
it attracts many Indians during its world famous shopping festival and even otherwise because of its
large Indian community and its geographic proximity to India. However, with the troubled situation
in the Middle East, following the Iraq conflict, its share in departures declined over the review
period.
Not surprisingly, the US and UK continue to be major destinations for Indian travellers, accounting
for estimated shares of 6% and 5% of departures in 2004. This is largely due to the number of
Indian expatriates in these countries.
Another interesting trend is the healthy growth in numbers to Southeast Asian countries over the
review period, especially Thailand and Malaysia, though there was a dip in shares in 2003
following the SARS crisis. These countries aggressively marketed themselves as tourist
destinations in the review period and targeted Indians probably due to a slump in recent times in the
number of western tourists. The Indians were obliging too, as this region offers excellent
opportunities for shopping, which is an important attraction for the Indian tourist.
Table 27 Departures by Destination: 1999-2004
Euromonitor Page 18
'000 people
1999 2000 2001 2002 2003 2004
Australia 33.6 41.5 48.2 45.0 45.6 54.7

Belgium 14.0 14.5 15.0 15.5 13.8 17.1
China 84.2 120.9 159.4 207.2 87.5 173.4
Dubai 216.2 235.5 270.8 308.7 237.9 314.4
France 108.7 111.5 113.9 129.4 135.0 146.1
Hong Kong 107.4 131.4 161.8 199.0 84.5 170.1
Indonesia 24.1 34.2 33.0 32.0 27.6 35.7
Italy 57.0 60.6 51.1 134.0 127.4 120.0
Japan 35.9 38.8 40.3 41.9 46.3 49.7
Malaysia 46.5 132.1 143.5 183.4 99.7 163.3
Middle East 418.7 532.2 400.0 431.0 337.5 449.8
Nepal 140.7 97.0 76.9 72.0 43.7 74.0
New Zealand 3.0 8.0 12.0 13.8 13.4 15.1
Singapore 288.4 346.4 339.8 375.0 254.9 440.0
South Korea 43.8 51.4 47.7 52.4 42.5 54.9
Sri Lanka 42.3 31.9 33.9 66.8 85.4 90.0
Switzerland 64.5 71.9 72.3 80.4 80.3 89.9
Thailand 164.0 202.9 229.7 280.6 155.0 254.8
United Kingdom 183.0 206.0 189.0 222.5 226.9 246.3
USA 228.0 274.2 270.8 257.3 240.5 296.7
Others 1,810.8 1,672.6 1,855.4 1,792.3 2,114.6 2,144.0
Departures by destination 4,114.8 4,415.5 4,564.5 4,940.2 4,500.0 5,400.0
Source: 1999-2001 World Tourism Organisation, 2002-2004 Euromonitor estimates
Table 28 Departures by Destination: % Breakdown 1999-2004
%
1999 2000 2001 2002 2003 2004
Australia 0.8 0.9 1.1 0.9 1.0 1.0

Belgium 0.3 0.3 0.3 0.3 0.3 0.3
China 2.0 2.7 3.5 4.2 1.9 3.2
Dubai 5.3 5.3 5.9 6.2 5.3 5.8
France 2.6 2.5 2.5 2.6 3.0 2.7
Hong Kong 2.6 3.0 3.5 4.0 1.9 3.2
Indonesia 0.6 0.8 0.7 0.6 0.6 0.7
Italy 1.4 1.4 1.1 2.7 2.8 2.2
Japan 0.9 0.9 0.9 0.8 1.0 0.9
Malaysia 1.1 3.0 3.1 3.7 2.2 3.0
Middle East 10.2 12.1 8.8 8.7 7.5 8.3
Nepal 3.4 2.2 1.7 1.5 1.0 1.4
New Zealand 0.1 0.2 0.3 0.3 0.3 0.3
Singapore 7.0 7.8 7.4 7.6 5.7 8.1
South Korea 1.1 1.2 1.0 1.1 0.9 1.0
Sri Lanka 1.0 0.7 0.7 1.4 1.9 1.7
Switzerland 1.6 1.6 1.6 1.6 1.8 1.7
Thailand 4.0 4.6 5.0 5.7 3.4 4.7
United Kingdom 4.4 4.7 4.1 4.5 5.0 4.6
USA 5.5 6.2 5.9 5.2 5.3 5.5
Others 44.0 37.9 40.6 36.3 47.0 39.7
Departures by destination 100.0 100.0 100.0 100.0 100.0 100.0
Source: 1999-2001 World Tourism Organisation, 2002-2004 Euromonitor estimates
5.13 Outgoing – Per Capita Expenditure

Two major factors contributed to this increasing trend. One was a relaxation in foreign exchange
controls by the Reserve Bank of India (the Indian Central Bank) with the improvement in India’s
Euromonitor Page 19
balance of payments position since 2000. The limit on the annual quantum of foreign exchange that
Indian tourists are permitted to utilise for trips abroad was raised from US$3,000 to US$5,000 in
2000 and to US$10,000 in 2002, which is the limit prevailing in 2004. This enabled Indian
travellers to carry more money with them abroad. Secondly, with economic growth, disposable
incomes increased, especially among middle- and higher-income consumers. This induced greater
expenditure on overseas trips registering Rs37,590 in total per departure in 2004.
Table 29 Per Capita Expenditure per Departure: 1999-2004
Rs
1999 22,523.57
2000 29,749.75
2001 23,812.03
2002 33,927.78
2003 35,800.00
2004 37,590.00
Note: Does not include international travel, as this is paid for in local currency
5.14 Domestic – Number of Trips and Expenditure

Trips
Since 1999, the number of domestic trips grew at a CAGR of nearly 14%. In 2004, it is estimated
that domestic trips numbered 346 million, registering a growth of 10% over 2003. State
governments are being encouraged to promote state tourism more vehemently. A number of them
adopted a strong marketing approach in projecting themselves as attractive tourist destinations. In
addition, the government identified six new tourism circuits for development. These circuits include
major pilgrim destinations, eco-tourism destinations and heritage destinations.
Many rural trips are not recorded, however, as they are made on bicycle, auto rickshaws or owned
or hired animals that cannot be kept track of.
The volume of business travel within the country for conferences, meetings and business group
holidays is also increasing.
Domestic Spending
Domestic tourist expenditure grew rapidly at an annual rate of nearly 19% over the review period.
To a large extent, this reflects the strong growth in domestic trips. However, the rising costs of
domestic travel in the form of accommodation and transport also contributed to this rise. During
2004, it is estimate that domestic spending amounted to Rs539 billion, representing an increase of
18% over 2003.
Table 30 Total Number of Domestic Trips: 1999-2004
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'000 trips
% growth
1999 190,671.0 -
2000 220,106.9 15.4
2001 234,781.4 6.7
2002 271,328.2 15.6
2003 315,116.2 16.1
2004 346,484.6 10.0
Note: Trip is defined as one visit from point A to point B; Return from point B to point A is taken as
another trip
Table 31 Domestic Tourist Expenditure: 1999-2004
Rs million
Value % value growth
1999 230,263.7 -
2000 281,282.4 22.2
2001 304,914.1 8.4
2002 376,874.9 23.6
2003 457,830.5 21.5
2004 538,866.5 17.7
Source: 1999-2004 Euromonitor from Department of Tourism and NCAER data
5.15 Domestic – Trips by Mode of Transport

The main mode of transport in India is by land. Land transportation takes diverse forms such as bus,
taxi, hired car, own car, auto rickshaw, motorcycle and scooter. During 2004, it was estimated that
land transportation accounted for 80% of domestic tourism. Keeping in mind the low income levels
of many Indians, roads are the main means of transport in the country largely because they are the
cheapest mode of transport.
Air travel is still too expensive for most Indians and represents only an estimated 1% of total
domestic tourism in 2004. The high cost of Aviation Turbine Fuel (ATF) keeps the price of airline
tickets beyond the reach of most Indians. However, during 2004, intense competition among
domestic carriers and the emergence of low cost airlines resulted in major cuts in air tickets. This is
expected to result in a 32% increase in the number of domestic tourists travelling by air in 2004
over the previous year.
Rail forms the favoured option for long distance travel and accounted for an estimated 19% of
domestic tourist traffic in 2004. However, capacity constraints prevented growth in this share over
the review period.
Only a very small number of people travel by boat as it is more time consuming. Leisure travel by
yacht, trawler, ship or boat is virtually non-existent in India, as it is still undeveloped within
domestic tourism. River trips are nearly negligible.
Table 32 Domestic Trips by Mode of Transport: 1999-2004
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'000 trips
1999 2000 2001 2002 2003 2004
Air 1,048.7 1,183.6 1,234.4 1,382.5 1,575.2 2,079.8

Land 150,106.8 174,614.3 187,355.8 216,471.6 253,778.3 277,995.5
Rail 39,104.2 43,870.0 45,741.2 52,993.6 59,247.9 65,859.3
Sea 411.3 439.0 450.0 480.6 514.8 550.0
Domestic tourism by 190,671.0 220,106.9 234,781.4 271,328.2 315,116.2 346,484.6
mode of transport
Note: River trips are included under sea
Table 33 Domestic Trips by Mode of Transport: % Breakdown 1999-2004
%
1999 2000 2001 2002 2003 2004
Air 0.6 0.5 0.5 0.5 0.5 0.6

Land 78.7 79.3 79.8 79.8 80.5 80.2
Rail 20.5 19.9 19.5 19.5 18.8 19.0
Sea 0.2 0.2 0.2 0.2 0.2 0.2
Domestic tourism by 100.0 100.0 100.0 100.0 100.0 100.0
mode of transport
Note: River trips are included under sea
5.16 Domestic – Trips by Destination

The major purposes for domestic travel in India are pilgrimage, visiting relatives, business and
leisure tourism. The first three account for most of domestic tourism. This is largely why Uttar
Pradesh has the largest share since it has the biggest population of any Indian state. It is also home
to Varanasi (formerly Benares), which is one of the holiest cities of the Hindus as well as
Allahabad, another important Hindu city and the venue for the Maha Kumbh mela in 2001, which
attracted millions of pilgrims. The capital of the state is Lucknow, which, culturally and
historically, is one of the most important Muslim cities of north India.
States like Rajasthan and Kerala are more popular with foreign tourists than Indians, as they offer
cultural and eco-tourism. Jammu, home to the Vaishno Devi temple, one of the important
pilgrimage destinations and Kashmir, which was at one time considered to be the premier hill
station of India, lost out on tourist numbers over the last decade due to terrorism.
The state of Bihar is home to some of the holiest Buddhist shrines but does not have a larger share
of domestic tourism due to poor infrastructure and law and order situation. The southern states like
Andhra Pradesh and Tamil Nadu are again important centres of Hindu pilgrimage as some of the
oldest and most revered of Hindu temples are located in these states.
Table 34 Domestic Trips by Destination 1999-2004
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‘000 trips
1999 2000 2001 2002 2003 2004
Uttar Pradesh 45,723.7 64,830.0 68,071.0 73,067.0 88,175.9 99,325.8

Andhra Pradesh 42,316.9 47,998.2 52,533.6 60,487.4 73,166.3 77,365.2
Tamil Nadu 21,079.1 22,982.3 23,812.0 39,873.2 28,984.6 41,117.0
Karnataka 15,902.7 18,000.0 14,117.5 8,678.7 17,436.8 20,180.3
Gujarat 11,533.1 11,408.3 8,273.0 5,735.3 8,111.0 12,559.3
Bihar 8,932.9 5,520.6 6,061.2 6,860.2 8,683.2 8,865.6
Maharashtra 7,542.9 8,297.2 8,479.7 9,802.5 10,567.5 12,793.3
Rajasthan 6,675.5 7,374.4 7,757.2 8,300.2 10,675.2 11,300.4
Jammu and Kashmir 4,984.8 5,393.5 5,246.9 4,570.6 4,965.6 5,546.0
Kerala 4,888.3 5,013.2 5,240.0 5,568.3 6,000.0 6,932.6
Others 21,091.1 23,288.8 34,608.5 48,384.8 58,350.1 50,642.4
TOTAL 190,671.0 220,106.5 234,200.6 271,328.2 315,116.2 346,627.9

Table 35 Domestic Trips by Destination: % Analysis 1999-2004
% trips
1999 2000 2001 2002 2003 2004
Uttar Pradesh 24.0 29.5 29.1 26.9 28.0 28.7

Andhra Pradesh 22.2 21.8 22.4 22.3 23.2 22.3
Tamil Nadu 11.1 10.4 10.2 14.7 9.2 11.9
Karnataka 8.3 8.2 6.0 3.2 5.5 5.8
Gujarat 6.0 5.2 3.5 2.1 2.6 3.6
Bihar 4.7 2.5 2.6 2.5 2.8 2.6
Maharashtra 4.0 3.8 3.6 3.6 3.4 3.7
Rajasthan 3.5 3.4 3.3 3.1 3.4 3.3
Jammu and Kashmir 2.6 2.5 2.2 1.7 1.6 1.6
Kerala 2.6 2.3 2.2 2.1 1.9 2.0
Others 11.1 10.6 14.8 17.8 18.5 14.6
TOTAL 100.0 100.0 100.0 100.0 100.0 100.0

5.17 Domestic – Per Capita Expenditure

Domestic per capita tourist expenditure rose at an annual rate of 5% over the review period.
However, per capita spending is still at a lowly Rs1,453 in 2003 and is expected to reach just
Rs1,555 in 2004.
Only 3% of the population takes leisure holidays each year. However, with the proliferation of
television channels, awareness of holiday options and the desire to travel increased. It is these
middle-income individuals who are taking more holidays within the country that are contributing to
the rise in per capita spending.
It is important to note that in India, a person travelling for business purposes is also called a
domestic tourist. There is a new trend of hosting business conferences at upmarket destinations like
Goa, leading to higher spending for these business travellers who are able to go on a short break
after their conferences. There is a wide gap between the amount spent by business and leisure
travellers and rural and pilgrimage travellers.
The major proportion of domestic trips is made for purposes of pilgrimage, religious and social
functions or meeting family/friends. Due to economies of scale and the fact that these trips are often
made in groups, these trips are low budget trips and do not require large spending per person.
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Table 36 Per Capita Expenditure Per Domestic Trip 1999-2004
Rs, current prices

Per capita 1999-2004 %
expenditure growth
1999 1,207.60 -
2000 1,277.90 5.80
2001 1,298.70 1.60
2002 1,389.00 7.00
2003 1,452.90 4.60
2004 1,555.20 7.00
Source: 1999-2004 Euromonitor from Department of Tourism and NCAER data
5.18 Tourism Spending

Spending on tourism by inbound and domestic tourists was estimated at Rs756 billion in 2004. This
expenditure grew at a CAGR of 16% during the review period. During 2004, estimated growth was
21%, reflecting the boom in tourism.
The largest component of tourism spending was travel, which accounted for over 60% of spending
in most years of the review period. The large share of travel is mainly because domestic tourists
stay in cheap hotels and spend most of their travel budget on transport. Accommodation comes next
with a share of 22-26% of spending.
Table 37 Spending on Tourism 1999-2004
Rs million, current prices

1999 2000 2001 2002 2003 2004
Accommodation 93,343.2 105,291.1 117,294.3 127,147.0 146,346.2 166,834.7

Entertainment 8,400.9 9,476.2 10,556.5 11,443.2 13,171.2 15,015.1
Excursions 7,467.5 8,423.3 9,383.5 10,171.8 11,707.7 13,346.8
Food 23,335.8 26,322.8 29,323.6 31,786.8 36,586.6 41,708.7
Shopping 9,334.3 10,529.1 11,729.4 12,714.7 14,634.6 16,683.5
Travel within country 213,224.9 258,355.4 264,202.1 319,204.1 392,356.9 493,798.8
Others 4,667.1 5,264.5 5,864.7 6,357.3 7,317.3 8,341.7
TOTAL 359,773.7 423,662.4 448,354.1 518,824.9 622,120.5 755,729.3

Note: Figures include spending by incoming tourists, as well as domestic tourist spending
Entertainment includes attractions and evening entertainment; Food includes restaurants
Other spending includes services like communication, hair salons, laundry, medical services, etc
Table 38 Spending on Tourism: % Breakdown 1999-2004
Euromonitor Page 24
%
1999 2000 2001 2002 2003 2004
Accommodation 25.9 24.9 26.2 24.5 23.5 22.1

Entertainment 2.3 2.2 2.4 2.2 2.1 2.0
Excursions 2.1 2.0 2.1 2.0 1.9 1.8
Food 6.5 6.2 6.5 6.1 5.9 5.5
Shopping 2.6 2.5 2.6 2.5 2.4 2.2
Travel within country 59.3 61.0 58.9 61.5 63.1 65.3
Others 1.3 1.2 1.3 1.2 1.2 1.1
TOTAL 100.0 100.0 100.0 100.0 100.0 100.0

Note: Figures include spending by incoming tourists, as well as domestic tourist spending
Entertainment includes attractions and evening entertainment; Food includes restaurants
Other spending includes services like communication, hair salons, laundry, medical services, etc
5.19 Tourism Spending – Method of Payment

Credit cards are now becoming the standard means by which hotel bills are paid. Neither incoming
nor domestic tourists like to carry large amounts of cash with them while travelling. The business
traveller usually pays for his stay at hotels using a corporate account credit card. All major
shopping stores and restaurants also accept credit cards. There is an increasing trend of domestic
tourists also paying such bills with plastic.
However, all entertainment bills are paid for using cash. All the major tour operators and travel
agents are also authorised foreign exchange providers. Therefore, many tourists exchange their
travellers cheques with them itself to make payments.
However, it must be noted that the penetration of credit cards in India is still very low. Hence, many
lower- and middle-income tourists do not possess credit cards. Hence, it is estimated that, in 2003,
only 21% of domestic tourist spending is through credit cards, compared with half of incoming
tourist expenditure.
Table 39 Method of Payment for Tourism Spending: % Breakdown 2003
%
Incoming Domestic
Cash 25.0 74.0

Credit card 50.0 21.0
Traveller’s cheque 25.0 5.0
TOTAL 100.0 100.0
Source: Euromonitor estimates based on Venture Infotek Research and trade interviews
6. TRAVEL ACCOMMODATION
6.1 Market Size
Sales of travel accommodation grew impressively at a current value CAGR of 12% over the review
period. Annual growth in constant terms was also relatively high at 8%. In 2004, it is expected to
show a hefty growth of 14%. The major reason is the sharp rise in international tourist arrivals
coupled with a robust expansion in domestic tourist traffic.
Trends during the review period clearly show the impact of events that affected tourism in India. In
particular, growth in 2002 was unusually low, following the slump in international arrivals in India
Euromonitor Page 25
after the terrorist attacks on 11 September 2001, the Afghan war and escalating tension between
India and Pakistan in 2002. However, with the boom in tourism since 2003, travel accommodation
also grew rapidly.
Table 40 Travel Accommodation Market 1999-2004
Rs million/'000 bed nights

Current value Constant value Volume (bed
nights)
1999 93,343.2 93,343.2 364,147.0

2000 105,291.1 101,241.4 403,941.9
2001 117,294.3 108,758.9 409,469.7
2002 127,147.0 112,925.9 428,994.4
2003 146,346.2 125,219.4 489,053.6
2004 166,834.7 136,864.9 547,740.0
Source: Euromonitor from Central Statistical Organisation, FHRAI, trade sources
Table 41 Travel Accommodation Market: % Growth 1999-2004
% growth
Current Constant Volume
2000 12.8 8.5 10.9

2001 11.4 7.4 1.4
2002 8.4 3.8 4.8
2003 15.1 10.9 14.0
2004 14.0 9.3 12.0
6.2 Sales by Sector

