As per the Travel and Tourism Competitiveness Report 2009 by the World Economic Forum, India is ranked 11th

in the Asia Pacific region and 62nd overall, moving up three places on the list of the world's attractive
destinations. It is ranked the 14th best tourist destination for its natural resources and 24th for its cultural
resources, with many World Heritage sites, both natural and cultural, rich fauna, and strong creative industries in
the country. India also bagged 37th rank for its air transport network. The India travel and tourism industry ranked
5th in the long-term (10-year) growth and is expected to be the second largest employer in the world by 2019.

Contribution to the economy

Combining unparalleled growth prospects and unlimited business potential, the industry is certainly on the foyer
towards being a key player in the nation's changing face. Furthermore, banking on the government’s initiative of
upgrading and expanding the country’s infrastructure like airports, national highways etc, the tourism and
hospitality industry is bound to get a bounce in its growth.

The hotel and tourism industry’s contribution to the Indian economy by way of foreign direct investments (FDI)
inflows were pegged at US$ 2.24 billion from April 2000 to November 2010, according to the Department of
Industrial Policy and Promotion (DIPP).

India’s hotel pipeline is the second largest in the Asia-Pacific region according to Jan Smits, Regional Managing
Director, InterContinental Hotels Group (IHG) Asia Australasia. He added that the Indian hospitality industry is
projected to grow at a rate of 8.8 per cent during 2007-16, placing India as the second-fastest growing tourism
market in the world. Initiatives like massive investment in hotel infrastructure and open-sky policies made by the
government are all aimed at propelling growth in the hospitality sector.

Foreign Tourist Arrivals

Ministry of Tourism compiles monthly estimates of Foreign Tourist Arrivals (FTAs) in India and Foreign Exchange
Earnings (FEE) from tourism on the basis of data received from major airports. Following are the important
highlights, as regards these two important indicators of tourism sector for 2010 and December 2010.

 FTAs in India during 2010 were 5.58 million with a growth rate of 9.3 per cent as compared to the FTAs
of 5.11 million during 2009.
 FTAs during the December 2010 was 6,55,000 as compared to FTAs of 6,46,000 in December 2009
and 5,34,000 in December 2008.
 FEE from tourism during 2010 were US$ 14,193 million as compared to US$ 11.39 billion during 2009
and US$ 11.74 billion during 2008. The growth rate in FEE in US$ terms during 2010 was 24.6 per cent.
 FEE from tourism during the month of December during 2010 were US$ 1.55 billion.

Government Initiatives/policy

According to the Consolidated FDI Policy, released by DIPP, Ministry of Commerce and Industry, Government of
India, the government has allowed 100 per cent foreign investment under the automatic route in the hotel and
tourism related industry. The terms hotel includes restaurants, beach resorts and other tourism complexes
providing accommodation and /or catering and food facilities to tourists.

The term tourism related industry includes:

 Travel agencies, tour operating agencies and tourist transport operating agencies
 Units providing facilities for cultural, adventure and wildlife experience to tourists
 Surface, air and water transport facilities for tourists
 Convention/seminar units and organisations

The Government of India has announced a scheme of granting Tourist Visa on Arrival (T-VoA) for the citizens of
Finland, Japan, Luxembourg, New Zealand and Singapore. The scheme is valid for citizens of the above
mentioned countries planning to visit India on single entry strictly for the purpose of tourism and for a short period
of upto a maximum of 30 days. During 2010, a total number of 6549 Visa on Arrivals (VoA) were issued under
VoA Scheme.

The tourism master plan, the first for Karnataka, envisages initiatives to attract private investment ranging from
US$ 2.2 billion to US$ 4.4 billion in the next three to five years. The plan is prepared based on the Vision 2020
document prepared and adopted by the Karnataka State Planning Board. The state government aims to generate
200,000 jobs in the tourism sector in the next five years. The master plan is aimed at making Karnataka the
number one destination for tourism in the country by 2020, according to Mr G Janardhan Reddy, Minister for
Tourism and Infrastructure Development

As per the press release by Press Information Bureau (PIB) dated November 15, 2010, the Union Ministry of
Tourism has included Medical Tourism under the Marketing Development Assistance (MDA) Scheme. The
Ministry of Tourism has sanctioned US$ 27,742 as MDA to 10 Medical Tourism Service Providers during current
year.

The Ministry of Tourism has sanctioned 781 projects in 34 States/ Union Territories (UTs) in the country
amounting to US$ 511.82 million during the last three years up to June 2010, as per a press release dated
October 18, 2010.

The Ministry of Tourism has won a PATA Grand Award and two PATA Gold Awards during the Pacific Asia
Travel Association (PATA) Travel Mart 2010 in Macau. The PATA Grand Award was given under the Heritage
category for the Rural Tourism Project at Hodka village in Kutch District of Gujarat.

Medical Tourism

As per a market research report ‘Booming Medical Tourism in India’ by RNCOS, India’s share in the global
medical tourism industry will reach around 3 per cent by the end of 2013. Moreover, medical tourism is expected
to generate revenue worth US$ 3 Billion by 2013, growing at a CAGR of around 26% per cent during 2011–2013.
The number of medical tourists is anticipated to grow at a CAGR of over 19 per cent during the forecast period to
reach 1.3 Million by 2013.

Factors such as, low cost, scale and range of treatments provided by India differentiate it from other medical
tourism destinations. The growth in India’s medical tourism market will be a boon for several associated
industries, including hospital industry, medical equipments industry and pharmaceutical industry.

