India slips 10 spots since 2019 on WEF’s travel & tourism ranking despite growth

Among the world's top 10 economies, India's slide down the rankings was the sharpest, followed by the UK, which fell 3 places since 2019 to occupy the seventh spot. The US retained its top position, while China, the world's second-largest economy, moved a notch higher to 8 in the global rankings.

Varuni Khosla
Updated21 May 2024
India has recovered only to 70% of its inbound tourists from before the pandemic.
India has recovered only to 70% of its inbound tourists from before the pandemic.

Despite a burgeoning travel sector and a sharp rebound in economic growth from covid lows, India has slipped ten places to 39 in the World Economic Forum's Travel and Tourism Development Index 2024 (TTDI) rankings since 2019, mostly hurt by weak access to healthcare facilities, inadequate tourism infrastructure, and low-skilled manpower serving the sector.

On an overall index score of 7, where 1 is the worst, and 7 the best, India's score of 4.25 was lower than its emerging-market peers such as China and Brazil, WEF's new Insight Report showed. Among the world's top 10 economies, India's slide down the rankings was the sharpest, followed by the UK, which fell 3 places since 2019 to occupy the seventh spot. The US retained its top position, while China, the world's second-largest economy, moved a notch higher to 8 in the global rankings.

The TTDI focuses on 119 economies based on factors and policies contributing to a sustainable and resilient development of the travel and tourism sector. The rankings reflect each country's ability to develop and sustain its travel and tourism industry.

The United Arab Emirates saw the biggest growth in the index, while India remained above the average by 7.1%. The report calls for revamping tourism policies to create a more conducive environment for both domestic and international travellers.

Streamlining regulations and incentivising investment in the tourism sector can significantly boost India's attractiveness as a destination, since it currently lags on tourism policies, air transport, and tourist service infrastructure, the report highlighted. By contrast, India scored high on price competitiveness as well as availability of cultural and natural resources, boosting its allure for tourism. The WEF's annual report flagged poorly-skilled human resources as well as poor hygiene hurting the growth of travel and tourism in the country that received about 10.93 million international tourists in FY20, before the pandemic shut down travel.

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The United States leads the TTDI rankings, standing at 32.3% above the average. Interestingly, Thailand, a popular tourist destination, ranks lower than India, with its score falling by 4.12%. This decline is possibly due to delays in easing travel restrictions after the pandemic ebbed, compared to other regions, impacting its ability to recover air route capacity and attract international tourists. The report suggests that India needs to improve its infrastructure, policy conditions, and sustainability to enhance its future rankings and fully leverage its travel and tourism potential.

The Asia-Pacific region was the second-highest performer among all regions globally, but experienced the largest average decline in TTDI scores (-0.7%) due to delays in loosening travel restrictions and struggles with air route capacity and sector investment recovery.

Globally, the travel and tourism industry, which historically accounted for 10% of global GDP, is on a path to recovery post-pandemic. International tourist arrivals are projected to reach 88% of 2019 levels in 2023 and are likely to return to pre-pandemic levels by 2024. The west Asia has outpaced other regions, with tourist arrivals 20% above 2019 levels, while Europe, Africa, and the Americas have recovered to around 90% of their pre-pandemic levels.

However, the recovery is uneven, particularly in conflict-stricken areas and regions affected by natural disasters such as forest fires. Also, Environmental challenges continue to impact the travel and tourism sector globally. Issues such as bio-diversity loss, climate-related extreme weather events, and pollution pose significant risks to tourism resources and infrastructure. The sector, which accounted for 5.8% of global water use and 5-8% of global material extraction in 2019, is under pressure to adopt more sustainable practices, the report added.
 

Also read | For international travellers, India remains a distant destination
According to the report, a big dampener for India has been the steady reduction in government funding for overseas tourism promotions over the years, from 524 crore in 2021-22 to 341 crore in FY23, and further down to 167 crore for FY24. In contrast, substantial funds have been directed towards the development of pilgrimage destinations, with an increase of 66%, from 150 crore in FY23 to 250 crore in FY24.