Hotels accounted for 29% of travel accommodation sales in 2003, a share that is expected to fall
marginally to 28% in 2004. These are hotels recognised by the government or which are members
of the Federation of Hotel and Restaurant Associations of India (FHRAI). However, besides these
official hotels, there are a huge number of unrecognised lodging establishments dotting the
highways, towns and cities. Most of them are small and offer very basic facilities. Since many of
them are on the roadside, these establishments were classified here as motels, though the term motel
is not used in India. In 2003, such lodging establishments accounted for 70% of travel
accommodation sales. This share is expected to rise marginally to 71% in 2004.
As regards the others, their shares in travel accommodation sales are marginal and less than 2% in
2004. Not surprisingly, given their low value, growth rates were high for some, such as self-
catering apartments and campsites, which are becoming popular in Indian tourism.
There are also a large number of travel accommodation outlets that are not run commercially. Many
of them are attached to pilgrimage centres. Given their mode of operations, it is difficult to
ascertain their true value.
Since foreign tourists are a major source of business for hotels, hotels were most affected by
international events that influenced tourist arrivals. For instance, hotel sales fell in 2001 and
showed low growth in 2002, following the dip in tourist arrivals. Similarly, the boom in tourist
traffic since 2003 meant that hotels prospered more so than most types of travel accommodation.
Table 42 Travel Accommodation Value Sales by Sector: Value 1999-2004
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Rs million
1999 2000 2001 2002 2003 2004
Campsites 10.0 51.2 115.8 185.0 213.0 245.0

Chalets - - - - - -
Guesthouses 334.0 545.9 779.3 814.6 926.0 995.5
Hostels 165.1 220.2 314.9 325.0 336.0 359.5
Hotels 34,610.1 37,996.6 36,905.3 38,779.7 42,308.7 46,962.6
Motels 58,224.0 66,477.2 78,940.5 86,659.9 102,029.1 117,632.2
Private accommodation - - 238.5 380.0 530.0 636.0
Self-catering apartments - - - 2.8 3.4 3.9
Other travel - - - - - -
accommodation
Travel accommodation 93,343.2 105,291.1 117,294.3 127,147.0 146,346.2 166,834.7
sales by sector
Table 43 Travel Accommodation Value Sales by Sector: % Value Breakdown 1999-

2004
% value
1999 2000 2001 2002 2003 2004
Campsites 0.0 0.0 0.1 0.1 0.1 0.1

Chalets - - - - - -
Guesthouses 0.4 0.5 0.7 0.6 0.6 0.6
Hostels 0.2 0.2 0.3 0.3 0.2 0.2
Hotels 37.1 36.1 31.5 30.5 28.9 28.1
Motels 62.4 63.1 67.3 68.2 69.7 70.5
accommodation
Travel accommodation 100.0 100.0 100.0 100.0 100.0 100.0
sales by sector
6.3 Outlets by Sector

Hotels and unorganised lodging
There were nearly 1,600 hotels recognised by the government in 2003. However, besides these
recognised hotels, there are many other lodging establishments. The number of hotels grew by only
2% in 2003 and is expected to rise by 3% in 2004. This modest growth, despite the boom in tourist
arrivals, is explained by the overcapacity that developed in hotels in 2001 and 2002, after a dip in
tourist traffic during those two years. Not surprisingly, occupancy levels in many hotels were
higher since 2003.
Unorganised lodging is accounted for under motels and guesthouses, both of which are growing at
an increasing rate of between 6-7% in 2004. Guesthouses are considered by some as a way of
running a hotel while evading paying the necessary taxes.
Other forms of travel accommodation
There was a sprouting up of new campsites over the review period, which can be attributed to the
proliferation of adventure tour operators in India. Adventure sports are more popular among foreign
tourists than domestic tourists.
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There are also a number of hostels including those run by non-profit, non-government organisations
such as the Young Men’s Christians Association (YMCA), Young Women’s Christians Association
(YWCA) and other more commercially run youth hostels.
The main metros like Delhi, Mumbai, Bangalore, Kolkota and Chennai were introduced to the
concept of self-catering apartments during the review period, which cater to high-end tourists who
stay for long periods. These extend to expatriates as well as those who express a keen interest in the
arts, culture and history of India.
Table 44 Travel Accommodation Outlets by Sector: Units 1999-2004
No of outlets
1999 2000 2001 2002 2003 2004
Campsites 50 75 113 174 200 230

Chalets - - - - - -
Guesthouses 960 989 1,038 1,100 1,160 1,230
Hostels 181 189 196 204 212 220
Hotels 1,209 1,295 1,420 1,541 1,570 1,620
Motels 16,506 17,496 18,634 19,938 21,438 23,000
Private accommodation - - 1,472 2,208 2,958 3,800
Self-catering apartments - - - 16 20 28
accommodation
Travel accommodation 18,906 20,044 22,873 25,181 27,558 30,128
sales by sector
Source: Euromonitor from Department of Tourism, trade sources
Table 45 Travel Accommodation Outlets by Sector: % Volume Breakdown 1999-2004
%
1999 2000 2001 2002 2003 2004
Campsites 0.3 0.4 0.5 0.7 0.7 0.8

Chalets - - - - - -
Guesthouses 5.1 4.9 4.5 4.4 4.2 4.1
Hostels 1.0 0.9 0.9 0.8 0.8 0.7
Hotels 6.4 6.5 6.2 6.1 5.7 5.4
Motels 87.3 87.3 81.5 79.2 77.8 76.3
accommodation
Travel accommodation 100.0 100.0 100.0 100.0 100.0 100.0
sales by sector
Source: Euromonitor from Department of Tourism, trade sources
6.4 Hotels by Region

West and Central the most developed
West and Central India have a clear lead in accommodation for two reasons. Firstly, Mumbai, in the
west is the financial capital of the country. A significant proportion of business travellers to India
will therefore visit Mumbai. Secondly, this region has many of India’s top tourist destinations like
Goa, southern Rajasthan, Ajanta Ellora caves, Elephanta caves off the coast of Mumbai, Khajuraho
Temples in Madhya Pradesh state and hill-stations like Mahabaleshwar. This region is also home to
Bollywood, India’s famed film-industry nestled in Mumbai, which attracts visitors from other
Asian countries and from the West.
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North and East struggle
The share of north went down since the mid-1990s due to the problems in Kashmir, which was a
big draw at one time for foreign and Indian tourists. The east was a laggard in terms of tourist
development and attracting business travellers. Hence, the number of hotels and rooms in these
regions is far behind those of the other regions.
The South looking up
On the other hand, hotel accommodation in southern India grew rapidly in recent times. One of the
reasons for this is Bangalore, capital of Karnataka, which is India’s answer to the famed Silicon
Valley in the US. Bangalore attracts many business visitors to the south.
In addition, many tourists are attracted to other parts of southern India to savour the famous south
Indian beaches, temples and palaces. The state of Kerala was successfully marketing its many
tourist attractions, including wildlife sanctuaries, hill stations and beaches. In a marketing
campaign, the Kerala tourist authorities branded the state as “God’s own country”. There is also a
lot of business traffic to Chennai (in the state of Tamil Nadu) and Hyderabad (in the state of Andhra
Pradesh) particularly in information technology and business process outsourcing (BPO).
Table 46 Hotels, Rooms and Beds by Region 2003
Number
Number of Rooms (‘000) Beds (‘000) Occupancy
hotels rate (%)
West and Central 578 31,232 60,150 57.0

South 524 27,238 52,482 60.0
North 322 20,018 35,644 56.0
East 146 6,993 13,427 55.0
TOTAL 1,570 85,481 161,703
Source: Euromonitor from Department of Tourism, FHRAI
6.5 Hotels by Star Ratings

Southern India clearly shows a stronger presence of hotels in the 4-Star and below category, chiefly
because it sees a larger proportion of domestic tourists. The West shows a high proportion of hotels
belonging to 4-star and above ratings, which is indicative of more foreign tourists and business
travellers.
While it is understandable that West and Central India have the highest number of hotels in almost
all categories since the region has the highest number of hotels to begin with, the North has the
second highest number of 5-star hotels in the country. This is a reflection of the higher-income
travel that is more prevalent in the North compared to the national average. A major reason for this
is the importance of Delhi for both business and high-income leisure travellers. Other tourist
attractions in the North, especially monuments such as the Taj Mahal and the palaces and forts of
Rajasthan, are also popular among well-heeled tourists.
The Department of Tourism also has a category of “heritage hotels” which includes old palaces and
buildings converted into hotels. In 2003, there were 77 heritage hotels registered with the
Department of which 12 are in the South, 10 are in the north, 5 in the east, 48 in west and central
India and 7 in the east. The total number of hotels that are registered with the DOT but await
classification are 81. More than half of these are in the south.
Table 47 Number of Star Rated Hotels by Region 2003
Euromonitor Page 29
Number
5-star 4-star 3-star 2-star 1-star
West and Central 59 33 157 171 83

South 35 33 166 156 78
North 48 31 96 108 25
East 10 23 53 41 6
TOTAL 152 120 472 476 192
Source: Department of Tourism, Euromonitor
Note: 5-star deluxe included in 5-star. Heritage and unclassified hotels are not included.
6.6 Hotels by Ownership

Though India is peppered with independent hotels, the hotel chains register a much higher
proportion of value sales, accounting for about 70% of all sales in 2004. Most of the 5-star and 5-
star deluxe hotels are part of hotel chains.
Budget hotel chains also began to spring up in the country, eating into the share of independent
hotels that largely comprise the three-star and lower categories. This trend is expected to continue
into the forecast period, as hotels will be allowed to reap benefits accruing from mergers and
acquisitions, which will see a lot of independent hotels merge with chains to improve occupancy
rates.
During the review period, sales of hotel chains grew at a CAGR of 7%, which was significantly
higher than the 6% annual growth for all hotels. Hence, the share of hotel chains in hotel sales rose
from 66% in 1999 to an estimated 70% in 2004.
While the top two hotel players, Indian Hotels Co and EIH Ltd, continued to be well ahead of the
other chains in terms of revenues and the number of hotels, other hotel companies such as ITC grew
more dynamically. A major reason was the large investments that it made in expanding its hotel
network. For instance, ITC took a decision in 1998 to invest a huge amount of Rs15 billion over a
period of five years to achieve a national rollout.
Table 48 Hotel Sales by Independent vs Chained Outlets: Value 1999-2004
Rs million
1999 2000 2001 2002 2003 2004
Total hotel sales 34,610.1 37,996.6 36,905.3 38,779.7 42,308.7 46,962.6

Hotel sales: hotel chains 22,911.9 25,989.7 25,390.8 27,029.5 29,573.8 32,873.8
Chained outlets’ sales 66.2 68.4 68.8 69.7 69.9 70.0
as a % of total sales
Source: Euromonitor based on FHRAI data and trade press
6.7 Internet Transaction Trends

Trends
Compared with other aspects of Indian tourism, the internet is a more important source of sales for
hotels. In 2003, 9% of hotel sales were generated through the internet. This share fluctuated over
the review period. In 1999, the share was about 10%. The main reason for this fluctuating trend was
the changing proportion of foreigners among hotel customers. This is because the use of internet for
hotel booking is greater for foreigners compared with domestic travellers. Hence, it is not surprising
that the share of internet sales in hotel sales dropped to 8% in 2001 with the drop in foreign arrivals
in India.
Euromonitor Page 30
Apart from hotels, there is negligible use of the internet for bookings in other accommodation, most
of which is used by local travellers with modest incomes, who are not particularly internet-savvy.
Key players activity
About half of internet hotel sales are through hotel websites. Hence, the key players are the large
established hotel chains such as Indian Hotels Co, EIH Ltd, Hotel Leela Venture and ITC Hotels.
There are also a large number of travel portals that provide hotel reservation services for hotels in
India. These include the portals of internet travel companies such as MakeMyTrip, as well as those
created by travel retail companies such as Thomas Cook.
Table 49 Travel Accommodation Internet Transactions Sales: Internet Transaction

Value 1999-2004
Rs million
1999 2000 2001 2002 2003 2004
Internet 2,941.9 3,685.7 2,952.4 3,412.6 3,807.8 4,696.3

Others 90,401.3 101,605.4 114,341.9 123,734.4 142,538.4 162,138.4
Total 93,343.2 105,291.1 117,294.3 127,147.0 146,346.2 166,834.7
Source: Euromonitor from FHRAI
6.8 Emerging Products

Campsites for Adventure Tourism
India has enormous potential for adventure tourism because of its diverse terrain including
mountains, lush forests, beaches, rivers and lakes. Hence, there is a lot of scope for adventure
tourism activities like trekking, rock climbing, rafting, scuba diving and skiing. A number of states
actively promote these activities. Not surprisingly, adventure tourism in India grew rapidly in recent
years, especially since 2000. During 2003, the value of this was estimated at over Rs400 million.
The demand for adventure tourism led to the sprouting up of many campsites with excellent
services. These campsites may also be organised in collaboration with hotels.
Self-Catering Apartments
The metropolitan cities were introduced to the concept of self-catering apartments or, as they are
known in India, Service Apartments. These are based on the European concept of rent-an-apartment
such as the apart’hotel concept. The apartments are available on monthly or weekly rates. This is
the high-end option of private accommodation/paying guest system in India and targets the long-
stay tourist or those tourists that are expected to make repeat visits in the near future.
6.9 Key Players – Mergers and Acquisitions

Hotel operations saw major changes in terms of ownership during the review period. During the
review period, India Tourism Development Corp Ltd (ITDC), with its 100% government share
holding, divested 18 of its hotel units leaving it with only eight hotels and seven joint-venture
hotels, apart from its other non-accommodation investments such as 37 Duty Free shops at airports.
Hotel Corp of India (HCI), a wholly owned subsidiary of Air India, divested from its properties
Centaur Hotel Juhu Beach, Indo Hokke Hotels Ltd, a subsidiary of HCI and Centaur Hotel Mumbai
Airport. Interestingly, the buyers of Centaur Hotel Mumbai Airport, Batra Hospitality, quickly sold
it to Sahara India for a huge profit.
Euromonitor Page 31
In August 2004, ITC, the Indian business conglomerate, which owns 72% equity stake in ITC
Hotels, announced that it would be merging ITC Hotels with itself. This consolidation of ITC’s
hotel business will result in economies of scale and cost reduction.
Summary 3 List of Mergers and Acquisitions 2002-2004

Takeover company Sahara India
Country India
Sector Private
Acquired company Centaur Hotel Mumbai Airport
Country India
Sector Private
Year 2002
Takeover company Silverlink Holdings Ltd
Country India
Sector Private
Acquired company Lodhi Hotel (ITDC)
Country India
Sector Public
Year 2002
Takeover company Nehru Place Hotels Ltd
Country India
Sector Private
Acquired company Hotel Kanishka (ITDC)
Country India
Sector Private
Year 2002
Source: Department of Disinvestment, trade press, Euromonitor
6.10 Key Players – Revenue Rankings

The two main players in the Indian hotel industry are the Indian Hotels Co and EIH Ltd (earlier
known as East India Hotels). Indian Hotels Co, a part of the ubiquitous Tata Group of Companies,
owns the well-known Taj Hotels, whereas EIH owns the equally famous Oberoi brand. Both these
companies own properties that can be classified into various types such as luxury, business and
budget, heritage as well as beach and hill resorts. Cumulatively, these two hotel leaders raked in
Rs11,102 million in 2003/2004.
The Leela Hotels brand run by Hotel Leela Venture is a relatively new player but quietly increased
its share during the review period. Another big hotel company is ITC Hotels, which runs the ITC-
Welcomgroup chain of hotels. ITC Hotels also has a tie up with the international chain Sheraton. In
August 2004, its parent company, ITC, announced that it would be merging ITC Hotels with itself.
Two public sector companies, India Tourism Development Corp (ITDC) and Hotel Corp of India
(HCI), used to be major players in hotels. However, as part of its privatisation strategy, the
government decided to sell off most of their hotels to the private sector. As a result, both ITDC and
HCI are now only minor players.
Table 50 Key Players by Revenue 2003/2004
Euromonitor Page 32
Rs million
2003/2004 Year end
Indian Hotels Co Ltd 6,652 March

EIH Ltd 4,450 March
Hotel Leela Venture Ltd 2,037 March
ITC Hotels 1,577 March
Source: Company reports, trade press, Euromonitor
6.11 Key Hotel Players – Market Share

The two top hotel players, Indian Hotels Co and EIH Ltd, had a combined value share of nearly
23% in 2003, which is expected to rise to about 24% in 2004. However, the shares of these two
companies fell since 2001, as younger players expanded their hotel networks. Moreover, the shares
of these two companies significantly suffered in 2002 because of the fall in tourist arrivals. Since
their hotels are more dependent on foreign guests compared with most other hotels, they were more
severely affected by this drop.
ITC Hotels and Hotel Leela Venture had much lower shares of about 3-4% each in 2003. Trends in
their shares were similar to those of Indian Hotels Co and EIH Ltd, with a fall in 2002 and a steady
rise since then. The major reason is again trends in tourist arrivals and their relatively higher
dependence on foreign guests.
Table 51 Hotel Companies by Market Share 2001-2004
% retail value rsp

Company 2001 2002 2003 2004
Indian Hotels Co Ltd 18.6 15.0 13.5 14.2

EIH Ltd 12.9 9.7 9.1 9.5
ITC Hotels 3.3 2.2 3.2 4.3
Hotel Leela Venture Ltd 3.6 2.9 2.9 3.4
Others 61.6 70.2 71.3 68.6
Total 100.0 100.0 100.0 100.0
Source: Euromonitor from company reports, FHRAI, trade press
6.12 Key Hotel Players – RevPAR

Hotel Leela Venture tops in Revenue Per Available Room (RevPAR), which was estimated at
Rs3,287 during 2003/2004. This was because of the relatively high room tariffs of the three
luxurious hotels of the Leela group in Bangalore, Mumbai and Goa, as well as a high occupancy
rate. With the boom in the hotel industry, RevPAR for the Leela group rose by 20% during
2003/2004.
Indian Hotels Co (IHC) and EIH followed with estimated RevPARs of Rs2,876 and Rs2,594 in
2003/2004. RevPAR was lowest for ITC Hotels at an estimated Rs1,410 in 2003/2004. This is
because ITC Hotels has a number of modestly-priced hotels catering to budget tourists in its fold.
However, growth in RevPAR during 2003/2004 was the highest for ITC Hotels at nearly 30%,
reflecting its dynamic revenue growth, followed by IHC (26%).
Table 52 Key Hotel Players by RevPAR 2003/2004
Euromonitor Page 33
Rs
2003/2004 % growth year end
Hotel Leela Venture Ltd 3,287 20.0 March

Indian Hotels Co Ltd 2,876 26.0 March
EIH Ltd 2,594 16.1 March
ITC Hotels 1,410 29.6 March
Source: Euromonitor from company reports, trade press
6.13 Forecast Sales by Sector

Negligible impact of Indian Ocean earthquake
In spite of the widespread devastation to lives in Asia, Africa and India itself, the Indian Ocean
earthquake and its resultant tsunamis are not expected to cause any negative impact on the
performance of travel accommodation in 2005 or later. The most affected areas in India in terms of
travel accommodation were the Andaman and Nicobar islands, although in early-February, reports
emanating from India suggest that the government aid swiftly brought a sense of normalcy and is
poised to help travel accommodation recoup its losses through various support measures including
increased marketing and promotional efforts for the islands.
Strong growth all around
Both foreign tourists to India and domestic tourism within India are expected to grow robustly over
the forecast period. Some of the major reasons include better tourist infrastructure, improved
marketing of tourist attractions and a greater capacity of Indians to travel because of enhanced
disposable income. This would obviously imply more demand for travel accommodation. Hence,
during the forecast period, sales of travel accommodation are predicted to grow by nearly 9% per
annum in constant value terms, compared with annual growth of 8% over the review period.
Sales of hotels are predicted to grow at a much higher pace during the forecast period at 8% per
year in constant value terms compared with a CAGR of 2% in constant prices over the review
period. Some accommodation that showed very high growth of sales in the past five years because
of a low base, such as campsites, is likely to grow more modestly during the next five years.
It is also predicted that within hotels, budget hotels would grow at a faster rate. This is because, in
India, there are not enough budget hotels with good facilities in relation to potential demand. Even
the top Indian hotel companies, which traditionally concentrated on 5-star hotels, are realising this
fact and a number of them are investing their resources in setting up budget hotels. For instance, in
June 2004, Indian Hotels Co established its first low-cost hotel in Bangalore. Hence, during the
forecast period, the number of budget hotels and their sales are expected to increase at a rapid pace.
Table 53 Forecast Travel Accommodation Sales by Sector: Value 2004-2009
Euromonitor Page 34
Rs million
2004 2005 2006 2007 2008 2009
Campsites 245.0 269.5 296.5 323.1 349.0 373.4

