Hotel Industry Trends in India

TOURISM AND HOTEL INDUSTRY
TRENDS IN INDIA
TABLE OF CONTENTS
1. INTRODUCTION 1-3
2. PURPOSE OF RESEARCH STUDY 4
3. RESEARCH METHODOLOGY 5-7
4. DATA ANALYSIS 8-53
5. FINDINGS 54-55
6. RECOMMENDATIONS 56
7. CONCLUSION 57-62
8. BIBLIOGRAPHY 63-64
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INTRODUCTION
Tourism In India:
India is well known worldwide for tourism places. Indian culture, history,
historical monuments, ice capped mountains, lush green valleys, vast
forests and rich wildlife always excites tourists all over the world. As you
may know tourism is a major part of Indian economy, every year we add
million of dollars in our foreign exchange reserve.
Tourism industry of India is today is being a part of interest for many national
and international organizations. Today this industry presenting the
business opportunity of a lifetime for anyone interested in investing in
India's 'Tourism Infrastructure'. India has more then 300 million domestic
and foreign tourists. The graph of this industry will surely increase in
coming years as the liberalization of the economy permeates deeper and
deeper.
Opportunities abound in the traditional tourism related areas and in novel

exciting fields. From the setting up of international class star hotels,
motels, wary-side amenities, heritage hotels and restaurants. To the
setting up of golf courses, amusement parks, adventure and water sport
complexes, aerial ropeways, cruises, domestic airports and more.
Recognizing that the logistics of identifying locations for the type of
investments you are interested in making is difficult and time-consuming,
the Department of Tourism of the Government of India in consultation with
the various State Governments has worked out a plan of potential
projects. The department of tourism of government also help investors and
facilitate them in getting project clearance and permits for this industry.
1
Booming industry
• Indian travel and tourism experienced a boom during 2005. There was a
surge in arrivals and departures as well as robust expansion in
domestic tourism. After growing by 15% in 2004, the number of
incoming arrivals rose by a hefty 22% in 2005 over 2004. Not
surprisingly, incoming tourism receipts also rose sharply by about 16%
in 2004 and 32% during 2005.
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 2003-2005
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 2004, 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 2005, 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.
2
Local holiday spirits
• Domestic tourism is also expected to grow robustly in 2005 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 2004. With Air Deccan expanding its
network to a national footprint in 2005 and offering very low fares,
competition increased for other carriers. This will undoubtedly provide a
further impetus to the growth of tourism in India.
3
PURPOSE OF THE RESEARCH STUDY
THE PURPOSE OF MY RESEARCH STUDY IS TO
UNDERSTAND AND CRITICALLY ANALYZE THE VARIOUS
IMPORTANT ASPECTS OF TOURISM IN INDIA: AND TO
ENABLE THE MARKET ANALYSIS OF THE TOURISM
MARKET IN INDIA.
4
RESEARCH METHODOLOGY
A Research Methodology defines the purpose of the research, how it

proceeds, how to measure progress and what constitute success with respect
to the objectives determined for carrying out the research study.
The appropriate research design formulated is detailed below.
 Exploratory research: this kind of research has the primary objective of

development of insights into the problem. It studies the main area where
the problem lies and also tries to evaluate some appropriate courses of
action.
 The research methodology for the present study has been adopted to
reflect these realties and help reach the logical conclusion in an objective
and scientific manner.
The present study contemplated an exploratory research.
RESEARCH DESIGN AND METHODS
Research Design
1. This report is a combination of an Exploratory and Descriptive process of
research design. The sample population was chosen for being
representative of the hotel industry and the various other organizations
considered in the study as outlined. It was based on selection of an
appropriate convenience sample. The research variables taken were the
state of infrastructure, political, economic, social and technological factors
etcetera as posited in the context of the role these played on the hotel
industry. The objective of undertaking a descriptive study was to learn the
“who, what, when, where and how” of the subject taken up for research.
Whatever its form, a descriptive study can be just as demanding of
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research skills as a causal study, and would entail on the same high
standards in its design and execution. These are proposition that typically
state the existence, size, forms, or distribution of some variables. For
example a statement such as “The tourism industry in India is expected to
grow at 8% in the next five years” can be validly tested from data collated
or status of infrastructure relating to tourism and other aspects as have
been validated in this study. Exploration is particularly useful when
researchers lack a clear idea of the problems they will encounter during the
study. Through exploration the researcher develops concepts more clearly,
establishes priorities, develops operational definitions, and improves the
final research design. When these approaches are combined, two
exploratory techniques emerge for the study as have wide applicability for
the researcher:
1. Secondary data analysis
2. Personal Interviews
Data collection Methods

The research variables were so chosen as to aid the analysis of the
supportive questionnaires administered to the strategic management heads in
the hotel and tourism industry as and also in the other organizations taken in
the sample. Through a process of in depth interviews (primary data) from
functionaries in the sectors, hotels and tourism, Tourism Financial Corporation
of India, the study was developed. Secondary data as considered in the study
were resourced from travel magazines, travel websites, internet, etcetera.
Limitations of the Research