Despite these shifts, the overall budget for the tourism sector remains unchanged at 2,400 crore, the same as in FY23. However, only 1,343 crore of this allocation was spent on promoting tourism in FY23, with a mere 60 crore of the 341 crore budgeted for overseas promotions actually utilized. An equal amount was spent on domestic campaigns, falling short of the allocated 75 crore.

"Over the years, there has been a reduction in spending on promoting India as a destination overseas, which is how most countries get high-spending in-bound tourists. Small policy changes could potentially have a big impact on the tourism landscape of the country. For instance, we don't want them to give out free visas but they can incentivise transiting travellers to come spend a day or two travelling here and bring in a 48-hour free transit visa facility. Right now the focus of the government is primarily on domestic and spiritual tourism. They need to expand beyond that and also target business from inbound travellers," said Dipak Deva, managing director, Travel Corporation India Ltd, a Fairfax company.

He said changes should also be made to the Services Exports from India Scheme (SEIS), which will help small and medium companies operating in the travel space to expand their businesses through financial rewards to these service providers by way of duty credit scrips based on a percentage of their net foreign exchange earnings. These scrips can be used to pay various duties, such as customs and excise, which can lower operational costs. The government should encourage the private sector to spend on promoting India with schemes such as SEIS. "We must mobilise the embassies overseas to make tourism a key focus area and the ministry of tourism should focus on marketing India - let's say it's time for Incredible India 3.0," he added.

Rajiv Mehra, president of the Indian Association of Tour Operators, said, "India has no problem with infrastructure at the moment, flights or road, they are all very good. The problem is that there is no advertisement of the country outside, including roadshows or fam trips for tour operators and print and electronic media etc." This is putting the country at a huge disadvantage. India has earmarked just 3 crore for this fiscal for overseas tourism promotion. In 2022, the country had shut all its 20 tourism offices abroad, allocating the work to local Indian embassies in these countries. "Whenever there is one foreign in-bound tourist, s/he creates nine employment opportunities locally. But this has reduced to five now because India is only still at 70% of the total in-bound travellers compared to the pre pandemic levels," he added. 

The report highlights the travel and tourism sector’s global contribution to GDP, nearly matching pre-pandemic levels in 2023 at $9.9 trillion. However, persistent issues such as labour shortages, supply and demand imbalances, and price increases have strained destinations and businesses within the sector. Additionally, infrastructure in air transport and tourist services has not fully recovered to 2019 levels, indicating ongoing challenges in meeting the rising demand.

The top 10 economies in the 2024 TTDI include the United States, Spain, Japan, France, Australia, Germany, the United Kingdom, China, Italy, and Switzerland. These countries benefit from favorable business environments, robust transport and tourism infrastructure, and a high concentration of natural and cultural resources. The top 30 TTDI scorers accounted for over 75% of travel and tourism industry GDP in 2022 and 70% of GDP growth between 2020 and 2022.

In the Asia-Pacific region, Japan, Australia, and China lead in travel and tourism development, with India ranking as the top lower-middle-income economy in the TTDI. The region has made progress in areas such as ground and port infrastructure, information and communication technology-readiness, and cultural resources. However, emerging economies in south and southeast Asia lag in transport, tourism, and information and communication technology infrastructure.

Most of the dataset for the TTDI is statistical data from international organizations, with the remainder based on survey data from the World Economic Forum’s annual Executive Opinion Survey, which measures qualitative concepts or for which internationally comparable statistics are not available for enough countries.

As the travel and tourism sector continues to recover, it faces the dual challenge of addressing immediate supply and demand imbalances while preparing for long-term environmental and geopolitical issues. Sustainable and inclusive development is crucial to harness the sector’s potential to contribute to global well-being and address worldwide challenges.

 

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