Chalets - - - - - -
Guesthouses 995.5 1,085.1 1,171.9 1,253.9 1,329.2 1,395.6
Hostels 359.5 377.5 396.3 414.2 432.8 450.1
Hotels 46,962.6 50,250.0 54,018.7 58,340.2 63,299.1 68,996.1
Motels 117,632.2 129,395.4 142,335.0 155,145.1 169,108.2 182,636.8
Private accommodation 636.0 712.3 790.7 869.7 948.0 1,023.9
Self-catering apartments 3.9 4.5 5.2 5.9 6.7 7.5
accommodation
sales by sector
Source: Euromonitor
6.14 Forecast Outlets by Sector

The number of travel accommodation outlets is predicted to grow at a slightly lower pace of 8% per
annum during the forecast period compared with the annual growth of 10% over the review period.
This is because the high growth rates registered for some accommodation during the past five years
was essentially because of the low base, such as for campsites. Such high growth is unlikely to be
sustained.
Moreover, there is expected to be a shift to larger and better-equipped travel accommodation

establishments in the forecast period, with higher-income tourists demanding more facilities. In
particular, the number of hotels is forecast to grow at 7% per annum during the forecast period
compared with 6% in the review period. Also, the number of budget hotels is expected to increase
at a rapid pace during the review period, as hotel players realise the unfulfilled demand for low-cost
hotels providing value for money.
The events of the Indian Ocean earthquake in late-2004 are not expected to cause any difference to
outlet volume, as the total number of travel accommodation outlets affected as a proportion of the
total number of travel accommodation outlets in India is very small.
Table 54 Forecast Travel Accommodation Outlets by Sector: Units 2004-2009
No of outlets
2004 2005 2006 2007 2008 2009
Campsites 230 265 302 344 388 435

Chalets - - - - - -
Guesthouses 1,230 1,298 1,363 1,431 1,495 1,562
Hostels 220 229 238 246 255 264
Hotels 1,620 1,701 1,803 1,929 2,084 2,271
Motels 23,000 24,725 26,456 28,308 30,148 32,107
Private accommodation 3,800 4,750 5,700 6,555 7,211 7,787
Self-catering apartments 28 41 57 74 89 98
accommodation
Travel accommodation 30,128 33,009 35,919 38,887 41,670 44,524
sales by sector
Source: Euromonitor
7. TRANSPORTATION
Euromonitor Page 35
7.1 Market Size

Transportation was valued at an estimated Rs1,057 billion in 2004, representing growth of 15%
over 2003. The value of total transportation grew at an increasing CAGR of 10% over the review
period. However, in constant terms, the CAGR was 6%. In volume terms, seats sold totalled an
estimated 5,081 million in 2004, registering a 5% growth over the previous year.
In air transport, value grew due to increased competition from private players, after the government
liberalised its civil aviation policy. In land transportation, which is the largest in India’s
transportation, price rises were in line with inflation and increasing oil prices. In rail, price
increases are below inflation and driven by political considerations.
Transportation in India is in need of a high level of investment for infrastructure improvements.

The railway networks are old and in need of upgrading. Airports also require to be modernised.
While the road network is large, the quality of many roads is poor.
Table 55 Transportation Market 1999-2004
Rs million/000 seats sold

Current value Constant value Volume
(seats sold)
1999 652,902.0 652,902.0 4,305,700

2000 702,200.0 675,192.3 4,510,900
2001 762,399.0 706,919.9 4,710,000
2002 827,592.4 735,028.0 4,698,000
2003 920,931.1 787,983.6 4,838,940
2004 1,056,880.0 867,024.6 5,080,900
Source: Euromonitor from Director General of Civil Aviation (DGCA), Airports Authority of India (AAI),
Indian Railways and trade press
Table 56 Transportation Market: % Growth 1999-2004
% growth
2000 7.6 3.4 4.8

2001 8.6 4.7 4.4
2002 8.6 4.0 -0.3
2003 11.3 7.2 3.0
2004 14.8 10.0 5.0
Source: Euromonitor
7.2 Sales by Sector

Bus travel is the most significant in transportation, with an estimated share of 46% in 2004 in value
terms. It was estimated that land transport represents 70% of the volume of all domestic trips. Value
sales of bus/coach travel rose rapidly over the review period at a CAGR of nearly 15%.
Bus travel offers the cheapest mode of transport in India, allowing for large numbers of customers.
Another important reason for its healthy growth in the review period is the improvement in
passenger comfort through the introduction of reclining seats and on-board movies. Bus travel
providers are at the same time pushing up ticket prices, as the Indian middle class is becoming
larger and richer.
Euromonitor Page 36
Air travel is the second most significant in value sales, accounting for nearly a third of
transportation in 2004. During 1999-2002, the share of air travel dropped because of reduced tourist
traffic and air travel following the global economic slowdown, the events relating to 11 September
2001 and other factors. However, with the revival of tourist traffic in India since 2003, the share of
air travel stabilised.
The percentage share of rail transport in the total value of transport in India has not changed much
over the review period and is estimated at 13% in 2004. Capacity constraints, non-flexible
schedules and slow trains saw the railways lose potential passengers.
With rising business and leisure travel, chauffeur-driven car services continued to grow and its
share increased by 1% since 1999. Cruises are meanwhile relatively new and account for a very tiny
part of transportation. Currently, value sales in ferries are also insignificant.
Table 57 Transportation Sales by Sector: Value 1999-2004
Rs million
1999 2000 2001 2002 2003 2004
Air 265,224.0 258,743.0 256,400.0 261,528.0 285,993.1 328,892.0

Bus/coach 244,708.0 281,415.0 326,441.0 372,142.7 416,578.0 483,230.0
Chauffeur-driven car 57,071.0 65,632.0 73,507.0 80,857.7 91,300.0 103,808.0
Cruise 400.0 600.0 900.0 1,100.0 1,342.0 1,550.0
Ferry - - - - - -
Rail 85,499.0 95,810.0 105,151.0 111,964.0 125,718.0 139,400.0
Transport by sector 652,902.0 702,200.0 762,399.0 827,592.4 920,931.1 1,056,88
0.0
Table 58 Transportation Sales by Sector: % Value Breakdown 1999-2004
% value
1999 2000 2001 2002 2003 2004
Air 40.6 36.8 33.6 31.6 31.1 31.1

Bus/coach 37.5 40.1 42.8 45.0 45.2 45.7
Chauffeur-driven car 8.7 9.3 9.6 9.8 9.9 9.8
Cruise 0.1 0.1 0.1 0.1 0.1 0.1
Ferry - - - - - -
Rail 13.1 13.6 13.8 13.5 13.7 13.2
Transport by sector 100.0 100.0 100.0 100.0 100.0 100.0
7.3 Airline Capacity and Utilisation

Over 97% of airline seats sold are from scheduled flights. Though chartered travel seats grew at a
CAGR of over 8% over the review period, chartered air travel is still nascent and will take several
years to develop. Budget flights began in India only in August 2003 with the commencement of
operations of the low-cost airline Air Deccan.
Most of the Indian carriers augmented their seat capacity significantly since 1999. Air India, India’s
premier international airline, expanded its fleet from 26 aircraft in 1999 to 33 currently. The leading
domestic carrier is Indian Airlines. Indian Airlines (together with its fully owned subsidiary
Alliance Air) has a fleet of 62 aircrafts. Its network covers 75 destinations - 50 domestic and 16
international.
Euromonitor Page 37
However, both Air India and Indian Airlines were constrained in implementing their capacity
expansion plans because of government ownership. This resulted in long delays in obtaining
approvals. In contrast, the two private carriers were able to expand their capacity swiftly. Jet
Airways’ fleet size rose from 11 aircraft in 1999 to 41 in 2003. Air Sahara’s capacity went up from
4 aircraft in 1999 to 12 in 2003.
The total number of available seats by all carriers grew at a CAGR of 8% during the review period.
In 2004, total capacity was estimated at 52 million seats. The number of seats sold in 2004 is
estimated at 35 million seats.
Table 59 Airline Capacity by Type 1999-2004
available seats, million

1999 2000 2001 2002 2003 2004
Scheduled 34,900 39,300 40,200 42,200 46,000 50,600

Charter 200 200 200 200 220 300
Budget 0 0 0 0 180 900
TOTAL 35,100 39,500 40,400 42,400 46,400 51,800

Source: Euromonitor from Director General of Civil Aviation (DGCA), Airports Authority of India (AAI)
Table 60 Airline Utilisation by Type 1999-2004
seats sold, million

1999 2000 2001 2002 2003 2004
Schedule 24,280 26,000 24,800 27,150 29,600 34,040

Charter 180 140 160 180 200 270
Budget 0 0 0 0 120 650
TOTAL 24,460 26,140 24,960 27,330 29,920 34,960

Table 61 Airline Utilisation by Type : % Breakdown 1999-2004
% seats sold
1999 2000 2001 2002 2003 2004
Schedule 69.6 66.2 61.7 64.3 64.3 67.3

Charter 90.0 70.0 80.0 90.0 90.9 90.0
Budget 66.7 72.2
TOTAL 69.7 66.2 61.8 64.5 64.5 67.5
7.4 Airline Sales by Seat Class

During the review period, business class performed the best, registering an annual growth of over
8% in terms of number of seats sold. The principal reason is the increasing scope for foreign
collaborations in Indian business, which resulted in growth in business travel. However, economy
class constitutes the largest proportion of seats sold. This share was estimated at 73% in 2004.
Economy class grew at a CAGR of 7% over the review period in terms of number of seats sold.
First class, which accounted for only 5% of seats sold in 2004, grew slowest, at a rate of about 6%
per annum over the review period.
Euromonitor Page 38
Table 62 Airline Volume Sales by Seat Class 1999-2004
seats sold, million

1999 2000 2001 2002 2003 2004
Economy class 18,060 19,040 18,060 20,130 21,920 25,560

Business class 5,200 5,600 5,700 5,900 6,600 7,800
First class 1,200 1,500 1,200 1,300 1,400 1,600
TOTAL 24,460 26,140 24,960 27,330 29,920 34,960

Source: Trade interviews, Euromonitor estimates
Table 63 Airline Volume Sales by Seat Class: % Breakdown 1999-2004
% seat sold
1999 2000 2001 2002 2003 2004
Economy class 73.8 72.8 72.4 73.7 73.3 73.1

Business class 21.3 21.4 22.8 21.6 22.1 22.3
First class 4.9 5.7 4.8 4.8 4.7 4.6
TOTAL 100.0 100.0 100.0 100.0 100.0 100.0

Source: Trade interviews, Euromonitor estimates
7.5 Airline Sales by Distance

Airline seat sales are almost equally divided between short haul and long haul flights. However,
short haul flight sales were slightly higher than those for long haul flights during the review period.
In 2004, the share of short haul flight sales was estimated at 51%.
The share of long haul flight sales rose gradually during the review period. This is largely because
of increased cheap holiday options abroad, liberalisation in foreign exchange controls, enabling
Indian travellers to carry more foreign exchange, and the growth in business travel.
Table 64 Airline Volume Sales by Distance: % Breakdown 1999-2004
% seats sold
1999 2000 2001 2002 2003 2004
Short haul 52.2 52.5 51.6 51.1 50.5 51.0

Long haul 47.8 47.5 48.4 48.9 49.5 49.0
TOTAL 100.0 100.0 100.0 100.0 100.0 100.0

Note: All international flights were classified as long-haul, while all domestic flights were classified as
short-haul

Internet transactions constitute only a tiny share of the value of Indian transportation. This is
because of the low penetration of the internet in India and the reluctance of many Indian internet
users to undertake e-commerce because of safety concerns. In 2004, it was estimated that internet
transactions constituted only 2% of the value of Indian transportation.
Euromonitor Page 39
However, the share of internet transactions rose rapidly over the review period. In 1999, internet
sales were almost negligible. The purchase of airline tickets constitutes over 90% of internet
transactions relating to transportation, with railway tickets accounting for most of the balance.
Online agencies
There are several Indian internet travel companies that provide a variety of services to travellers,
including transportation arrangements and sales of air tickets. A number of regular brick and mortar
travel companies also offer such services through their websites.
Two leading internet travel companies are MakeMyTrip and TravelJini. MakeMyTrip mainly
targets the large number of non-resident Indians living in the US and primarily offers inbound
travel services. During 2003, it sold air tickets valued at Rs560 million. On the other hand,
TravelJini’s business mainly relates to outbound travel. TravelJini sold air tickets worth Rs360
million in 2003.
Direct suppliers: no-frills
At present, the only no-frills carrier is Air Deccan, which began operations in August 2003. In its
efforts to reduce costs to the minimum, Air Deccan is placing a great deal of emphasis on selling
tickets over the internet.
Direct suppliers: traditional airlines
Traditional airlines in India were rather late in offering internet booking facilities. For instance, the
two major carriers, Air India and Indian Airlines, began providing such services only in 2002.
Currently, all carriers in India offer such facilities, though most of the bookings are through travel
agents.
Railways and internet auction sites
Indian Railways began operating internet ticket booking facilities in August 2002. These proved to
be quite popular among Indians. While about 3,500 tickets were booked in the first month of
launch, this went up to about 5,000 per day in April 2002. By the end of 2004, this number is
expected to further shoot up to 10,000 per day. However, given the huge number of rail passengers,
most of whom are from middle- and lower-income households, the number of books bought
through the Internet translates to a mere 1% of total tickets sold.
Another popular mode of internet sales of air tickets is through internet auction websites. The main
player here is Times Internet which owns the auction website, Indiatimes. During 2003, air tickets
worth Rs700 million were bought through auctions on Indiatimes. This represented a 150%
increase over 2002, when the service was launched.
Table 65 Transportation Sales: Internet Transaction Value 1999-2004
Rs million
1999 2000 2001 2002 2003 2004
Internet 270.0 1,300.0 2,570.0 5,241.8 11,887.7 16,333.5

Others 652,632.0 700,900.0 759,829.0 822,350.6 909,043.4 1,040,54
6.5
Total 652,902.0 702,200.0 762,399.0 827,592.4 920,931.1 1,056,88
0.0
Source: Trade press (Economic Times, Business World, The Hindu), Euromonitor
Euromonitor Page 40
Low-cost airlines
Low-cost no-frills airlines constitute an emerging service in Indian transportation. This service
began only in August 2003 when the low-cost carrier Air Deccan began operations. During 2003,
the carrier’s revenue totalled Rs1 billion. This service became very popular among Indians and the
carrier rapidly increased its network. The cheap air tickets that it offers also drew away a number of
railway passengers who traditionally travel in higher-priced rail coaches. During 2004, the revenues
of Air Deccan are expected to rise to Rs6 billion.
Because of the success of Air Deccan, several other companies also plan to offer low-cost airline
services. One such player is Kingfisher Airlines, which expects to commence operations in January
2005. Kingfisher Airlines is owned by the UB group, which is primarily involved in the Indian
liquor industry.
A few of the traditional Indian carriers, such as Air India, are also planning on entering low-cost
airlines through separate subsidiaries.

There were no noteworthy mergers and acquisitions in transportation during 2002-2004. While
there was some talk of an “operational merger” between Air India and Indian Airlines in October
2003, this has not materialised.

The single largest player in transportation is Indian Railways with passenger revenue reaching
Rs139 billion in 2003/2004. Passenger revenues were traditionally cross-subsidised by the freight
revenues.
The two national carriers, Air India and Indian Airlines are the next largest players. Indian Airlines
was incorporated as a domestic airline and Air India as an international carrier. However, over the
years, there was growth in each other's specialised area. During 2003, among passengers carried by
Indian Airlines, 27% were those travelling in its international flights, mainly to the Gulf. Air India
also carries a large number of passengers on the domestic legs of its international flights.
Each state has a road transport corporation, which offers both inter-city services as well as
commuter services in major cities in their state. Maharashtra Road Transport Corp (MSRTC) and
Andhra Pradesh Road Transport Corp (APSRTC) are two of the largest corporations, in terms of
turnover. Most of the companies are loss making and heavily subsidised by their respective states.
Rs million
2003/2004 Year end
Indian Railways 139,400.0 March

Air India 58,970.0 March
Indian Airlines 45,240.0 March
Jet Airways 32,503.0 March
Sahara Airlines 10,846.0 March
Alliance Air 5,679.0 March
Source: Indian Railways, Air India, DGCA, trade press, Euromonitor estimates
7.10 Key Players – Passengers Carried

The ranking of players in transportation in terms of passengers broadly mirrors that in revenues.
The main exception is Air India. The number of passengers carried by Air India is less than those of
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Indian Airlines and Jet Airways. The higher ranking of Air India in terms of revenues is not
surprising considering that it is essentially an international carrier, so that its revenue per passenger
is much higher than that of domestic carriers.
Passengers carried by Indian Railways were estimated at 5 billion in 2003/2004. However, it must
be noted that Indian Railways also runs the suburban rail network, which is a major network for
daily commuting in cities like Mumbai, Chennai and Kolkata. Hence, a large proportion of
passengers carried consist of such daily commuters.
Table 67 Key Players by Numbers of Passengers Carried 2003/2004
‘000 passengers
2003/2004 Year end
Indian Railways 5,120,130.0 March

Jet Airways 7,234.0 March
Indian Airlines 6,258.2 March
Air India 3,776.0 March
Alliance Air 1,578.0 March
Sahara Airlines 1,471.0 March
Source: Indian Railways, Air India, DGCA, trade press, Euromonitor estimates
7.11 Key Airline Players – Market Share

The shares of the two national carriers, Air India and Indian Airlines, fell during 2001-04 by under
one percentage point each. A major factor was government ownership, which constrained them
from responding quickly to competition. For instance, in the case of Indian Airlines, its capacity
expansion plans were affected because of long delays in getting government approval.
It is also important to make the distinction between domestic and international passenger travel
while examining trends in shares. Considering only domestic travel, the share of Indian Airlines fell
steeply from 39% in 1999 to 31% in 2003. The gainers were the two private airlines, Jet Airways
and Air Sahara. Being in private hands, these carriers were able to quickly introduce innovative
strategies to draw passengers. In fact, now, in terms of passengers carried, Jet Airways ranks higher
than Indian Airlines.
7.12 Forecast Sales by Sector

Air travel sales are expected to grow at a much faster pace during 2004-2009 compared with the
review period. In constant value terms, while air travel sales grew only marginally at 2% overall
during 1999-04, growth is forecast to rise to 7% per annum during the forecast period. With
growing competition and the emergence of budget airlines, air travel is becoming much more
affordable for Indians. Moreover, with rising disposable incomes from sustained economic growth,
more Indians are able to travel by air.
Sales from bus/coach travel are predicted to grow at a CAGR of 8% in constant value terms over
the forecast period. This is only slightly lower than the constant value growth of 10% registered
during the review period. Sales from travel in chauffeur-driven cars are also expected to grow at the
same rate of 8% per annum during 2004-2009. Leaving aside cruise travel which is nascent, sales
from land travel are expected to continue to grow at the fastest pace during the next five years. This
is because, with the ongoing upgrading of highways and increasing comforts offered by buses,
many passengers strongly prefer land transportation, especially because of its convenience and
flexibility.
Sales from rail travel are forecast to grow at the slowest pace of 5% per annum during the forecast
period. This is mainly because of capacity constraints as well as increased competition from other
modes of transport.
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When good news outweighs the bad
At the time of reporting, the sustained positive growth registered, especially through the advent of
low-cost airlines, was expected to far outstrip any decline as a result of lesser tourist travel to areas
impacted by the Indian Ocean earthquake of December 2004. This and other sources of information
available at the time of writing strongly suggest that transportation value and transportation volume
are unlikely to be negatively affected in 2005 or the other years during the forecast period.
Table 68 Forecast Transportation Sales by Sector: Value 2004-2009
Rs million
2004 2005 2006 2007 2008 2009
Air 328,892.0 348,625.5 371,286.2 397,276.2 427,071.9 461,237.7

