Tourism industry begins to feel the pinch of global crisis

Tourism industry begins to feel the pinch of global crisis
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First Published: Tue, Nov 25 2008. 01 02 AM IST

Close look: Tourism is said to contribute about 6% to India’s GDP. Ramesh Pathania / Mint
Close look: Tourism is said to contribute about 6% to India’s GDP. Ramesh Pathania / Mint
Updated: Tue, Nov 25 2008. 01 02 AM IST
New Delhi: Incredible India” is what the country’s energetic promotional campaign calls it. But behind the glossy brochures is an increasingly hard fight to entice foreign tourists.
The worst financial crisis in 80 years, high oil prices and a slew of militant attacks has hit an industry that has basked in double-digit growth numbers of both domestic and foreign tourists in recent years, according to data from the ministry of tourism.
October saw an increase of just 1.8% in the number of foreign tourist arrivals compared to the same month in 2007.
Close look: Tourism is said to contribute about 6% to India’s GDP. Ramesh Pathania / Mint
“We are seeing the early stages of a slackening of the market,” said Madhavan Menon, managing director of Thomas Cook India Ltd, adding that “2009 is going to be a difficult year”. A slump risks undermining India’s enormous growth potential in the tourism sector, which the UN’s World Tourism Organization (UNWTO) said has also been let down in the past by a lack of adequate accommodation and poor infrastructure. Despite its vast size, diversity and array of historical monuments, India still ranks at No. 42 in the world’s holiday destinations of choice, a UNWTO report said.
Even so, India’s tourism industry is said to contribute around 6% of the country’s gross domestic product (GDP) and give employment to more than 40 million people.
As the tourist season kicks off in the winter months, both domestic and foreign travellers are flocking to the famed Taj Mahal, with at least 300,000 visiting the 17th century mausoleum in October alone.
But because many of the 5 million foreign tourists who came to India in 2007 were from the US and Britain—among the hardest-hit countries in the global economic slowdown—some travel agents and hoteliers are nervous. “As compared to last year, we have received far fewer queries for the next tourist season,” Mahatam Singh of Touraids said.
The tourism ministry says domestic demand will continue to grow at a high level, despite analysts’ predictions that economic growth could slow to below 7% in the year ending March from 9% or higher in the past three years.
Although crude oil prices have fallen to around $50 (Rs2,505) a barrel, government-set retail fuel prices remain uncomfortably high, and tour operators say this and high air fares will take a toll on domestic tourism.
However, the setbacks are “not alarming”, says Devesh Chaturvedi, a director at the ministry of tourism, adding that “the tourists will still come but may reduce their spending”.The ministry has set itself a target of doubling the number of foreign tourist arrivals to 10 million per year by 2010, when India hosts the Commonwealth Games.
But with officials worried that Commonwealth Games infrastructure may not be ready on time, the estimates of a doubling of tourism in two years may be rather optimistic.
Sheikh Mushtaq and Sharat Pradhan contributed to this story.
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First Published: Tue, Nov 25 2008. 01 02 AM IST