Domestic medical tourism in the country has also seen growth in the recent years. As per the report ‘Domestic
Tourism in India, 2008-09’ released by the National Sample Survey Office (NSSO), trips for ‘health and medical’
purposes formed 7 per cent of overnight trips in the rural population and about 3.5 per cent in the urban
population. ‘Health and medical’ purposes accounted for 17 per cent of same-day trips in rural India and 8 per
cent in urban India. Expenditure on medical trips accounted for 30 per cent of all overnight trip expenditure for
rural India and 15 per cent for urban.

Recently, the Union Ministry of Tourism has included Medical Tourism under the Marketing Development
Assistance (MDA) Scheme. The Ministry of Tourism has sanctioned US$ 27,400 as MDA to 10 Medical Tourism
Service Providers during 2010.

Hospitality

The current count of hotel rooms is 130,000, and the country is expected to require an additional 50,000 rooms
over the next two to three years, according to World Travel and Tourism Committee (WTCC) estimates

 US-based hotel chain, Marriott International, plans to expand its network in India to 100 hotels over the
next five-years, stated Arnie Sorenson, Chief Operating Officer, Marriott International. At present, the
group operates 11 properties across the country.
 Roots Corporation, a subsidiary of Indian Hotels Company (IHC), plans to open 60 to 70 budget hotels,
known as Ginger Hotel, in 23 locations across the country.
 ITC, the Kolkata-based cigarette major, also projected its plan to open 25 new hotels under the Fortune
brand over the course of next 12-18 months (or by 2011).

The Road Ahead

The Indian hospitality sector is certainly the most apt replication of the belief 'Atithi devo bhava'- touch of
tenderness, a helping hand and a welcoming visage.

According to the Tourism Satellite Accounting (TSA) research, released by World Travel and Tourism Council
(WTTC) and its strategic partner Oxford Economics in March 2010:
  The contribution of travel and tourism to Gross Domestic Product (GDP) is expected to increase from
8.6 per cent (US$ 117.9 billion) in 2010 to 9.0 per cent (US$ 330.1 billion) by 2020.
 Export earnings from international visitors and tourism goods are expected to increase from US$ 11.1
billion in 2010 to US$ 33.6 billion in 2020.
 Travel and tourism investment is estimated at US$ 34.7 billion or 7.2 per cent of total investment in
2010. By 2020, this should reach US$ 109.3 billion or 7.7 per cent of total investment.

Ministry of Tourism aims to create a comprehensive and coordinated framework for promoting golf tourism in
India, capitalising on the existing work that is being carried out, and building upon the strength of India’s position
as the fastest growing free market economy.

Exchange rate used: 1 USD = 45.46 INR (as on January 2011)

(http://www.ibef.org/artdispview.aspx?in=74&art_id=27804&cat_id=120&page=2 (source)

India has the potential to become the number one tourist destination in the world with the demand growing at
10.1 per cent per annum, the World Travel and Tourism Council (WTTC) has predicted.

The WTO (World Travel Organisation) predicts that India will receive 25 million tourists by year 2015.

Major attractions in India are the world's highest mountains, miles of coastline with excellent beaches, tropical
forests and wildlife, desert safari, lagoon backwaters, ancient monuments, forts and palaces, adventure tourism
and, of course, the Taj Mahal.

India currently has over 200,000 hotel rooms spread across hotel categories and guest-houses and is still facing
a shortfall of over 100,000 rooms (source: FHRAI).

The country is witnessing an unprecedented growth in hotel constructions and will be adding almost 114,000
hotel guest rooms to its inventory over the next five years. (source: HVS)

The earlier setbacks in global tourism have strengthened the Department of Tourism's resolve to promote India's
tourism through aggressive marketing strategies through its campaign 'Incredible India'.

The 'marketing mantra' for the Department of Tourism is to 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.

The Indian Hospitality Industry – An Overview

The current scenario

 Existing hotel rooms in India: 202,963, source FHRAI

 Revenue of the Indian hotel industry FY 2007-08: INR 38,558 crore
 30% of this revenue i.e. INR 11,567.4 crore went back into the market in FY 2008-09 as operating
expenses

Number of hotels and restaurants in India:

Hotel category No. of Hotels  No. of Rooms
5 star deluxe/5 star 165 43, 965
4 Star 134 20, 770
3 Star 505 30,100
2 Star 495 22,950
1 Star 260 10,900
Heritage 70 4,200
Uncategorised 7,078 -
Total 8,707 1,32,885
Restaurants 12,750  

What the future holds:

 Despite the global recession, inflation, terrorism and other factors, the overall outlook for the Indian
hospitality market is optimistic and will remain so says HVS 
 India remains the second fastest growing economy in the world and the economic growth of the country
is at 7.1% of the GDP as declared by Mr. Pranab Mukherjee, Finance Minister, India.
 The Tourism Ministry, Government of India, has set a target of 10 million tourists to India by 2010
 The WTO (World Travel Organisation) predicts that India will receive 25 million tourists by year 2015

Projected investments years 2009-015

 Rooms being built across hotel categories: 114,000, source HVS

 Investment in rupees: INR 40,463.10

(http://www.hostsindia.in/index.php?option=com_content&task=view&id=18&Itemid=32)

http://www.hostsindia.in/index.php?option=com_content&task=view&id=18&Itemid=32

http://www.dpncindia.com/news/Hospitality%20Industry.pdf

http://www.cci.in/pdf/surveys_reports/tourism-hotel-industry.pdf

http://www.rbi.org.in/scripts/AnnualPublications.aspx?head=Handbook%20of%20Statistics%20on
%20Indian%20Economy ( page 13) table 3