Bus/coach 483,230.0 521,888.4 563,639.5 611,548.8 663,530.5 719,930.6
Chauffeur-driven car 103,808.0 112,112.6 121,081.7 130,768.2 141,883.5 154,653.0
Cruise 1,550.0 1,705.0 1,858.5 2,025.7 2,187.8 2,362.8
Ferry - 1.0 2.0 3.0 4.0 5.0
Rail 139,400.0 146,370.0 153,688.5 160,604.5 167,831.7 174,545.0
Transport by sector 1,056,88 1,130,70 1,211,55 1,302,22 1,402,50 1,512,73
0.0 2.5 6.4 6.4 9.4 4.1
Source: Euromonitor
8. CAR RENTAL
8.1 Market Size
Doing it differently
The nature of car rental in India is totally different from car rental in more industrialised countries.
This is because, in India, cars are rented out along with drivers and the extent of car rentals for self-
driving is negligible. This is not at all surprising considering the very low wages of drivers, so that
almost all Indians and foreigners hiring cars in India prefer to hire chauffeur-driven cars because of
convenience and comfort. Another reason for this strong preference is the poor state of many roads
in India and chaotic traffic, so that those hiring cars would rather let chauffeurs navigate the traffic
than do it themselves.
Even for the Indian operations of Hertz and Avis, the overwhelming bulk of revenues come from
chauffeur-driven cars and car rental for self-driving is minor. Hence, in India, travel by rented
“chauffeur-driven cars” is synonymous with “car rentals”.
Good growth
The value of car rental grew by nearly 13% in 2003 to reach an estimated value of more than Rs90
billion. This is predicted to rise by about 14% in 2004 so that value would cross Rs103 billion.
CAGR over the review period stands at 13% in current value terms. Car rental services is
characterised by many small players and the lack of developed big players.
The reason for growth in car rental is twofold. First there was an increase in customers with the
growth in tourism. The second reason is that as unorganised car rental proliferated, intense
competition made prices competitive.
Table 69 Car Rental Market: 1999-2004
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Rs million/'000 transactions
1999 57,071.1 57,071.1 63,494.8

2000 65,632.0 63,102.0 66,894.9
2001 73,507.0 68,161.8 68,378.6
2002 80,857.8 71,823.4 71,555.5
2003 91,300.0 78,125.5 79,391.3
2004 103,808.0 85,166.5 86,506.7
Source: Euromonitor based on Ministry of Road Transport data, trade interviews, trade press
Table 70 Car Rental Market % Growth: 1999-2004
% growth
1999 - - -
2000 15.0 10.6 5.4
2001 12.0 8.0 2.2
2002 10.0 5.4 4.6
2003 12.9 8.8 11.0
2004 13.7 9.0 9.0
Source: Euromonitor
8.2 Fleet Size and Number of Operators

The total fleet size of Indian car rental for 2003 was estimated at 573,000. This number grew at a
CAGR of nearly 9% over the review period. During 2004, fleet size is predicted to grow by 9% to
reach 621,000.
Car rental is highly dispersed with thousands of small and individual operators. Average fleet size
is only about 15 currently. As a result, there are over 62,000 operators. However, many of the tiny
operators have informal or formal arrangements with travel agencies or tour operators to make it
easier for them to get customers.
Table 71 Structure of Car Rental Market 1999-2004
Number
Fleet size (‘000) Operators
1999 406.5 40,652

2000 449.5 44,946
2001 495.4 49,538
2002 534.5 53,450
2003 572.5 57,254
2004 621.4 62,139
Source: Euromonitor based on Ministry of Road Transport, Society of Indian Automobile Manufacturers
data, trade press
8.3 Sales by Sector and Location

Business car rentals account for the bulk of sales. During 2003, the share of business was estimated
at 71% which is likely to remain unchanged in 2004. The dominant share of business is not
surprising since car rentals are a more expensive mode of transport compared with others such as
buses and railways. Hence, many leisure tourists, especially domestic tourists, do not make as much
use of rented cars as business travellers do.
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For both business and leisure, the share of non-airport rentals is much higher than airport rentals.
This is because not all airports have a price-competitive car rental facility due to the high rental
charges imposed by the Airports Authority of India (AAI).
Insurance replacement is non-existent in India at present but might come into being once better and
more competitive insurance practices are adopted.
Table 72 Car Rental Sales by Sector and Location: Value 1999-2004
Rs million
1999 2000 2001 2002 2003 2004
Business 39,384.3 45,286.1 51,454.9 56,923.9 64,820.6 73,700.9

- Airport business 5,128.5 5,906.9 7,350.7 8,085.8 8,668.6 9,856.2
- Non-airport business 34,255.8 39,379.2 44,104.2 48,838.1 56,152.0 63,844.7
Insurance replacement - - - - - -
Leisure 17,686.8 20,345.9 22,052.1 23,933.9 26,479.4 30,107.1
- Airport leisure 3,419.0 3,937.9 4,397.3 4,851.5 5,296.3 6,021.9
- Non-airport leisure 14,267.8 16,408.0 17,654.8 19,082.4 21,183.1 24,085.2
Car rental services by 57,071.1 65,632.0 73,507.0 80,857.8 91,300.0 103,808.0
sector
Source: Euromonitor estimates based on industry interviews, trade press
Table 73 Car Rental Sales by Sector and Location: % Value Breakdown 1999-2004
% value
1999 2000 2001 2002 2003 2004
Business 69.0 69.0 70.0 70.4 71.0 71.0

- Airport business 9.0 9.0 10.0 10.0 9.5 9.5
- Non-airport business 60.0 60.0 60.0 60.4 61.5 61.5
Insurance replacement - - - - - -
Leisure 31.0 31.0 30.0 29.6 29.0 29.0
- Airport leisure 6.0 6.0 6.0 6.0 5.8 5.8
- Non-airport leisure 25.0 25.0 24.0 23.6 23.2 23.2
Car rental services by 100.0 100.0 100.0 100.0 100.0 100.0
sector
Source: Euromonitor estimates based on industry interviews, trade press
8.4 Rental Duration

The per-day rental duration of large tour operators is 10 hours. On an average, business trips are
shorter than leisure trips and therefore see average rental duration of three days, two days less than
leisure trips.
As tourism grows, the percentage share of car rental for more than three days is increasing. The
rental of cars for between four to seven days can be expected to become more popular as tourism
increases in the short run and larger organised players emerge in the long run.
Table 74 Car Rental Average Duration by Sector 1999/2004
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Average number of rental days

1999 2004
Business 2.0 3.0

Leisure 4.0 5.0
Insurance replacement 0.0 0.0
AVERAGE 2.0 2.7
Source: Euromonitor from industry interviews, trade press
Table 75 Average Car Rental Duration: % Breakdown 1999/2004
% share by number of days

1999 2004
0-3 59.0 57.0

4-7 36.0 37.0
7+ 5.0 6.0
TOTAL 100.0 100.0
Source: Euromonitor from industry interviews, trade press
8.5 Time of Booking

Half of all car rentals are booked at the destination itself. 20% of all cars rented are pre-booked and
these are popular mainly with corporate travellers. The rest of the cars are rented through package
tours, which include car rentals in the holiday package. Bigger tour operators either run their own
car rentals or enter into agreements with other car rental companies. Smaller tour operators or travel
agents only retail the services of other car rental companies.
Booking on reaching destination is a safe option for most tourists, as the car rental can be organised
by the hotel itself. Most hotels either provide their own service and/or have tie-ups with car rental
companies. Almost all star-rated hotels provide this service. A car may also be rented at the airport
itself though this can turn out to be more expensive. One can also rent a car straight from the
company.
Table 76 Time of Booking: % Breakdown 2004
% transactions
2004
Pre-booked 20.0
- of which pre-booked over the Internet 1.0
Included in holiday 30.0
Booked at destination 50.0
TOTAL 100.0
Source: Euromonitor from industry interviews
Note: Only incoming tourists were considered

Trends
Car rental internet transaction sales grew rapidly over the review period at an estimated CAGR of
94%. However, this growth is from a tiny base of Rs6 million in 1999. Even in 2004, it is expected
that such sales will remain tiny, at Rs156 million, constituting merely 0.1% of the overall market.
An important reason for the small share is that the internet is mainly used by inbound leisure
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tourists whereas domestic travellers, who are much less comfortable with the internet for e-
commerce, account for the bulk of car rental sales.
The bulk of internet sales in car rental take place through the websites of the three leading
companies – Hertz, Avis and International Travel House.
Table 77 Car Rental Sales: Internet Transaction Value 1999-2004
Rs million
1999 2000 2001 2002 2003 2004
Internet 5.7 13.1 29.4 48.5 91.3 155.7

Others 57,065.4 65,618.9 73,477.6 80,809.3 91,208.7 103,652.3
Total 57,071.1 65,632.0 73,507.0 80,857.8 91,300.0 103,808.0
Source: Euromonitor from trade press

There were no significant mergers or acquisitions in car rental during 2002-2004. This is partly due
to the highly fragmented nature of car rental in India. Apart from a few significant national players,
there are a huge number of unorganised players. Hence, mergers and acquisitions as such are not
very clear to begin with.

The leading car rental player is Carzonrent, the master franchisee of Hertz in India. The company’s
revenues in 2003/2004 totalled Rs250 million. Close behind is International Travel House, the
travel division of the conglomerate, ITC. International Travel House also provides a number of
travel services other than car rentals. Sales from its car rental business amounted to Rs241 million
in 2003/2004. Another major player is Mercury Car Rentals which is a joint venture between the
Oberoi group, the leading Indian hotel company and Avis.
Rs million
2003/2004 Year end
Carzonrent 250.0 March

International Travel House 240.9 March
Note: Revenues for International Travel House only include car rental sales
8.9 Key Players – Fleet Size

The small size of the key players in relation to overall sales is vividly demonstrated by the fact that
the largest player, Carzonrent (the master franchisee of Hertz) had only 627 cars in early-2004.
International Travel House also has a fleet of about 600 cars. Because of its relationship with Hertz,
Carzonrent was able to expand its business faster than International Travel House. This also meant
that its fleet grew at a faster pace.
Table 79 Key Players by Size of Fleet 2001-2004
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Number of cars ’000

2001 2002 2003 2004
Carzonrent 0.1 0.2 0.4 0.6

International Travel House 0.3 0.3 0.4 0.6
Source: Trade press, Euromonitor
8.10 Key Players – Average Daily Rate

All three key players Carzonrent, International Travel House and Mercury Car Rentals cater to
premium rentals. This is not surprising since there is tremendous competition in economy car
rentals from a huge number of tiny and small operators. The average daily rate for car hire of the
key players range from Rs1,900 to Rs2,050.
Table 80 Key Players by Average Daily Rate for Car Hire 2003
Rs
2003 Price platform
Carzonrent 2,000 Premium

International Travel House 1,900 Premium
Mercury Car Rentals 2,050 Premium
Source: Company websites, Euromonitor
Note: Year end December
8.11 Key Players – Market Share

The minor role played by the top companies in relation to huge unorganised sales is demonstrated
by the shares of the leading players. The three top companies - Carzonrent, International Travel
House and Mercury Car Rentals - together have a share of less than 1%. However, this share rose
over the review period.
Carzonrent is the most dynamic company of the three in terms of increasing its share. It built up a
relationship with many companies for utilising its cars. It also set up travel desks at a number of
hotels and outlets at airports. It tied up with various hotels to offer holiday packages to customers
who hire its cars.
Table 81 Key Players by Market Share 2001-2004
% retail value rsp

Company 2001 2002 2003 2004
Carzonrent India Pvt Ltd 0.0 0.1 0.1 0.2

International Travel House Ltd 0.2 0.2 0.2 0.2
Mercury Car Rentals 0.2 0.2 0.2 0.2
Others 99.6 99.6 99.5 99.4
Total 100.0 100.0 100.0 100.0
Source: Euromonitor based on company report, trade press
Note: Market share for International Travel House only reflects car rental sales
8.12 Forecast Sales by Sector and Fleet Size

Sales by sector
Euromonitor Page 48
It is predicted that sales of car rental services will rise at a CAGR of 8% during the forecast period
in constant value terms. Sales to leisure travellers are expected to grow much faster than to business
travellers, which is a reversal of trends over the review period. This is because, with the expected
growth in tourism during the forecast period, leisure travel is expected to rise in importance.
Moreover, leisure travellers, especially domestic tourists, are expected to spend more on their trips
and utilise car rental services to a greater extent.
In spite of the seemingly catastrophic effects of the Indian Ocean earthquake of 26 December 2004,
there is no downside forecast to car rental in India as a result of this singular factor at the time of
writing, in early-2005. This is mainly because car rental is already very small in India and is
unlikely to be affected as the affected areas are similarly amongst the lesser geographical areas of
importance as far as car rental services are concerned.
Fleet Size
The fleet size is forecast to grow at a CAGR of under 8% during the forecast period, which is lower
than the predicted growth of sales. This is because of the expected expansion in share of organised
players with better and well maintained cars. This means that the revenue generated per car will rise
significantly.
Table 82 Forecast Car Rental Sales by Sector: Value 2004-2009
Rs million
2004 2005 2006 2007 2008 2009
Business 73,700.9 78,478.8 83,425.3 88,791.6 94,920.1 101,916.3

- Airport business 9,856.2 10,762.8 11,744.9 12,815.3 14,046.5 15,465.3
- Non-airport business 63,844.7 67,716.0 71,680.4 75,976.3 80,873.6 86,451.0
Insurance replacement - - 121.1 130.8 141.9 154.7
Leisure 30,107.1 33,633.7 37,535.3 41,845.9 46,821.6 52,582.0
- Airport leisure 6,021.9 6,614.6 7,264.9 7,976.9 8,796.8 9,743.1
- Non-airport leisure 24,085.2 27,019.1 30,270.4 33,869.0 38,024.8 42,838.9
sector
Source: Euromonitor
Table 83 Forecast Car Rental Fleet Size 2004-2009
Number of cars ‘000

Fleet size % growth
2004 621.4 8.5

2005 668.0 7.5
2006 718.1 7.5
2007 772.0 7.5
2008 833.7 8.0
2009 904.6 8.5
Source: Euromonitor
9. TRAVEL RETAIL
9.1 Market Size
Travel retail outlets comprise travel agents, tour operators and exchange providers. Their total
number was about 28,000 in 2004, with an expected growth of 2% over the previous year. Total
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current value sales were estimated at about Rs220 billion in 2004. During the review period, it grew
at the rate of 14% per annum in current value and 10% per year in constant value terms.
The size of travel retail sales fell in 2001, following the drop in tourist arrivals in India after the
September 2001 terrorist attacks in the US affected global tourist flows. Tourist arrivals in India
continued to fall in 2002, especially because of an escalation of tension between India and Pakistan.
However, this shrinkage in inflows of foreign tourists was more than made up by a sharp rise in
domestic tourism as well as outbound tourist traffic from India. Hence, the value of travel retail
grew sharply in 2002. With the boom in tourism since 2003, travel retail continued to grow
impressively in 2003 and 2004.
Table 84 Travel Retail Market: 1999-2004
Rs million/No of outlets
1999 112,660.8 112,660.8 23,740.0

2000 127,532.1 122,615.9 24,950.0
2001 127,100.0 117,857.6 25,615.0
2002 157,880.0 140,239.8 26,556.0
2003 180,140.7 154,146.6 27,770.0
2004 220,504.5 180,907.0 28,300.0
Source: Euromonitor based on trade press and industry interviews
Table 85 Travel Retail Sales % Growth: 2000-2004
% growth
2000 13.2 8.8 5.1

2001 -0.3 -3.9 2.7
2002 24.2 19.0 3.7
2003 14.1 9.9 4.6
2004 22.4 17.4 1.9
Source: Euromonitor
9.2 Outlets by Sector

Trends
Travel agencies account for about 83% of all the travel retail outlets. However, there is considerable
overlap in functions of a number of travel agencies and tour operators. In 2003, the Department of
Tourism chalked out the guidelines for recognition of travel agents, tour operators, tourist transport
operators and adventure tour operators. However, only a small proportion of travel retail outlets
register with the Department of Tourism.
The various outlets in this can be classified as:

• Large travel retail companies, which are both travel retailers and tour operators, like Thomas
Cook, Kuoni and Cox & Kings;
• Mid-sized travel agencies, dependent on flights only for their revenue;
• Inbound tour operators;
• Outbound tour operators;
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• Domestic tour operators, which also include the state tourism corps and adventure tour
operators;
• Moneychangers.
There is a significant gap between the shares of travel agencies and tour operators because many of
the travel agencies, especially the bigger ones, double up as tour operators, servicing both inbound
as well as outbound tourists. Their significant economies of scale make it very difficult for the
smaller independent tour operators to compete with them. Tour operators account for only 16% of
the total number of travel retail outlets. Travel agencies are dominated by mid-sized players, who
also represent most unorganised travel retail services.
Adventure tour operators are those who engage in activities related to adventure tourism in India,
such as water sports, aero sports, mountaineering and trekking and safaris of various kinds. In
addition, they may also arrange for transport, accommodation or other destination services.
State tour operators are popular for their daily tours. They also organise package tours within the
state. These are low-budget tours and hence state companies deal with the largest volumes.
There was a major increase in the number of outlets providing exchange services since 2002. This
is because, in January 2002, the Reserve Bank of India announced a major liberalisation in its
policy relating to licensing of entities for providing such services. Under the new policy, these
licensed dealers and money changers were permitted to appoint agents/franchisees for undertaking
restricted money changing activities.
Competition from the internet
including transportation arrangements and sales of air tickets. A number of regular brick and mortar
travel companies also offer such services through their websites. In addition, there is also
competition from direct internet sales by companies, especially airline companies. At present, since
the internet accounts for only a small proportion of travel retail sales, competition is limited.
However, there is little doubt that, in coming years, such competition will become more serious.
Table 86 Travel Retail Outlets by Sector: Units 1999-2004
No of outlets
1999 2000 2001 2002 2003 2004
Exchange services 240 250 265 306 350 400

Tour operators 3,500 3,700 3,800 3,950 4,200 4,450
Travel agents 20,000 21,000 21,550 22,300 23,220 23,450
Travel retail services 23,740 24,950 25,615 26,556 27,770 28,300
by sector
Source: Euromonitor estimates from trade press, TAAI, IATO and industry interviews
Note: Estimates include unorganised sector. Dedicated currency exchange outlets only
Table 87 Travel Retail Outlets by Sector: % Volume Breakdown 1999-2004
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%
1999 2000 2001 2002 2003 2004
Exchange services 1.0 1.0 1.0 1.2 1.3 1.4

Tour operators 14.7 14.8 14.8 14.9 15.1 15.7
Travel agents 84.2 84.2 84.1 84.0 83.6 82.9
Travel retail services 100.0 100.0 100.0 100.0 100.0 100.0
by sector
Source: Euromonitor estimates from trade press, TAAI, IATO and industry interviews
Note: Estimates include unorganised sector. Dedicated currency exchange outlets only
9.3 Travel Agencies – Services

Even though flight-only sales have the largest share, accounting for 66% of the total sales of travel
agencies, this share fell over the review period. The main reason is that, as a business strategy,
many travel agencies consciously attempted to diversify into providing other travel services. In fact,
a number of agencies are being forced to adopt this strategy because of the move by a number of
international airlines to reduce the commissions that they give to travel agencies for sales of their
air tickets. In 2002, the commission was reduced from 9% to 7%. Now, the carriers wish to reduce
this further to 5%. However, because of strong resistance from the travel agencies, this decision is
yet to be implemented.
Package tours, which are quite popular in India, constituted 14% of sales in 2003. This is expected
to rise further to 15% in 2004. The shares of accommodation and travel insurance also grew during
the review period. Other services offered by travel agencies include railway ticketing, car rentals,
visa services, foreign exchange provision etc. It is expected that these other services will account
for nearly 11% of sales in 2004.
Table 88 Travel Agency Value Sales by Service: % Breakdown 1999-2004
% value
1999 2000 2001 2002 2003 2004
Package tours 11.0 12.5 13.0 13.5 14.0 14.5

