Now, slowdown bug bites tourism sector

India’s tourism sector is the latest to be hit by the global economic slowdown headwinds.

Foreign tourist arrivals grew a mere 2.12 per cent in the first half of calendar 2019 — the lowest for the comparable period in the last four years.

India received around 6.08 million foreign tourists between January and July this year. In 2018, the country received around 5.96 million foreigners during the same period, a growth of 7.07 per cent.

“Brexit in the UK and recession fears in large parts of Europe and the US have created nervousness among people and they are not willing to spend money on travel,” said Dipak Deva, Managing Director, Travel Corporation of India.

Bangladesh, the US, the UK, China, Sri Lanka, France and Canada are among the top 15 source markets for foreign tourist arrivals (FTAs) in India. These countries account for over 75 per cent of the total FTAs. Many of these economies are either impacted by the economic slowdown or are facing geopolitical issues.

India-Pakistan tension

“This (slow growth) can be attributed to geopolitical factors. Heightened tensions between India and Pakistan at the beginning of the year and the subsequent shutdown of Pakistan’s air space for India-bound flights led to an increase in travel time and deterred potential tourists,” said Jaideep Ghosh, Partner and Head – Leisure and Sports, KPMG in India.

“India is a long-haul destination for Europe and the US and leisure holiday bookings are made 3-6 months in advance, which adversely impacted the numbers for the April-June quarter as well,” he added.

Consequently, the country’s foreign exchange earnings (FEE) from tourism, too, grew only marginally, at 4 per cent in rupee terms to ₹1,16,872 crore (₹1,12,481 crore) in the January-July period. In dollar terms, it reported a negative growth of 2 per cent at $16.75 billion ($17.05 billion).

“India is seeing tourism growth from markets which have low per-person revenue. For instance, Bangladesh led the list of top 15 countries of origin for India-bound tourists this year with a 23.67 per cent share. Luxury hotels have also seen a decline in foreigner tourist arrivals,” Ghosh said.

Strong competition

Industry experts feel that high visa charges and strong competition from tourist destinations such as Sri Lanka, Thailand, Malaysia and Vietnam also led to the slow growth in foreign tourist arrivals. Last year, the government increased the e-visa fee for the US and the UK to $100 (from $50) and $80 for other countries.

As a course correction, the Tourism Ministry last month proposed to introduce a short duration e-visa with one month validity at a cost of $25. The visa will be applicable during the peak tourism season between July and March. The Ministry also said that it will propose to reduce the fee to $10 for the April-June period. “I think it (the fee reduction) is a fantastic move by the government which will influence the foreign tourists to come to India. Goa, as the largest contributor to foreign tourist arrivals, will benefit in a big way,” Deva said.

India moved up six places to the 34th position in the global Travel and Tourism Competitiveness Report 2019 published by the World Economic Forum (WEF) last week. India’s ranking was the greatest improvement over 2017 among the top 25 per cent of all countries ranked in the report. India received 10.5 million foreign tourists in 2018. The government has set a target of 20 million FTAs and doubling of forex earnings by 2020.

“Looking beyond the short -term factors, this will definitely improve the perception of inbound tourists about the country and will lead to a rise in inbound foreign tourist arrivals in the medium term,” Ghosh said.

COMMENT NOW