Flight only 69.7 68.0 67.8 67.5 67.2 66.3
Accommodation 5.0 4.9 4.8 4.8 4.7 4.8
Travel insurance 3.8 3.9 3.9 3.8 3.7 3.8
Others 10.5 10.7 10.5 10.4 10.4 10.6
TOTAL 100.0 100.0 100.0 100.0 100.0 100.0

Source: Euromonitor based on industry interviews and trade press
Note: Others includes railway ticketing, foreign exchange provision, visa services and car rental
services
9.4 Travel Agencies – Type of Holiday and Destinations

Type of holiday
Flight-only has a large share of sales because many Indians travel for meeting friends/relatives,
business, health or study. However, the share of flight only lost almost four percentage points in its
share of the total sales since 1999. This is because other types of holiday in are growing in
popularity. The share of package holidays is expected to reach 10% in 2004 because the expanding
Indian middle class with rising incomes began spending more on leisure travel. The share of city
breaks is small. However, it is expected to grow from 2% in 1999 to 3% in 2004.
Though cruises constitute a tiny share (an estimated 1% in 2004), they are increasing in popularity
as a result of aggressive marketing by cruising companies.
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Destinations
Though the share of “others” is reducing, it still commands 69% of share. This comprises travel for
non-holiday purposes such as business, meeting friends/relatives, health or study, pilgrim travel and
adventure travel.
Culture was always a strong point in India and visits to historical places attract both the foreign and
domestic tourist. Travel agencies developed packages that take customers to a similar set of sites.
There is therefore the Buddhist circuit, the south-India temple tour and the Golden Triangle of
Agra, Delhi and Jaipur, all of which grew in popularity during the review period. Travel to
destinations that have cultural tourist attractions represent the second highest share of value sales
for travel agents, accounting for 13% of their value sales in 2003, which is expected to rise
marginally in 2004.
Beaches are becoming popular with the land-locked domestic tourist, as movies and travel
programs increase their level of awareness. Thus value of travel to beach destinations represents
nearly 9% of the total value sales by travel agents in India in 2004.
Mountains, though more popular in the past, are losing their novelty and are also reaching their
saturation point in terms of capacity.
Popular city break destinations
There are several cities in India which are popular city break destinations for Indians visiting them
for the first time. A number of north Indians visit Bangalore or Chennai in the south for a city
break. Bangalore is popular because of its salubrious climate and gardens while Chennai is well
known for its beaches. Similarly, for many south Indians a trip to Delhi constitutes an interesting
holiday especially because of its historical monuments.
Table 89 Travel Agency Value Sales by Type of Holiday: % Breakdown 1999-2004
% value
1999 2000 2001 2002 2003 2004
Package holiday 6.5 7.4 8.2 8.9 10.0 10.3

Flight only 72.0 70.5 70.0 69.8 69.5 68.5
City break 1.7 1.8 2.0 2.3 2.5 2.6
Cruise 0.6 0.7 0.7 0.8 0.8 0.9
Fly-drive 0.0 0.0 0.1 0.2 0.2 0.2
Others 19.2 19.6 19.0 18.0 17.0 17.5
TOTAL 100.0 100.0 100.0 100.0 100.0 100.0

Note: Others includes railway ticketing, foreign exchange provision, visa services and car rental
services
Table 90 Travel Agency Value Sales by Destination: % Breakdown 1999-2004
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% value
1999 2000 2001 2002 2003 2004
Beach 6.8 7.0 7.5 8.0 8.5 8.6

Countryside 1.8 1.9 2.1 2.4 2.9 3.0
Mountain 8.0 7.7 7.4 6.9 6.5 6.4
Culture 9.5 10.0 11.0 12.0 13.0 13.1
Others 73.9 73.4 72.0 70.7 69.1 68.9
TOTAL 100.0 100.0 100.0 100.0 100.0 100.0

Note: Others includes travel for non-holiday purposes (business, meeting friends/relatives, health, study
etc), pilgrim tours, wildlife and adventure destinations
9.5 Travel Agencies – Exchange Services

As part of their diversification strategy, increasing numbers of travel agencies began to offer
foreign exchange services during the review period. The proportion of travel agencies providing
such services increased from 6% in 1999 to an estimated 8% in 2004.
The Reserve Bank of India announced a major liberalisation in its policy relating to licensing of
entities for providing foreign exchange services in January 2002. This also led to an increase in the
number of travel agencies offering such services.
Table 91 Travel Agencies Offering Exchange Services 1999-2004
Outlets
1999 2000 2001 2002 2003 2004
All travel agencies 20,000 21,000 21,550 22,300 23,220 23,450

Travel agencies
offering exchange
services 1,200.0 1,300.0 1,400.0 1,550.0 1,700.0 1,850.0
% of travel agencies
offering
exchange services 6.0 6.2 6.5 7.0 7.3 7.9
Note: Includes agencies with restricted money-changing facilities
9.6 Tour Operators – Source of Sale

In 2003, 70% of tour operators’ sales took place through travel agents. This share is expected to
remain unchanged in 2004. Many mid-sized travel agents, who dominate, are unable to put together
their own tours and therefore offer tours run by either state tourism companies or big tour operators.
In fact this trend is on the increase because of the fast rate at which the mid-size travel agents are
growing as well as the increasing inbound, outbound and domestic tourism in India.
About 20% of sales take place either through self-advertising through brochures at hotel lobbies or
airports or directly by customers approaching the tour companies or state tour companies. The
internet is meanwhile an emerging source for sales of tour packages. However, the share of hotel
referrals reduced, as tourists are taking the initiative to pre-plan their holidays.
Table 92 Tour Operator Value Sales by Source of Sale: % Breakdown 1999-2004
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% value
1999 2000 2001 2002 2003 2004
Travel agency 60.0 62.0 66.0 68.0 70.0 70.0

Direct/brochure 30.0 28.0 26.0 22.0 20.0 19.0
Internet 0.0 0.0 1.0 2.0 5.0 6.0
Others 10.0 10.0 7.0 8.0 5.0 5.0
TOTAL 100.0 100.0 100.0 100.0 100.0 100.0

Note: Others includes hotel referrals, trade fairs etc
9.7 Tour Operators – Type of Holiday and Destinations

Type of holiday
As compared to travel agencies, who earn nearly 70% of their total value sales from flight-only
sales, tour operators are far less dependent on flight sales, with flights accounting for only one third
of their total sales.
Package holidays are next in importance, accounting for nearly a quarter of sales. Pilgrim tours,
categorised under “others”, are also important, accounting for 17% of sales in 2003. This is likely to
fall only marginally in 2004.
With the advent of adventure tour operators in India and the increasing demand for them, their
value share increased by about three percentage points over the review period. In 2004, the share of
adventure/trekking holidays is expected to be nearly 15%. City breaks are relatively small with a
predicted share of 9% in 2004.
The majority of tour operators in India work in niches and only the large ones provide all types of
tours. For example, a certain tour operator may only provide the service of pilgrim tours and not
adventure tours.
Destinations
The largest share remains with “others”, accounting for almost half of total value sales. This is due
to the fact that the major share of “others” is pilgrim tours, which includes temple tours. These are
characterised by low fares but a high volume of travellers. The huge numbers associated with
pilgrim tourists are because of India’s large multi-religious population and the regular visits of
many Indians to the holy shrines of various religions like Hinduism, Jainism, Buddhism and
Sikhism which are typically located far away from their home towns.
Culture is a major attraction for foreign tourists. Many states like Kerala and Rajasthan promote
their traditional festivals like the Rajasthan camel races, the annual Pushkar mela and the famous
boat races of Kerala. This saw tour operators’ business swelling from cultural tours. In 2003,
culture tours accounted for 18% of tour operators’ value sales, up from 16% in 1999. This share is
expected to rise marginally in 2004.
The percentage value sale for beaches saw a growth of nearly 2% since 1999, as the share of
countryside and mountain destinations reduced. Most mountain destinations have now reached their
saturation point in terms of attraction value and cater mainly to budget domestic tourists.
Popular city break destinations
There are several cities in India that are popular city break destinations for Indians visiting them for
the first time. A number of north Indians visit Bangalore or Chennai in the south for a city break.
Bangalore is popular because of its salubrious climate and gardens while Chennai is well known for
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its beaches. Similarly, for many south Indians a trip to Delhi constitutes an interesting holiday
especially because of its historical monuments.
Table 93 Tour Operator Value Sales by Type of Holiday: % Breakdown 1999-2004
% value
1999 2000 2001 2002 2003 2004
Package holiday 25.3 24.9 24.4 24.0 23.7 24.0

Flight only 35.3 34.6 34.0 33.7 33.2 33.0
City break 5.0 6.0 8.0 8.0 9.0 9.0
Cruise 1.9 2.2 2.5 2.8 3.0 3.2
Fly-drive 0.0 0.0 0.1 0.1 0.1 0.1
Adventure/trekking 11.4 11.6 12.9 13.4 14.0 14.5
holiday
Others 21.1 20.7 18.1 18.0 17.0 16.2
TOTAL 100.0 100.0 100.0 100.0 100.0 100.0

Note: Others includes pilgrim tours
Table 94 Tour Operator Value Sales by Destination: % Breakdown 1999-2004
% value
1999 2000 2001 2002 2003 2004
Beach 13.0 13.4 13.8 14.2 14.7 14.8

Countryside 9.0 8.5 8.2 7.8 7.5 7.4
Mountain 12.0 11.7 11.5 11.4 10.8 10.7
Culture 16.0 16.5 16.7 16.9 17.5 17.6
Others 50.0 49.9 49.8 49.7 49.5 49.5
TOTAL 100.0 100.0 100.0 100.0 100.0 100.0

Notes: Others includes pilgrim tours, business tours, cruises, adventure tours etc
Data includes only inbound and domestic travel
9.8 Exchange Services – Sales by Outlet and Type

Sales by outlet
During the review period, the Reserve Bank of India (RBI) liberalised its policy relating to
licensing of firms for providing foreign exchange services. In January 2002, in a major
liberalisation move, RBI permitted licensed dealers and money changers to appoint
agents/franchisees for undertaking restricted money changing activities. Because of these policy
changes, foreign exchange transactions through non-banking agencies increased rapidly.
In 2003, about a third of the total value sales of all exchange services come from travel agencies
and bureaux de changes. However, the share of banks (an estimated 38%) is still the highest.
A large proportion of foreign exchange dealings in India take place through the black market,
known as hawala. However, the share of the black market declined due to RBI’s liberalisation of
foreign exchange controls in response to India’s growing foreign exchange reserves. For instance,
in November 2002, the RBI doubled the annual foreign exchange limit that Indian travellers can use
for personal travel from US$5,000 to US$10,000. In 2003, it is estimated that the share of the black
market was 30%.
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Sales by type
According to RBI regulations, there is an annual limit of US$2,000 on the amount of foreign
currency that Indians travelling abroad can carry for personal travel. The remainder of the overall
limit of US$10,000 can be taken through traveller’s cheques or banker’s drafts, which are obviously
not popular with travellers due to inconvenience and charges. However, in actual practice, Indian
travellers use much less of their annual foreign exchange limit. Hence, the actual proportion of
foreign currency is significantly higher at an estimated 52% in 2003.
Table 95 Exchange Service Value Sales by Outlet: % Breakdown 2003
% value
2003
Travel agents 18.0

Banks 38.0
Bureaux de change 14.0
Others 30.0
TOTAL 100.0
Note: Others includes the illegal market for black money in India called ‘hawala’
Table 96 Exchange Services Value Sales by Currency vs Traveller’s Cheques: %

Breakdown 2003
% value
2003
Foreign currency 52.0

Traveller’s cheques 48.0
TOTAL 100.0
Source: Euromonitor from trade sources and trade press
Notes: Includes dealing in black money
Outbound tourists only
9.9 Online Travel Agencies

Direct suppliers
Direct suppliers of travel services that sell through the internet mainly include large and medium-
size hotels, airline companies and the Indian Railways. Direct sales increased over the review
period. This had adverse implications for a number of travel agencies. For instance, one of the
reasons for the reduced commissions being passed on to travel agencies by foreign airlines
companies is their belief that more passengers will purchase tickets through the internet.
Online agencies
offering transportation arrangements, sales of air tickets and hotel accommodation. A number of
regular brick and mortar travel companies also offer such services through their websites.
Two leading internet travel companies are MakeMyTrip and TravelJini. MakeMyTrip mainly
targets the large number of non-resident Indians living in the US and primarily offers inbound
travel services. On the other hand, TravelJini’s business mainly relates to outbound travel.
Table 97 Travel Retail Sales: Internet Transaction Value 1999-2004
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Rs million
1999 2000 2001 2002 2003 2004
Internet 2,816.5 4,463.6 4,956.9 8,051.9 10,808.4 14,787.2

Others 109,844.3 123,068.5 122,143.1 149,828.1 169,332.3 205,717.3
Total 112,660.8 127,532.1 127,100.0 157,880.0 180,140.7 220,504.5
Source: Euromonitor from trade press

Adventure tourism
tourism activities like trekking, rock climbing, rafting, scuba diving and skiing. A number of states
actively promote these activities. Not surprisingly, adventure tourism in India grew rapidly in recent
years. During 2003, the value of adventure tourism was estimated at over Rs400 million.
The demand for adventure tourism led to a growing number of tour operators specialising in
arranging adventure tours. This trend even led to the establishment of the Adventure Tour
Operators Association Of India and guidelines being framed by the Ministry of Tourism for
recognising such operators.

There were no noteworthy mergers and acquisitions during 2002 and 2003. In 2004, Kuoni Travel
(India), the large travel conglomerate, acquired Resnet from Traveljini, an internet travel company.
Resnet is an online booking engine and a comprehensive reservation solutions provider to the
hospitality industry. The acquisition of Resnet is part of Kuoni India’s overall strategy to enter
internet sales and provide a competitive edge.
Summary 4 List of Mergers and Acquisitions 2002-2004

Takeover company Kuoni India
Country India
Sector Travel retail
Acquired company Resnet booking engine
Country India
Sector Travel retail
Year 2004
Source: Company press release, Euromonitor
9.12 Key Travel Agencies – Revenue and Market Share

Revenue Ranking
Most of the leading travel agencies in India derive revenues from various travel and tourism
activities not restricted to travel agency services. For example, Kuoni, Cox & Kings and Travel
Corp derive a significant and inseparable volume of their revenues from tour operator services.
These and other services, which such players offer to the consumer, are often considered by travel
agencies to be a critical part of the total service offering to the consumer.
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Kuoni India is the top travel retail company with estimated revenues of Rs8 billion in 2003/2004. It
was followed by Cox & Kings and Travel Corp (India) which had estimated revenues of Rs5 billion
each in 2003/2004.
Market share
The top player, Kuoni India, had a value share of nearly 7% in 2004. Its share rose over the review
period. A key strategy followed by Kuoni India to reach the leadership position was the acquisition
of several players. The shares of Cox & Kings and Travel Corp (India) are estimated at 4-5% in
2004. Thomas Cook had a value share of only about 1%. The company tried to acquire Travel Corp
(India) to enhance its position in travel but was not successful. The size of unorganised travel retail
is clearly visible as the top players account for 17% of the total business in 2004.
Table 98 Travel Agents: Revenue Rankings 2003/2004
Rs million
2003/2004 Year end
Kuoni Travel (India) Ltd 7,800.0 March

Cox & Kings 5,400.0 March
Travel Corporation (India) Ltd 4,800.0 March
Thomas Cook (India) Ltd 1,273.2 March
International Travel House Ltd 380.6 March
Table 99 Travel Agencies: Market Share 2001-2004
% retail value rsp

Company 2001 2002 2003 2004
Kuoni Travel India Ltd 5.1 5.2 5.9 6.6

Cox & Kings 3.7 4.1 4.4 4.6
Travel Corp (India) Ltd 3.2 3.7 4.0 4.1
Thomas Cook (India) Ltd 0.9 1.0 1.1 1.1
International Travel House Ltd 0.4 0.3 0.3 0.3
Others 86.7 85.7 84.3 83.3
Total 100.0 100.0 100.0 100.0
9.13 Key Tour Operators – Revenue and Market Share

Revenue ranking
The top four outbound tour operators in India are travel agencies: Kuoni Travel India, Cox &
Kings, Thomas Cook and Raj Travels. Kuoni India is the leader, with estimated revenues from tour
operations of Rs4 billion during 2003/2004.
SOTC, Kuoni's outbound tour division, actively promoted its tours in recent years. It operates both
packaged tours and customised holidays for individual travellers. SOTC’s core competency is
escorted tours and its flagship brand SOTC World Famous Tours caters to a cosmopolitan clientele.
Acknowledging the need for language markets for hindi speakers, SOTC pioneered Marathi and
Hindi tours with SOTC Bhraman Mandal and SOTC Vishwa Darpan respectively. Similarly, it
caters to vegetarian travellers through vegetarian tours. Kuoni India's Inbound division operates
under the umbrella brand name SITA.
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The leisure travel division of Cox & Kings in India offers the Indian traveller a wide choice of
holiday options both abroad and within India and operates three branded holiday/ tour products:
Duniya Dekho and Flexihols in outbound tourism and Bharat Dekho in domestic tourism.
Besides these travel agency-tour operators, there are government-run tourism companies, which run
tours. They account for a significant proportion of local tours. Cruise companies, such as Star
cruises, also sell cruise tours in India.
Market share
Apart from Kuoni Travel, for the other major players, it is difficult to distinguish their tour
operations from their travel agency services. In 2003, Kuoni Travel was estimated to account for
37% of all tour operators value sales. This is further expected to improve to 38% in 2004.
Table 100 Tour Operators: Revenue Rankings 2003/2004
Rs million
2003/2004 Year end
Kuoni Travel (India) Ltd 4,110 March

Source: Euromonitor from company website, trade press
Table 101 Tour Operators: Market Share 2001-2004
% retail value rsp

Company 2001 2002 2003 2004
Kuoni Travel India Ltd 22.7 35.0 37.0 38.0

Others 77.3 65.0 63.0 62.0
Total 100.0 100.0 100.0 100.0
Source: Euromonitor from company website, trade press
9.14 Key Exchange Services – Revenue and Market Share

Revenue ranking
The banks remain the most popular dealers in foreign exchange in India. With the relaxation in the
Reserve Bank of India rules regarding licensing of money changers, small money changers
meanwhile burgeoned. The main non-bank players are Thomas Cook and American Express.
Thomas Cook’ financial services division generated revenues of Rs319 million in 2003/2004.
It must be noted that almost all big travel retail companies offer foreign exchange services. For
instance, Kuoni India has a subsidiary, TravelMate, which focuses exclusively on this area.
Market share
Thomas Cook had a value share of 18% in 2003. This is expected to fall marginally to 17% as the
company concentrates on its other travel services.
Table 102 Exchange Services: Revenue Rankings 2003/2004
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Rs million
2003/2004 Year end
Thomas Cook (India) Ltd 319.2 March

Source: Company annual report, Euromonitor
Notes: Includes wholesale purchase and sale of foreign currencies and paid documents
Data not available for Amerian Express
Table 103 Exchange Services: Market Share 2001-2004
% retail value rsp

Company 2001 2002 2003 2004
Thomas Cook (India) Ltd 15.0 16.0 18.0 17.0

Others 85.0 84.0 82.0 83.0
Total 100.0 100.0 100.0 100.0
Source: Company annual report, Euromonitor
9.15 Forecast Sales and Outlets

Sales
Inbound and outbound tourism and domestic tourism within India are expected to grow robustly
over the forecast period. Some of the major reasons include better tourist infrastructure, improved
marketing of tourist attractions and a greater capacity of Indians to travel because of enhanced
disposable income. This would obviously imply more demand for travel retail services.
The only negative factor for travel retailers is the growing use of the internet for travel purchases.
However, this is not likely to be a severe constraint. This is because the use of the internet for such
services is currently small and, while it will grow during the forecast period, its share in sales is
likely to remain at a modest level. During the forecast period, sales of travel retail services are
predicted to grow by 6% per annum in constant value terms, compared with annual growth of
nearly 10% (in constant prices) over the review period.
Outlets
Currently, there are a huge number of tiny travel agencies. There is little doubt that, in coming
years, there will be a process of consolidation. With the growth of tourism in India, larger travel
agents providing a range of services will thrive, especially because of economies of scale. In
comparison, tiny and small travel agencies will find it hard to survive. Many of them will merge
with larger operators or wind up operations. This process will be hastened by the ongoing trend of
airline carriers reducing commissions to agents for selling tickets. Hence, travel agencies that are
highly dependent on such commissions and that do not offer other services will be severely
affected.
Hence, a low annual growth of merely 1% is predicted in the number of travel agents during the
forecast period, compared with 3% growth over the review period. However, the number of money
changers is forecast to grow rapidly at 9% per year from 2004-2009 with further exchange control
liberalisation by the RBI. The number of tour operators is predicted to grow at a CAGR of 4%
during the forecast period given the expected growth in demand for their services.
Indian Ocean earthquake impact
In spite of the economic loss experienced by India as a whole stemming from the Indian Ocean
earthquake in late December 2004, it is not likely to adversely affect travel retail in the forecast
period. Sources indicate that damage to physical infrastructure such as roads was not irreparable.
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Simultaneously, there is sufficient activity existing to help take up any slack created by the loss of
travel retail personnel or outlets within the first quarter of 2005.
Table 104 Forecast Travel Retail Value Sales: 2004-2009
Rs million constant 2004 rsp

2004 220,504.5 -
2005 237,412.9 7.7
2006 253,467.9 6.8
2007 268,530.3 5.9
2008 282,502.2 5.2
2009 294,773.2 4.3
Source: Euromonitor
Table 105 Forecast Travel Retail Outlets by Sector: Units 2004-2009
No of outlets
2004 2005 2006 2007 2008 2009
Exchange services 400 448 493 537 580 621

Tour operators 4,450 4,673 4,883 5,078 5,256 5,413
Travel agents 23,450 23,685 23,874 24,017 24,137 24,258
Travel retail services 28,300 28,806 29,250 29,632 29,973 30,292
by sector
Source: Euromonitor
10. TOURIST ATTRACTIONS

10.1 Market Size
The value of tourist attractions grew by a hefty 19% in 2003 to reach a current value of Rs1,435
million. With the continuing boom in inbound and domestic tourism, sales are forecast to grow by
17% in 2004 with sales reaching Rs1,681 billion. Even though the value of tourist attractions grew
consistently in the review period, except for a dip in 2002, there is still much untapped potential.
There are many attractions such as zoos that fail to attract many tourists due to lack of
development. The government also paid little attention to other tourist attractions like museums or
art galleries.
Table 106 Tourist Attractions Market: 1999-2004
Rs million/'000 people
1999 907.9 907.9 43,959.5

2000 1,332.0 1,280.7 48,844.0
2001 1,475.4 1,368.1 51,340.1
2002 1,203.0 1,068.6 46,206.8
2003 1,435.2 1,228.1 53,121.2
2004 1,680.6 1,378.8 60,541.8
Source: Euromonitor based on government publications and trade press
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Table 107 Tourist Attractions Market % Growth: 1999-2004
% growth
1999 - - -
2000 46.7 41.1 11.1
2001 10.8 6.8 5.1
2002 -18.5 -21.9 -10.0
2003 19.3 14.9 15.0
2004 17.1 12.3 14.0
Source: Euromonitor
10.2 Sales by Sector

Apart from monuments, of which India has many, there are not too many attractions like museums,
galleries, theme parks, as well as other places of interest. Historic buildings/sites attract the most
tourists and account for 56% of all sales from tourist attractions in 2003, with this share predicted to
rise marginally to 57% in 2004. Such monuments include traditional favourites like the Taj Mahal.
The rise in the share of historic buildings and sites in sales during 2000 and 2001 is explained by
the decision of the government to sharply raise the entry fee for foreigners. However, protests from
those affected by this move led the government to reverse its policy.
Other attractions that attract a fair number of tourists are amusement parks, national parks/areas of
natural beauty and theatres. There are a number of national parks/areas of natural beauty because of
the country’s diverse landscape and ample natural beauty in the form of jungles, marine forests,
hills, snow-capped peaks and pristine beaches. The number of amusement parks is also rising
rapidly and became popular with domestic tourists.
Though most of the major cities have a zoo, they are not of an international standard and not many
tourists visit them. On the other hand, there are very few public aquariums, especially in the
northern part of India. Zoos and aquariums account for little more than 4% of tourist attraction
value in 2004. Circuses and magic shows are meanwhile a dying art in India and one hardly sees or
hears of them anymore, while casinos are banned by law in India, thus depriving it of one of the
greatest global tourist draws.
Table 108 Tourist Attractions Sales by Sector: Value 1999-2004
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Rs million
1999 2000 2001 2002 2003 2004
Art galleries 3.2 4.7 5.6 6.0 6.9 7.9

Casinos - - - - - -
Circuses 4.4 5.6 6.0 5.8 6.9 7.9
Historic buildings/sites 530.2 849.9 947.0 681.4 809.4 964.8
Industrial tourism - - - - - -
Museums 13.8 17.6 20.1 20.5 27.4 32.0
National parks/areas of 89.0 101.4 110.4 123.3 143.4 165.3
natural beauty
Theatres 56.7 76.1 81.5 81.3 94.6 109.9
Theme/amusement parks 140.7 185.4 205.6 190.2 225.8 259.8
Zoos/aquariums 45.3 60.4 61.8 53.5 58.3 67.6
Other tourist attractions 24.6 30.9 37.4 41.0 62.5 65.4
Tourist attractions by 907.9 1,332.0 1,475.4 1,203.0 1,435.2 1,680.6
type
Source: Euromonitor based on Department of Tourism and Parliamentary Committee reports, trade press
Note: Others includes some large temples, annual sports events, cultural festivals, fairs
Table 109 Tourist Attractions Sales by Sector: % Value Breakdown 1999-2004
% value
1999 2000 2001 2002 2003 2004
Art galleries 0.4 0.4 0.4 0.5 0.5 0.5

Casinos - - - - - -
Circuses 0.5 0.4 0.4 0.5 0.5 0.5
Museums 1.5 1.3 1.4 1.7 1.9 1.9
natural beauty
Theatres 6.2 5.7 5.5 6.8 6.6 6.5
Zoos/aquariums 5.0 4.5 4.2 4.4 4.1 4.0
Tourist attractions by 100.0 100.0 100.0 100.0 100.0 100.0
type
Source: Euromonitor based on Department of Tourism and Parliamentary Committee reports, trade press
10.3 Visitors by Sector

The Archaeological Survey of India (ASI) declared 3,616 historical monuments of national
importance in the country. Out of these, 126 centrally protected monuments are the most popular
among tourists. India has around 84 museums out of which 19 are in the capital, New Delhi. The
total number of zoos established in India since 1800 are 355.
Historic buildings/sites traditionally were the biggest draw for foreign and domestic tourists. They
account for about 60% of visitors to all tourist attractions in 2004. This share fell marginally over
the review period as other attractions also emerged.
Although other attractions also saw growing numbers over the review period, this is largely due to a
greater number of domestic tourists. These numbers could potentially be much larger if planned
development takes place similar to that of eco-tourism in Kerala, which proved successful.
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What attracts many leisure tourists to India is the diversity and uniqueness of its culture. Many
states like Kerala and Rajasthan promote their traditional festivals like the Camel Races, Pushkar
Mela and the boat races of Kerala.
Table 110 Tourist Attractions Visitors by Sector: 1999-2004
'000 people
1999 2000 2001 2002 2003 2004
Art galleries 527.5 586.1 616.1 600.5 690.6 787.3

Casinos - - - - - -
Circuses 87.9 97.7 102.7 104.0 103.0 101.0
Historic buildings/sites 26,507.6 29,306.4 30,547.4 27,255.2 31,130.9 35,731.5
Museums 1,978.2 2,198.0 2,259.0 2,032.6 2,284.4 2,664.7
National parks/areas of 3,560.7 4,054.1 4,415.2 4,111.4 4,781.2 5,511.1
natural beauty
Theatres 439.6 488.4 513.4 508.1 584.4 666.2
Theme/amusement parks 2,813.4 3,223.7 3,491.1 3,048.9 3,453.1 3,997.1
Zoos/aquariums 4,527.8 5,030.9 5,185.3 4,480.9 4,887.4 5,632.3
Other tourist attractions 3,516.8 3,858.7 4,209.9 4,065.2 5,206.2 5,450.6
Tourist attractions by 43,959.5 48,844.0 51,340.1 46,206.8 53,121.2 60,541.8
type
Source: Euromonitor based on Department of Tourism, trade press
Note: Only visitors to tourist attractions which charge a fee for entry are included. Others includes some
large temples, annual sports events, cultural festivals, fairs.
Table 111 Tourist Attractions Visitors by Sector: % Breakdown 1999-2004
%
1999 2000 2001 2002 2003 2004
Art galleries 1.2 1.2 1.2 1.3 1.3 1.3

Casinos - - - - - -
Circuses 0.2 0.2 0.2 0.2 0.2 0.2
Museums 4.5 4.5 4.4 4.4 4.3 4.4
natural beauty
Theatres 1.0 1.0 1.0 1.1 1.1 1.1
Zoos/aquariums 10.3 10.3 10.1 9.7 9.2 9.3
Tourist attractions by 100.0 100.0 100.0 100.0 100.0 100.0
type
Source: Euromonitor based on Department of Tourism, trade press
10.4 Internet Booking Trends

The utilisation of the internet for making bookings for tourist attractions in India is negligible.

Amusement parks
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Amusement parks are growing in popularity in India. However, this is almost entirely among
domestic tourists. Foreign tourists are not attracted because most of them come from countries
where amusement parks offer a much larger range of entertainment options. While Appu Ghar in
Delhi and Essel World in Mumbai have been in existence for many years, a large number of new
amusement parks emerged over the review period. Many of them are located in the outskirts of
large cities. However, many were also set up near other tourist towns. This is because visitors to
such towns are likely to have more time to visit such parks.

There were no mergers or acquisitions of note for tourist attractions in India or its operators from
2002-2004.
10.7 Key Players – Visits

The majestic Taj Mahal continues to be the top tourist attraction site in India, according to official
records. It is estimated that there were about 2 million visitors to the Taj Mahal in 2003. This is
expected to rise substantially in 2004, with the boom in inbound and domestic tourism.
The Red Fort and Qutb Minar, both in New Delhi, Sun Temple (Konarak) and Agra Fort were the
other attractions with estimated visitors of over a million in 2003.
Table 112 Major Tourist Attractions by Visitors 2002-2004
‘000 visitors
2002 2003 2004
Taj Mahal, Agra 1,761.3 2,095.9 2,494.2

Red Fort, New Delhi 1,491.4 1,774.8 2,112.0
Qutb Minar, New Delhi 1,487.0 1,769.5 2,105.7
Sun Temple, Konarak 954.3 1,135.6 1,351.4
Agra Fort, Agra 902.8 1,074.3 1,278.5
Ajanta Caves, Ellora Caves, Aurangabad 683.0 812.8 967.2
Golconda Fort, Hyderabad 580.8 691.2 822.5
Bibi-Ka-Maqbara 570.3 678.7 807.6
Group of Monuments, Mamallapuram 565.0 672.4 800.1
Gol-Gumbaz 553.1 658.2 783.2
TOTAL: 9,549.0 11,363.4 13,522.4
Source: 2002 Department of Tourism, 2003-2004 Euromonitor
10.8 Forecast Sales and Visitors by Sector

Sales
Inbound and domestic tourism within India is expected to grow robustly over the forecast period.
Some of the major reasons include better tourist infrastructure, improved marketing of tourist
attractions and greater capacity of Indians to travel because of enhanced disposable income. This
will encourage more visits to tourist attractions and greater sales. During the forecast period, sales
of tourist attractions are forecast to grow by a CAGR of nearly 10% in constant value, compared
with about 9% during the review period.
The dominance of historical buildings and sites is predicted to gradually decline from 57% in 2004
to 52% in 2009, as other tourist attractions gain in popularity.
Visitors
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As regards the number of visitors to tourist attractions, it is predicted that they will grow by about
9% annually during the forecast period, compared with about 7% CAGR during the review period.
Sales are expected to only marginally outpace visitor numbers. This is because most of the tourist
attractions, particularly historical monuments, are operated by the government. To make entry
affordable to the less affluent households, the government kept the price of entry tickets low and
has not increased them in step with inflation. This affected the level of growth in sales.
Indian Ocean earthquake impact
With over 10,000 confirmed deaths and nearly 6,000 still missing and feared dead in early February
2005, India was indeed hit hard by the Indian Ocean earthquake of 26 December 2004. Given the
over 1 billion population of the country though, sources were in agreement that visitor numbers
would not be affected in 2005 and beyond, as tourism infrastructure was quickly restored in many
affected areas. The worst affected areas are being restored gradually, although religious places of
interest affected during the earthquake and resultant tsunami have not experienced any decline in
the visits of religious devotees.
It is expected therefore that in the short term, in 2005, foreign visitors to affected areas may well
decline marginally although they are expected to visit other parts of India instead. Offsetting this
change, however, is the expectation and to an extent realisation already that more local visitors will
be present at affected areas due to curiosity as much as for religious purposes.
Table 113 Forecast Tourist Attractions Sales by Sector: Value 2004-2009
Rs million
2004 2005 2006 2007 2008 2009
Art galleries 7.9 9.5 10.4 12.8 13.8 16.5

Casinos - - - - - -
Circuses 7.9 8.8 8.7 8.5 8.1 7.4
Historic buildings/sites 964.8 1,047.9 1,141.3 1,252.5 1,339.0 1,389.2
Museums 32.0 35.1 39.5 45.9 50.6 53.0
natural beauty
Theatres 109.9 134.7 161.0 189.6 220.0 251.9
Zoos/aquariums 67.6 73.3 81.5 93.7 102.2 105.9
type
Source: Euromonitor
Table 114 Forecast Tourist Attractions Visitors by Sector: 2004-2009
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'000 people
2004 2005 2006 2007 2008 2009
Art galleries 787.3 875.0 975.0 1,075.0 1,175.0 1,275.0

Casinos - - - - - -
Circuses 101.0 99.0 97.0 94.0 91.0 88.0
Historic buildings/sites 35,731.5 39,544.5 43,066.2 46,389.1 49,590.8 52,423.1
Museums 2,664.7 3,052.3 3,432.2 3,822.4 4,216.0 4,605.1
National parks/areas of 5,511.1 6,240.3 6,938.9 7,644.8 8,344.2 9,022.3
natural beauty
Theatres 666.2 814.0 970.0 1,138.6 1,317.5 1,503.7
Theme/amusement parks 3,997.1 4,544.6 5,073.6 5,611.6 6,148.3 6,672.7
Zoos/aquariums 5,632.3 6,376.0 7,088.2 7,807.4 8,519.9 9,210.2
Other tourist attractions 5,450.6 6,172.5 6,864.3 7,563.4 8,256.3 8,928.3
type
Source: Euromonitor
11. KEY STRATEGIC ALLIANCES

11.1 Trends
There were no strategic alliances of note between companies across travel and tourism in India
during 2002-2004. In contrast, the industry continues to be relatively fragmented and outright
acquisitions by larger players are more common. In addition, the continued disinvestments of the
State in leading players is an added area through which mergers and acquisition targets are entering
when once they were out of reach.
12. GROWTH COMPANY PROFILES

12.1 Kuoni Travel (India)
Key facts
Kuoni Travel (India) Pvt Ltd was set up in 1997 as a fully-owned subsidiary of Kuoni Travel
Holding (Switzerland). Kuoni India was created by acquiring SOTC, a leading tour operator for
outbound travellers. Kuoni India continued to emphasise acquisitions as well as growth in existing
business. It emerged as the top travel retail company in India by the end of the review period.
Summary 5 Kuoni Travel India: Key Facts

Co name and status: Kuoni Travel (India) Pvt Ltd
Parent company: Kuoni Travel Holding
Financial year end: March
Travel and tourism sales (2004): Rs8 billion (forecast)
Travel and tourism market involvement: Travel agency, tour operations and other travel
retail services
Major travel and tourism brands: SOTC, SITA
Source: Euromonitor from company information, trade press
Euromonitor Page 68
Corporate development
Kuoni India adopted an aggressive strategy of acquisitions to enlarge its operations in India during
the review period. After beginning its operations through the takeover of SOTC, it then acquired
SITA World Travel, a leading provider of travel services for inbound travellers, in 2000. This made
Kuoni India’s largest travel retail company. Subsequent acquisitions include Tour Club, India’s top
destination manager for visitors from the Middle East and Resnet, an online booking engine and
reservations solutions provider to the hospitality industry. The acquisition of Resnet is part of
Kuoni India’s overall strategy to enter internet sales and provide a competitive edge.
Summary 6 Kuoni India: Summary of Key Events 1999-2004

1999 Kuoni’s outbound division, SOTC, gets the
outstanding performance award for South Asia
from World Travel Mart (London)
2000 Becomes India’s largest travel retail company
with the acquisition of SITA World Travel
2001 Takes over Tour Club, India’s top destination
manager for visitors from the Middle East
2002 Sets up FIT Holidays to market and operate
international and domestic holidays for free
individual travellers
2003 Enters domestic tourism with SITA Holidays of
India and also sets up Kuoni Academy of Travel
for training in the field of Travel and Tourism
and TravelMate, a foreign exchange money
changing subsidiary
2004 Acquires Resnet, an online booking engine and
reservations solutions provider to the hospitality
industry
Travel operations
As indicated above, Kuoni India was formed through the acquisition of SOTC, India’s leading
outbound tour operator. The brand, SOTC, was retained and was vigorously marketed as India’s
leading package tour brand.
SOTC’s core competency is escorted tours. Acknowledging the needs of Indians speaking different
languages, it pioneered tours for Marathi and Hindi speaking Indians. It also caters to vegetarian
tours. SOTC also entered FIT (Free Individual Traveller) retail with the introduction of Christopher
Columbus Holidays providing customised and fully flexible holidays.
SITA (Kuoni’s inbound division) is the speciality destination manager for tour operators sending
their clients to India, Nepal and Sri Lanka. It welcomes between 50,000 and 70,000 guests into
India every year.
SITA’s business activity is categorised under five key business units:

• SITA Incoming Services sells India Holidays in the US and Europe;
• Tour Club focuses on individual travel and special tailor-made itineraries and is a leader in the
Middle East, Africa and South East Asia;
• E-Holidays provides Indian holidays globally via the internet;
• SITA MICE (meetings, incentives, conferences and events) is the leader in conference
management in the country. It handles the largest volume of charter tourists into Goa each year
and is now set to introduce new eco-tourism products;
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• Kuoni India Trails is a specialist receptive agency for Kuoni businesses worldwide and leader
in the Far East, Japan and China.
In 2003, Kuoni India entered domestic tourism with SITA Holidays of India. It also operates a
business travel division in partnership with Business Travel International (BTI), a global travel
management company.
In addition, Kuoni India provides other travel-related services. These include VFS (visa felicitation
services) to foreign consulates in India and TravelMate, which provides foreign exchange services
to Kuoni customers. Kuoni India is also the first Indian principal agent of Western Union Money
Transfer Services (USA) that provides money transfer services.
Financial summary
Kuoni India’s sales galloped over the years. A major factor was inorganic growth through
acquisitions. While sales were just about Rs1.1 billion in 1999, this increased four-fold to about
Rs4 billion with the acquisition of SITA. Kuoni continued to expand through takeovers of smaller
companies as well as by increasing its existing business through innovative and customer oriented
strategies. In 2003, sales were about Rs6 billion. This is expected to rise by at least 30% in 2004.
Table 115 Kuoni India: Financial Summary 1999-2004
Rs million
1999 2000 2001 2002 2003 2004
Net sales 1,088 4,000 4,768 5,000 6,000 7,800

% growth 267.6 19.2 4.9 20.0 30.0
Note: Year end March, data for 2004 is a forecast
12.2 Jet Airways

Key facts
Jet Airways (India) Pvt Ltd began operations in 1993. It was set up by Naresh Goyal, an Indian
entrepreneur with extensive experience in the Indian travel and airlines industry. Earlier, since
1974, Naresh Goyal operated Jetair Pvt Ltd, which provided sales and marketing representation to
foreign airlines in India. Jet Airways was started in response to the Open Skies Policy adopted by
the government of India, under which private companies could enter the domestic airline industry,
which was hitherto restricted to the public sector.
Jet Airways operates domestic airline services covering over 40 destinations in India. In 2004, it
also started international services (to Colombo and Kathmandu) in response to a change in
government policies whereby private airlines can operate such services to a few destinations in
South Asia.
Summary 7 Jet Airways: Key Facts

Co name and status: Jet Airways (India) Pvt Ltd
Travel and tourism sales (2004): Rs33 billion (forecast)
Travel and tourism market involvement: Airlines
Major travel and tourism brands: Jet Airways
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Jet Airways rapidly expanded its operations over the years. As a result, it emerged as the largest
domestic airline in India, dethroning Indian Airlines. During 2003-2004, Jet Airways had an
estimated domestic value share of about 46%.
Since a high proportion of Indian domestic air traffic comprises of business travellers, Jet Airways
focussed on this. Its objective right from the beginning was to emerge as the "Businessman's
Preferred Airline" through high-quality and reliable air travel. Because of the constraints of being a
government-owned company, its chief competitor, Indian Airlines, was less able to provide a high-
quality and punctual service.
The emphasis placed by Jet Airways on technology and on time performance played an important
role in the success of the airline. The airline operates modern aircraft and maintains a young aircraft
fleet with an average age of 4 years as on July 2004, making it one of the youngest fleets in the
world.
Summary 8 Jet Airways: Summary of Key Events 1999-2004

1999 Introduces ATR 72-500 for flights on short
distance feeder routes
2000 Co-branded credit card launched in association
with Citibank
2001 Jetmail, India's first in-flight mail order shopping
programme, launched
2002 Launches new promotional scheme, “Everyone
can fly”, with reduced fares on select routes
2003 Introduces cost-cutting measures in order to
restore profitability
2004 Jet Airways starts international operations with
flights to Colombo and Kathmandu
Airline operations
Jet Airways rapidly scaled up its operations in domestic airlines during the review period. Its
aircraft number rose from 4 in 1993-94 to 41 in February 2003. The destinations covered by the
airline expanded from 12 in 1993-94 to 44 in July 2004. The number of daily flights increased from
24 in 1993-94 to over 250 in July 2004. Destinations locally were extended to destinations in
neighbouring Sri Lanka and Nepal most recently in 2004, with flights to Colombo and Kathmandu.
Financial summary
As a result of the rapid growth in operations of Jet Airways, sales grew by around 16% per year
during 1999-2004. However, profitability was low. In fact, in recent years, the airlines incurred
losses. This is not surprising considering the severe competition between domestic airlines, which
resulted in sharp cuts in air fares, and sluggish passenger traffic resulting in overcapacity.
Moreover, because of the acquisition of a large number of aircraft in recent years, debt servicing
costs were high. The management took a number of steps, including cost cutting and productivity
enhancement measures, to restore profitability after the large losses in 2002-2003.
Table 116 Jet Airways: Financial Summary 1999-2004
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Rs million
1999 2000 2001 2002 2003 2004
Net sales 15,969.0 19,822.7 25,004.8 25,331.8 28,764.1 32,503.0

% growth 24.1 26.1 1.3 13.5 13.0
Net profit 39.5 101.7 124.8 -134.3 -2,444.5 n/a
% growth 157.5 22.7 -207.6 1,720.2 n/a
Source: Directorate General of Civil Aviation,trade press, Euromonitor
Note: Year end March
12.3 ITC
Key facts
ITC Ltd operates the ITC-Welcomgroup chain of hotels. ITC entered the hotels business in 1975
and rapidly expanded its network of hotels. Currently, ITC has over 60 hotels located in 50 cities in
India. These emerged as India's fastest growing chain of premium hotels during the review period.
Summary 9 ITC Ltd: Key Facts

Co name and status: ITC Ltd
Travel and tourism sales (2004): Rs2,019 million
Travel and tourism market involvement: Hotels
Major travel and tourism brands: ITC prefixed hotels, WelcomHotel,
WelcomHeritage, Fortune hotels
Source: Euromonitor from company data
Note: Sales relate to ITC Hotels which was merged with ITC in 2004
ITC is one of India’s largest private companies with a diversified presence in cigarettes, hotels,
paperboards and specialty papers, packaging, agri-business, branded apparel, packaged foods and
confectionery, greeting cards and other FMCG products. Until 2004, the bulk of ITC’s hotel
business was undertaken by its subsidiary, ITC Hotels, in which it had a 72% equity stake. Though
ITC owned a few premium hotel properties itself, even these were operated by ITC Hotels.
In August 2004, ITC announced that it was merging ITC Hotels with itself. Since a large proportion
of the capital employed in the hotels business was on ITC's balance sheet, ITC felt that the merger
would provide investors with clear visibility on the total value creation in the hotels business. The
amalgamation would facilitate the better alignment of investment and incomes, besides promoting
fiscal efficiencies and rationalization of operating costs. With the travel and tourism industry in
India poised for rapid growth, ITC felt that the timing of the merger was opportune.
In terms of hotel accommodation, the ITC-Welcomgroup chain expanded at a more rapid pace
compared with most other hotel chains in India. A key reason for this was the decision taken by the
company in 1998 to invest a huge amount of Rs15 billion over a period of five years to achieve a
national rollout. A primary objective was to position ITC hotels as the preferred destination for
upmarket business travellers in six major Indian cities.
During the last few years, ITC opened super-deluxe hotels, which became landmarks in their
respective cities. In 2001, it inaugurated the 386-room ITC Hotel Grand Maratha in Mumbai. In
December 2002, it unveiled the 240-room ITC Hotel Sonar Bangla Sheraton and Towers in
Kolkata. The construction of another business hotel, the ITC Grand Central at Mumbai, is
underway and is expected to be ready this year.
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Summary 10 ITC Hotels: Summary of Key Events 1999-2004

1999 38% stake taken in Ansal hotels, Delhi
2000 Branding strategy adopted for positioning hotels
in different categories
2001 ITC Hotel Grand Maratha in Mumbai opened
2002 ITC Hotel Sonar Bangla Sheraton and Towers
inaugurated in Kolkata
2003 A new hotel, ITC Grand Central, begins
construction at Mumbai
2004 ITC announces merger of its subsidiary, ITC
Hotels, with itself
Source: Euromonitor from ITC, trade press
Hotel operations
ITC operates a branding structure, catering to the full range of hotel categories:
• ITC prefixed hotels constitute super-deluxe hotels;
• WelcomHotel brand are five star hotels;
• WelcomHeritage is the brand of palaces, forts and havelis, which are old-style, sprawling
residences preserved over generations;
• Fortune Hotels denotes four-star budget hotels.
ITC-Welcomgroup also implemented the concept of branding hospitality services including cuisine.
This meant creating a “Hotel within a Hotel” by segmenting and branding the hotel services. Thus,
it offers exclusive ITC One, Sheraton Towers and the Executive Club to cater to the needs of the
global business traveller.
Financial summary
During 1999-2004, sales of ITC Hotels grew at an annual rate of 6%, which is significantly higher
than the growth rates registered by the other two older premium hotel chains the Taj and Oberoi
groups. During 2001-2002, as in the case of other leading hotel chains in India, ITC Hotels was
under considerable financial pressure because of the decline in the number of business and leisure
travellers to India. However, since 2003, there was a strong revival. In fact, during 2003-2004, sales
grew by a hefty 30% while net profit shot up to Rs202 million, or 34 times higher than net profit in
the previous year.
Table 117 ITC Hotels: Financial Summary 1999-2004
Rs million
1999 2000 2001 2002 2003 2004
Net sales 1,210 1,301 1,317 1,121 1,217 1,577

% growth 7.5 1.2 -14.9 8.6 29.6
Net profit 120 120 127 -31 6 202
% growth – 5.8 -124.6 118.3 3,436.8
Source: Company reports, Euromonitor
12.4 Air Deccan

Key facts
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Air Deccan is India’s first low-cost airline, which began operations in 2003. It was set up by
Deccan Aviation Private Ltd, India's largest private heli-charter company, which was formed in
1995. Though Air Deccan began operations only in August 2003, it created a dramatic change in
the Indian airline industry because of its low pricing.
Summary 11 Air Deccan: Key Facts

Co name and status: Air Deccan
Parent company: Deccan Aviation Pvt Ltd
Major travel and tourism brands: Air Deccan
Corporate Development
Air Deccan began operations in 2003. It is based in Bangalore. The driving force of the airline is
Captain G R Gopinath, its Managing Director, who was earlier in the Indian Army. Initially, the
operations of Air Deccan were restricted to South India. However, in 2004 it became a carrier
operating nationally and is currently scouting for funds from foreign partners to finance its
ambitious growth plans.
Air Deccan adopted several strategies to keep fares much lower than competitors. It placed an
emphasis on acquiring small aircraft and utilising them better than other airline companies. Most of
its flights are also across short distances. Snacks and juice are only provided for purchase, with no
complimentary catering. Besides cutting costs this also means that galley space can be reduced and
more seats can be accommodated on each plane. There is also a lower requirement for flight
attendants and air hostesses. Only economy class is available and no upper class seats.
The airline also leveraged the power of the internet to lower costs and simplify the booking process.
It offers substantial fare concessions to passengers who make bookings through the internet. Call
centres are also being used as a major ticketing channel. All this helped to cut down ticketing
expenses and reduced commissions to travel agents.
Summary 12 Air Deccan: Summary of Key Events 2003-2004

2003 Begins operations as a low-cost airline
connecting smaller cities in south India
2004 Expands to a national low-cost carrier with
flights connecting metro cities like Bangalore,
Mumbai and Delhi
Note: Since Air Deccan began operations in 2003, no events are mentioned for 1999-2002
Airline operations
Air Deccan started with a fleet of small ATR-42 aircraft. It operated short distance flights
connecting smaller cities in south India, such as Belgaum, Hubli, Mangalore, Coimbatore, Madurai,
Rajamundry and Vijaywada, with Bangalore, Chennai and Hyderabad. Since other national carriers
did not have flights on many of these routes, Air Deccan was able to create a niche for itself. As a
low-cost carrier, it was able to offer low fares and proved to be popular among passengers.
Air Deccan became a national carrier in August 2004 by operating flights connecting cities like
Bangalore, Delhi and Mumbai, known as “trunk” routes in India. It acquired Airbus aircraft for this
purpose. It also adopted a unique dynamic fare system where fares were increased as the date of
flight departure came closer. The starting fare was as low as Rs500 excluding taxes. This created an
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enormous stir in the airline industry. Since Air Deccan has ambitious network expansion plans,
other Indian airlines are now feeling threatened by its growth. Most of them are now thinking in
terms of starting low-cost flights. However, Air Deccan will probably continue to have a first
mover advantage.
Financial summary
Since Air Deccan began operations only in August 2003, it is yet to complete a full financial
accounting year. During August – March 2003, it generated sales of Rs1 billion. With the rapid
expansion in its network, this is expected to rise sharply this year. During 2004-05, sales are
expected to be around Rs6 billion representing a 380% rise compared with the previous year. No
profit figures were available at the time of writing, as Air Deccan is privately held and is not
obliged to divulge such details.
Table 118 Air Deccan: Financial Summary 1999-2004
Rs million
1999 2000 2001 2002 2003 2004
Net sales - - - - 1,150 5,520

% growth - - - - - 380
12.5 Air Sahara

Key facts
Air Sahara commenced operations in December 1993 following the Indian government's decision to
open the skies to the private sector. It is part of Sahara India Pariwar, which is a diversified
conglomerate with interests in public deposit mobilisation, media and entertainment, housing and
infrastructure, tourism, consumer products and information technology.
Summary 13 Air Sahara: Key Facts

Co name and status: Air Sahara
Parent company: Sahara India Pariwar
Major travel and tourism brands: Air Sahara
Since commencing operations in 1993, Air Sahara rapidly expanded its value share in domestic air
travel though to a much lower extent than Jet Airways, the leader. The share of Air Sahara in the
domestic airlines industry was estimated at 13% in 2003.
Since it is part of a huge cash-rich group, Air Sahara has access to considerable financial resources
and was able to implement strategies to enhance share without excessive concerns about the impact
on profitability. For this reason, it often spearheaded fare cuts, forcing reluctant competitors to
follow suit to maintain their competitiveness.
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Air Sahara was very innovative in its strategies to woo customers. For instance, its in-flight
entertainment became very popular with passengers. This includes Bid ‘n’ Win, which is an on-
board auctioning programme where passengers have a chance to win gifts at low prices.
Summary 14 Air Sahara: Summary of Key Events 1999-2004

1999 Sets up a number of executive lounges in metro
cities
2000 Introduces online reservations facility.
2001 Launches the Fly n Smile program, under which
free gifts are given to lucky passengers
2002 Starts an online auctioning of air tickets in
alliance with Indiatimes.com
2003 Inaugurates its first international flight to
Colombo
2004 Announces a 30% cut in Apex fares to metro
cities
Airline operations
Air Sahara’s fleet includes a number of Boeing aircraft with an average age of less than 5 years. It
inducted 50-seat Canadair Regional Jets (CRJ 200) in 2004 to take the total fleet strength to 19
aircraft. Air Sahara connects 22 destinations with 119 flights and offers 11,800 seats per day. In
November 2003, it inaugurated its first international flight to Colombo to take advantage of the
government’s policy to permit private airlines to operate services to select south Asian countries.
Financial Summary
Since 1999, Air Sahara was the fastest growing airline, among the full-service Indian carriers.
Growth was especially rapid in financial year 2003, when sales almost doubled. However, sales
growth was at the expense of profitability. Since 1999, the airline incurred losses in almost all
years. It was able to sustain these losses since it is part of a large business group, Sahara India
Pariwar, with deep pockets. Hence, Air Sahara appears to be playing for the long-term.
Table 119 Air Sahara: Financial Summary 1999-2004
Rs million
1999 2000 2001 2002 2003 2004
Net sales 2,972.9 3,391.6 5,194.7 4,877.1 9,598.3 12,000.0

% growth 14.1 53.2 -6.1 96.8 25.0
Net profit 17.5 -48.8 -349.4 -1,599.2 -377.5 n/a
% growth -378.9 616.0 357.7 -76.4 n/a
Source: Directorate General of Civil Aviation,trade press, Euromonitor
13. FUTURE OUTLOOK

13.1 Indian Ocean Earthquake
India was one of the Asian countries affected by the Tsunami caused by the Earthquake in the
Indian Ocean near Indonesia on December 26, 2004. However, while over 10,000 lives were lost
and another 5,600 missing and feared dead by early-February 2005 and there was considerable
physical damage, the impact on overall Indian tourism was negligible.
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There are several factors that explain the minor impact of the Tsunami on the Indian tourism.
Hardest hit areas
Only a few localised areas were severely affected by the Tsunami. These included a few coastal
areas in the state of Tamil Nadu and the Andaman and Nicobar Islands. Though the tidal waves also
hit a few areas in other states like Andhra Pradesh and Kerala, the impact was minor.
In Tamil Nadu, a few resorts in Mahabalipuram, a sea resort with ancient temples, suffered some
damage. These included resorts like the Taj Fishermen’s Cove, GRT’s Temple Bay, TTDC Resort
and the MGM Beach Resort. However, the damage was not extensive and, by January 2005 most of
these resorts were functioning normally. Apart from these resorts in Mahabalipuram, damage in
Tamil Nadu was almost entirely confined to coastal villages without any tourist significance.
Impact of lower tourism flows in the Andaman and Nicobar Islands on India as a
country
While the Andaman and Nicobar Islands suffered extensive damage, the relief efforts which are in
full swing are fast restoring normalcy. In any case, these islands account for an extremely tiny share
of tourists. This is evidenced by the fact that only about 0.1% of foreign tourists and 0.03% of
domestic tourists visit these islands.
In Kerala, only a few small areas were affected and not a single beach resort suffered any damage.
In fact, the backwater cruises, for which Kerala is well known, proceeded normally even when the
Tsunami waves were pounding the coastal areas in a few parts.
It is also important to note that it is India’s western coast that is popular among tourists interested in
beach tourism. The western coast was totally unaffected by the tsunami, except for a minor impact
in the southern tip in Kerala as indicated earlier.
Hence, the overall impact of the Indian Ocean Earthquake on Indian tourism was negligible.
13.2 Market Opportunities

Taking off with airlines
Given the relatively small size of domestic air travel among Indians, there is enormous potential for
growth in the domestic airlines industry. In particular, as low-cost air services expand their reach
and air fares become increasingly affordable, air travel grew rapidly in 2004. The government
announced in its budget statement of July 2004 that the limit on foreign direct investment will be
increased from 40% to 49%, although it would continue with the policy of not allowing foreign
airline companies to invest in local air. This offers considerable investment opportunities for
foreign companies, particularly in fledgling low-cost carriers.
Profiting from the adventurous spirit
tourism activities like trekking, rock climbing, rafting, scuba diving and skiing amongst others. A
number of states are actively promoting these activities. While adventure tourism in India grew in
recent years, the size of this is far below its potential. There is enormous scope for providing
facilities to expand this, for instance setting up campsites and offering adventure tour packages on a
wider scale.
Home comforts
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Since around 2000, a growing number of visitors to India stayed for relatively long periods. Many
of these are expatriates on short business assignments. With the increasing globalisation of the
Indian economy following economic liberalisation, such long-stay visitors are growing in numbers.
This provided the impetus for the emergence of service apartments, which combine the comforts of
home with the advantages of hotel services. However, the number of such apartments in India
currently is small in relation to demand. Hence, there is considerable potential for the setting up of
more service apartments and other service-oriented businesses catering to the needs of these visitors
from more developed economies primarily from Western countries including the US.
Keeping Indians entertained
Amusement parks such as Appu Ghar in Delhi are growing in popularity in India, predominantly
among domestic tourists. Many of these amusement parks are located on the outskirts of large cities
or near other tourist towns. However, the range of entertainment options offered by such
amusement parks is much smaller compared with parks in industrialised countries. Hence, there are
large business opportunities for foreign companies with expertise in this area to collaborate with
Indian firms in setting up world-class amusement parks with state-of-the-art equipment and
facilities.
Environmentally-friendly ventures
The National Tourism Policy 2002 places considerable emphasis on the promotion of eco-tourism.
The government also set up a National Committee on Eco-Tourism and Mountains to work out
details for managing the fragile eco-system and to consider projects and programmes for the
development of eco-tourism in India. Given all these promotional efforts, there is considerable
scope for the private sector to invest in setting up accommodation facilities or tour packages in
areas which are being developed for eco-tourism.
Disinvestment opportunities
The government already privatised a large number of hotels earlier owned by the public sector
company, India Tourism Development Corp Ltd (ITDC). However, there are still a few ITDC
hotels that the government plans to privatise. Moreover, the state governments run a large number
of accommodation facilities. It is possible that in coming years, the state governments will actively
look for private sector partners to improve the operations of these accommodation units. This offers
a number of business opportunities for Indian and foreign hotel companies.
Summary 15 Opportunities for Growth and Investment

Foreign investment in domestic airline companies
Adventure Tourism
Service apartments
Amusement parks
Eco-tourism
Privatisation of hotels and accommodation facilities
Source: Euromonitor
13.3 Tourism Receipts and Expenditure

Receipts
Incoming tourism receipts are forecast to grow at a CAGR of 10% in constant 2004 prices during
the forecast period. This represents a substantial increase compared with the annual growth of 7%
registered during the review period. The main reason for the predicted rise in growth of incoming
tourism receipts is the forecast rise in tourist arrivals. However, it is also expected that there will be
Euromonitor Page 78
a rise in real expenditure per tourist. This is because, with improved tourist infrastructure and better
promotional efforts, more affluent tourists will be attracted to India.
Expenditure
Outgoing tourism expenditure is predicted to grow at a slightly higher CAGR of nearly 11% during
the forecast period, compared with the forecast growth in incoming tourism receipts. With rising
incomes, an increasing proportion of upper-middle-income and affluent Indians will travel abroad
in the coming years. Besides this growth in departures, it is also predicted that Indians travelling
abroad will spend more during their trips because of the rise in their disposable incomes. Easy
credit facilities locally will also encourage such spending. Continued price differentials for large
consumer durables such as TVs will also continue to spur outgoing tourists to return with such big
ticket purchases from destinations as varied from the US and Europe, to Asian destinations such as
Singapore and Malaysia.
Domestic tourism
It is predicted that domestic tourism expenditure will grow at the fastest pace of 12% per annum
during the forecast period, compared to incoming tourism receipts and outgoing tourism
expenditure. There is enormous potential in the growth of domestic tourism. Currently, only a small
fraction of Indians travel on holidays. With sustained economic growth leading to rising household
incomes, it is expected that more Indians will be able to afford holidays within the country,
although overseas holidays will be too expensive for many. This will significantly augment the
current domestic tourism levels, which in part are blurred by local pilgrimages and other religious-
related activities that attract droves to places such as the Ganges River and the Tirupathi temple
amongst others.
Table 120 Forecast Incoming Tourism Receipts: 2004-2009

2004 216,862.8 -
2005 242,886.3 12.0
2006 269,603.8 11.0
2007 296,564.2 10.0
2008 323,255.0 9.0
2009 349,115.4 8.0
Source: Euromonitor
Table 121 Forecast Outgoing Tourism Expenditure: 2004-2009

2004 202,986.0 -
2005 227,344.3 12.0
2006 252,352.2 11.0
2007 278,849.2 10.5
2008 308,128.3 10.5
2009 338,941.2 10.0
Source: Euromonitor
Table 122 Forecast Domestic Tourism Expenditure 2004-2009
Euromonitor Page 79
Rs million, constant 2004 rsp

Value % growth
2004 538,866.5
2005 608,919.1 13.0
2006 685,034.0 12.5
2007 767,238.1 12.0
2008 855,470.5 11.5
2009 949,572.2 11.0
Source: Euromonitor
13.4 Balance of Payments

In India, receipts from incoming tourists normally exceeded expenditure by outgoing Indian
tourists. In fact, the Indian government encouraged this trend in order to earn foreign exchange.
Controls on the annual limits of foreign travel expenses by Indians constituted an important policy
instrument for this purpose.
However, with burgeoning foreign exchange reserves, there was major liberalisation in such
exchange controls since 2000. The limit on the annual quantum of foreign exchange that Indian
tourists are permitted to utilise for trips abroad was raised from US$3,000 to US$5,000 in 2000 and
again, increased to US$10,000 in 2002, which is the limit prevailing in 2004. It is expected that
there will be further liberalisation in this limit in coming years.
Hence, during the forecast period, it is predicted that the balance of tourism payments will reduce
over time, at an annual rate of 6%, as tourism expenditure grows faster than tourism receipts.
However, it is still expected that receipts will exceed expenditure because of the higher spending
power of foreign tourists visiting India, compared with Indians travelling abroad in general.
Table 123 Forecast Balance of Tourism Payments: Value 2004-2009
Rs million
Receipts Expenditure Balance
2004 216,862.8 202,986.0 13,876.8

2005 242,886.3 227,344.3 15,542.0
2006 269,603.8 252,352.2 17,251.6
2007 296,564.2 278,849.2 17,715.0
2008 323,255.0 308,128.3 15,126.7
2009 349,115.4 338,941.2 10,174.2
Source: Euromonitor
13.5 Number of Arrivals

Trends
Policy makers in the government placed a greater emphasis on promoting tourism as a means of
generating economic growth and employment. In particular, the tenth 5-year plan (2002-2007)
provides for large investments and promotional efforts to support growth in this. Hence, during the
coming years, there is likely to be a major improvement in tourist infrastructure as well as enhanced
marketing efforts. For these reasons, during the forecast period, visitor arrivals are predicted to
increase at a CAGR of nearly 10%, which is substantially higher than the 6% annual growth
registered during the review period.
Popular destinations
Euromonitor Page 80
The UK and the US are expected to continue to lead in significance in terms of the countries of
origin of visitors. Together, they are forecast to account for nearly 30% of arrivals in 2009. While
neighbouring Bangladesh is also predicted to be a major country of origin, with a 16% share
forecasted for 2009, visitors from that country are mostly not tourists in a strict sense. Most of them
are people crossing the border to seek temporary employment or to visit relatives.
Preferred mode of transport
It is expected that air travel will continue to dominate as a mode of transport for arrivals. In 2009,
air travel is forecast to account for about 83% of arrivals. However, with the growing normalisation
of political relations between India and Pakistan, the share of land and rail transport is expected to
increase, albeit at a very slow rate for the initial years of the forecast period at least, although this
might well change towards the end of the forecast period.
Table 124 Forecast Visitor Arrivals: 2004-2009
'000 people
% growth
2004 3,355.4 -
2005 3,757.9 12.0
2006 4,133.7 10.0
2007 4,547.3 10.0
2008 4,956.5 9.0
2009 5,353.0 8.0
Source: Euromonitor
13.6 Number of Departures

Trends
At present, it is only upper-middle-income and affluent Indians who can afford holidays abroad.
However, with rising incomes, the size of these consumer groups is growing. During the next few
years at least up to about 2010, with further economic reforms and sustained economic growth, this
trend is expected to continue. Moreover, with easier financing options provided by banks in India, it
is becoming easier to travel abroad. The rising globalisation of the Indian economy is also resulting
in greater business travel. For all these reasons, it is predicted that departures will grow at a CAGR
of 10% during the forecast period which is significantly higher than the annual growth of 6%
registered during the review period.
Popular destinations
The most popular destination during the review period was the Middle East. This is mainly because
of travellers seeking temporary employment in the region or making visits to relatives there, since
there is a large Indian community employed in Middle East countries. However, it is predicted that
during the forecast period, the share of Middle East countries as a tourist destination will fall with
reduced employment opportunities in the region, at the same time that opportunities elsewhere are
opening up.
On the other hand, the share of Singapore will rise both for tourist and business reasons. One reason
was the affordability of holidaying there for many Indians, given its proximity, which means that
the air fare is relatively low. During the forecast period, it is predicted that the share of Singapore
will rise further and that it will emerge as the country accounting for the highest proportion of
departures by 2009. The rising incidence of budget air travel is also likely to increase the number of
travellers to Singapore and other Asian destinations such as Thailand and Malaysia. The US, the
UK and Thailand will continue to remain as other major destinations for Indian travellers.
Euromonitor Page 81
Preferred mode of transport
As in the case of arrivals, air transport is expected to continue to dominate as the preferred mode of
transport for departures. In 2009, its share is forecast at 97%. However, with relations between
India and Pakistan moving from animosity towards cooperation, keeping the interests of both
countries in mind, the share of land and rail transport is likely to rise. Sea transport, especially
cruises, is also rising in popularity among Indian travellers.
Table 125 Forecast Visitor Departures: 2004-2009
'000 people
% growth
2004 5,400.0 -
2005 6,021.0 11.5
2006 6,653.3 10.5
2007 7,318.7 10.0
2008 8,050.4 10.0
2009 8,815.1 9.5
Source: Euromonitor
13.7 Travel and Tourism Markets

Winners
Major predicted winners during the forecast period are:

• Low-cost airline carriers: currently, only a small proportion of domestic travellers use air
transport because of high fares. With low-cost airline carriers offering much more affordable
fares, the number of airline passengers will rise rapidly;
• Budget hotels: there are not enough budget hotels with good facilities in relation to potential
demand. Even the top Indian hotel companies, which traditionally concentrated on 5-star
hotels, are realising this fact and a number of them are investing their resources in setting up
budget hotels. During the forecast period, this number is expected to increase at a rapid pace.
Losers
Major predicted losers during the forecast period are:

• Travel agencies depending on commissions: currently, there are a large number of travel
agencies who rely on commissions for their earnings. However, with the increasing popularity
of internet bookings as well as direct sales by suppliers, the rate of such commissions fell and
are expected to fall further during the forecast period. Hence, travel agencies will have to
diversify rapidly into the provision of value-added services rather than merely selling air
tickets. Those agencies that are tardy in adopting such a strategy will have a tough time
surviving;
• Railways: although railways will continue to carry a huge number of poor and middle class
travellers because of low fares, the upper class rail coaches will increasingly lose out to other
modes of transport, especially air travel. This is because of the inflexibility of railway routes
and timings and the reduced cost advantage of using trains.
Table 126 Forecast Sales by Travel and Tourism Markets: Value 2004-2009
Euromonitor Page 82
Rs million
2004 2005 2006 2007 2008 2009
Travel and Tourism - - - - - -

sales by sector
Transport by sector 1,056,88 1,130,70 1,211,55 1,302,22 1,402,50 1,512,73
0.0 2.5 6.4 6.4 9.4 4.1
sector
Travel retail services 220,504.5 237,412.9 253,467.9 268,530.3 282,502.2 294,773.2
by sector
type
Source: Euromonitor
13.8 Developments in Internet Transaction Sales

Internet penetration, though currently low, is rising rapidly in India. While Indians were hesitant to
use the Internet in the past for e-commerce because of security reasons, they are increasingly
becoming more attracted to e-commerce because of its convenience. Moreover, medium and large
establishments in the Indian tourism industry are also placing considerable importance on creating
facilities for internet transactions. Reduced costs are a major motivation.
For all these reasons, it is predicted that the share of internet transactions in sales in various travel
and tourism will rise rapidly during the forecast period. In hotels, this is forecast to rise from 10%
in 2004 to 14% in 2009. Similarly, in travel retail services, this is predicted to increase from 7% in
2004 to 12% in 2009. In airlines, this is forecast to more than double from 5% in 2004 to 10% in
2009. The strong emphasis of low-cost airlines on internet bookings is an important reason for
predicting this sharp increase.
Table 127 Forecast Sales in Travel and Tourism Markets: Internet Transaction Value
2004-2009
Rs million
2004 2005 2006 2007 2008 2009

sales by sector
Transport by sector 16,333.5 23,127.9 30,839.5 39,658.6 49,725.2 61,196.8
Car rental services by 155.7 728.7 1,392.4 2,157.7 3,050.5 4,098.3
sector
Travel retail services 14,787.2 18,295.2 22,067.1 26,063.8 30,244.9 34,506.4
by sector
Source: Euromonitor
14. DEFINITIONS
Where possible this report adheres to the statistical definitions of international and domestic
tourism used by the World Tourism Organisation (WTO):
• International arrivals: refers to international tourists, ie any person visiting another country for
at least 24 hours, for a period not exceeding 12 months and staying in collective or private
accommodation. Each trip is counted separately and thus includes people travelling more than
once a year and people visiting several countries during one holiday. Unless otherwise stated
arrival figures exclude same-day visitors and transit and cruise passengers as this can distort
Euromonitor Page 83
arrival figures in important cruise destinations. It also excludes those in paid employment
abroad;
• International departures: refers to the number of trips undertaken by national residents to
another country for any other reason than to carry out an activity remunerated in the country of
destination. Data includes foreigners residing permanently in the country of departure;
• International tourism receipts: these are classified as payments by international inbound
tourists, including fares paid to national carriers for international transport and any other
prepayments made for goods or services received in the country of destination. This should
also include receipts from day visitors from abroad, although there are exceptional cases that
are recorded separately;
• International tourism expenditure: this is expenditure by outbound tourists abroad, including
their payments to foreign carriers for international transport. Again, this should also include
expenditure on day visits abroad, except in certain cases when these are recorded separately.
Data thus excludes international transport fares purchased within the country of origin;
• Domestic tourists: this varies from country to country and can refer either to actual tourists
spending one night or more away from home within their normal country of residence or to the
number of stays by residents within their normal country or residence. Most national statistics
on domestic tourism expenditure exclude that on travel to and from the destination;
• Domestic trips: number of trips taken by residents of the country within the country. The
definition of the length of a trip varies from country to country;
• Domestic tourist expenditure: the spending on travel and tourism services by domestic visitors
on their trips;
• Tourism spending: this analyses tourism spending by foreign and domestic tourists on items
such as food, accommodation, entertainment, travel within the country, excursions and
shopping;
• Occupancy rates: this expresses the relationship between available capacity and the extent to
which it is used. It may refer to either the use of rooms or of beds. Occupancy rates are based
on the number of nights of both domestic and international tourists;
• RevPAR: this signifies revenue per available room in travel accommodation. It is based on the
revenue generated by accommodation outlets with regard to capacity in terms of rooms, ie the
number of rooms available for use by domestic and international visitors;
• Travel accommodation: travel accommodation covers the main types of accommodation used
by incoming tourists and domestic tourists. For the purposes of this report, this is broken down
into nine principal sectors:
• Campsites: covers areas set aside for camping and caravans;
• Chalets: rented accommodation in mountain or country areas; may include meals; includes
lodges and inns;
• Guesthouses: rooms within officially-recognised private accommodation, for the purpose
of tourism; rented to tourists on a nightly or weekly basis; often with breakfast included;
• Hostels: providing low-cost/budget accommodation, often in dormitories; includes youth
hostels;
• Hotels: providing lodging and optional meals;
• Motels: roadside hotel accommodation for motorists;
• Private accommodation: privately-owned houses or individual rooms rented to tourists on
an unofficial basis;
• Self-catering apartments: providing lodging in allocated tourist apartments, not providing
meals;
• Other: smaller types of accommodation, such as holiday camps, not listed above but
included in country statistics.
• Number of bed nights: refers to the total number of beds in travel accommodation occupied
over the year
Euromonitor Page 84
• Transportation: transportation covers the mode of transport used by tourists going to their
holiday destination and within the country. It covers sales for outgoing travel by country
residents and internal travel by foreign and domestic tourists. For the purpose of this report, car
rental is analysed separately. The transportation market assesses seven main modes of
transport:
• Air: includes schedule, charter and budget airlines
• Bus/coach: overland travel by bus or coach
• Chauffeur-driven car: passengers driven to their destination by a hired third party.
Excludes taxis.
• Cruise: travel by cruise ship
• Ferry: travel by ferry
• Rail: travel by passenger train
• Car rental: the car rental market covers the hire of passenger cars by both business and leisure
users and from airport or non-airport locations for short-term rentals. It excludes long term
leasing by businesses. Car rental covers sales to incoming tourists and domestic use.
• Business;
• Leisure;
• Insurance replacement: where domestic residents use a rental car paid for by an insurance
company as a replacement vehicle, while their own car is repaired following an accident.
• Travel retail: The travel retail market covers companies that put package holidays together for
the general public, companies that sell them to the public and those that supply foreign
currency. The market for travel retail covers sales to outgoing and domestic tourists and
internal use by incoming tourists.
• Travel agencies: retail outlets that sell holidays and holiday services;
• Tour operators: companies that organise holiday packages and sell them either directly to
the public or through travel agencies;
• Exchange providers: within this report, this term refers to dedicated currency exchange
outlets only. It therefore excludes banks and travel agencies, unless otherwise stated.
Due to the difficulty of establishing sales by sector as a result of the overlap of business between
the sectors above, value by sector will not be given and will be provided at total market level only.
• Attractions: the attractions market covers the sites visited by tourists, covering sales to
incoming and domestic tourists and is broken down into the following sectors:
• Art galleries
• Casinos
• Circuses
• Historic buildings/sites
• Industrial tourism
• Museums
• National parks/areas of natural beauty
• Theatres
• Theme/amusement parks
• Zoos/aquariums
• Others
Units of Measurement
• Value by sector is measured in terms of consumer value sales, ie in terms of the actual
spending by consumers:
• Travel accommodation: the price paid for accommodation by the consumer; may include
meals
• Transportation: the price paid for the mode of transport by the consumer
• Car rental: the price of car hire to the consumer
• Travel retail: the price paid by the consumer for travel retail services
• Tourist attractions: the price of admission to tourist attractions
• Volume by sector is measured as follows:
Euromonitor Page 85
• Travel accommodation: number of accommodation outlets and number of rooms and bed
nights
• Transportation - air: number of available seats and seats sold
• Car rental: number of car hire transactions, unless otherwise stated
• Travel retail: number of travel retail outlets
• Tourist attractions: number of visitors to tourist attractions
Market shares are based on companies’ consumer values sales. Value sales are sector specific and
thus exclude all other non-sector specific company operations.
Data for 2004 are estimates based on part-year figures.
Country-specific Definitions
Based on national and official statistics, the following terms were defined as:
• Domestic trips: refers to trips within the country to a place other than the person’s usual place
of residence during which the person stays at commercial accommodation/establishments for a
period of not less than 24 hours or one night and for not more than six months at a time for any
of the following purposes:
• Pleasure
• Pilgrimage
• Business
• Study
• Health
• Social functions
• Long haul refers to all international flights
• Short haul refers to all domestic flights
Euromonitor Page 86

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Trends in Travel and Tourism Industry

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Travel and Tourism in India

List of Contents and Tables

5.10 Outgoing – Mode of Transport .................................................................................... 16

Table 51 Hotel Companies by Market Share 2001-2004 .................................. 33

Euromonitor Page iii

8.8 Key Players – Revenue Rankings................................................................................. 47

10. TOURIST ATTRACTIONS ..................................................................................................... 62

Table 125 Forecast Visitor Departures: 2004-2009 ............................................ 82

TRAVEL AND TOURISM IN INDIA

Strong government support

Local holiday spirits

Table 1 GDP 1999-2004

2.2 Disposable Income

Table 2 Disposable Income 1999-2004

2.3 Leisure Expenditure

Table 3 Consumer Expenditure on Leisure 1999-2004

1999 142,637.4 142,637.4

• Creation of world class infrastructure

Tax structure rationalisation

Mergers and acquisitions

3.2 Terrorism and Security

3.3 Sustainable Tourism

3.4 Positive Growth Factors

Summary 1 Positive Growth Factors

Tenth 5-year plan (2002-2007) recognises

3.5 Negative Growth Factors

Summary 2 Negative Growth Factors

Table 4 Paid Holiday and Public Holidays 2004

4.2 Holiday Taking

Table 5 Levels of Holiday Taking 1999-2004

1999 2.2 97.8

4.3 Holiday Taking – Demographics

Table 6 Holiday Taking by Demographic Groupings 1999-2004

Male 65.0 61.9 62.7 64.6 64.0 63.5

4.4 Holiday Taking – Length of Trip

Table 7 Holiday Taking by Length of Trip 1999-2004

Over 7 days 1,972.8 2,751.0 2,862.0 3,365.6 4,235.4 4,768.8

TOTAL 4,194.8 5,501.8 6,088.8 7,317.0 8,823.1 10,146.5

4.5 Holiday Taking – Seasonality

Table 8 Month in which Holidays are Taken 2004

January 322.4 9.6

Table 9 Incoming Tourism Receipts: 1999-2004

1999 129,510.0 129,510.0

Table 10 Incoming Tourism Receipts % Growth: 2000-2004

2000 9.9 5.7

5.2 Outgoing Tourism Expenditure

Table 11 Outgoing Tourism Expenditure: 1999-2004

1999 92,680.0 92,680.0

Table 12 Outgoing Tourism Expenditure % Growth: 2000-2004

2000 41.7 36.3

5.3 Balance of Tourism Payments

Table 13 Balance of Tourism Payments: Value 1999-2004

1999 129,510.0 92,680.0 36,830.0

5.4 Incoming – Number of Arrivals

Table 14 Total Arrivals: 1999-2004

5.5 Incoming – Mode of Transport

Table 15 Arrivals by Mode of Transport: 1999-2004

Air 2,436.8 2,214.4 2,210.1 1,952.8 2,324.0 2,829.8

Table 16 Arrivals by Mode of Transport: % Breakdown 1999-2004

Air 98.2 83.8 87.1 81.9 84.5 84.3

5.6 Incoming – Purpose of Visit

Table 17 Arrivals by Purpose of Visit: 1999-2004

Business 505.9 792.4 608.1 755.8 882.6 1,083.8

Table 18 Arrivals by Purpose of Visit: % Breakdown 1999-2004