(i) The responses are likely to be biased.
(ii) There was a phenomenal lack of time to conduct research more
extensively than could have been possible had there been more time
allocated for undertaking this study.
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(iii) The sample chosen was a convenient sample, which was felt to be
appropriate to the context though the responsiveness of the
respondents in answering the questions posed by the interviewer,
featured some element of resistance in extent of data disclosure
besides that of attitudinal preferences.
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DATA ANALYSIS AND PRESENTATION
Data Analysis
City Trends: According to The survey Of The Tourist and Hotel Sector
(2005), the year 2004-05 witnessed a period of considerable buoyancy and
upswing for the hotel industry in India. Most cities saw occupancy levels
improve over the previous year and, for the first time in six years, both
occupancy levels and average room rates improved.
According to the Tourism in India Report, a nation that has the right, but not
necessarily the best infrastructure could still reap the biggest benefits out of
tourism, which, at the end of the day, is a sheer volumes game. The country
neglects domestic tourism at its own peril. The millions that travel from one
end of the globe to the other and within the country can give every industry
related to tourism a critical mass, which in turn will encourage the dollars as
well as rupees to come in. The links in the chain need to be aware of their role
and their mutual interdependence. If there was ever a sector that needed a
high element of co-existence between its inter dependent value chains
besides healthy inter sectoral linkages needing to be established it is the hotel
and the tourism industry. (A House In Disorder)
The Truth Behind Hotel Pricing: Few clients would normally check into a
hotel without looking over the room rates. And in this sector it is the high rack
rates that currently limit occupancy. Rack rates are room rates quoted in the
hotel brochures and on the websites by the respective hotels.
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Rack Rates
Hotel Avg Discount ** (%) Effective Saving (Rs.)
Corporate Individual Corporate Individual
category Room
Rates *
(Rs)
5 Star 9000 40 20 3600 1800
3 Star 4000 40 20 1600 800
Budget 2500 30 10 750 250
Hotel
Room for more, Tourism in India, Economic Times Intelligence Group (2005)
The researcher’s informal interviews with numerous senior hotel managers

revealed two distinct industry rates prevailing, that are the rack title (or the
published rate) and the actual payment rate. The actual payment rate in most
cases is the final settlement price which could be anywhere up to 40% lower than
the rack rates. While refusing to go on record, most hotel functionaries
interviewed agreed that rack rates were relevant and were published to set a
benchmark rate as an indicative price for this product depending on the demand
scenario, as is also linked to the availability of rooms. Another VP of a Delhi Five
Star hotel agreed that they normally publish the rack rates for, the respective
busy season. However, the price at the end that the customer lands up with may
vary. There is a common perception that room rates are negotiable in higher star
hotels as well. When it comes to corporate clients such pricing techniques as for
instance the publishing of rack rates etcetera have no meaning. In reality there
exists a practical demand supply situation for the hotel concerned. Occupancy
rates drop off in the off-season and shoot up in the peak season. If the hotels
could have a realistic rate, everyone would land up being the ultimate gainers.
One of the major costs for hotels is the land or real estate costs and which is
the reason why fewer hotels are found in the budget and the lower class
categories apart from the consideration of time taken to develop these hotels.
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Internationally, land cost forms around 15 % of the total cost of a hotel project
while in India, it comprises almost 45-50% of the total costs in such projects.
This is partly the reasons why the hoteliers prefer to invest in middle and
luxury class hotels so as to be able to recover the costs in a shorter span of
time. In addition, to this there are around 55 licenses to be sought and
awarded before one can actually start off a hotel. So such procedural
bottlenecks also impact on the project coming up. In the US and Europe, it
takes around 14-18 months to develop a hotel property while in India it takes
around four years to start up and, as a result, the finance and interest costs hit
the project costing made at the time of inception of such projects.
Since this is a people intensive-industry, it has a high proportion of manpower

costs compared to some other industries and this can be seen from the staff
to room ratio, which is about 3:1 for, hotels in India compared to the
international ratio of 1:1 prevailing for the same in the respective season.
However, this proportion may vary. There is a common perception that room
rates are negotiable in budget and mid-star segments but a few interviews
conducted by the researcher in this segment reveal negotiations having taken
place on this issue even in the higher star hotels as well.
Employment Pattern in Hotels: Tourism is an economic activity, which is

one of the biggest employment generators and has a multiplier effect on the
economy. The average employment figure in the hotels is higher than in
restaurants. According to a study in the Indian Journal of Labour Economics,
in 1988-89 the hotel sector employed 1.74 lakh persons. In 1993-94 this
number stood at 3.49 lakh, implying that the hotel sector employment had
increased by 101 per cent order this period. The direct enterprise (DE) hotels
employ about 2.99 lakh workers or 85% of the workers employed in the hotel
industry.
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According to Tourism In India (2005), like any other business, tourism is big
enough to warrant a very strategic approach and so there has to be a target
for developing proper infrastructure for tourism. While the target is clear: five
million visitors by 2006(double the present numbers), the path to that number
is an old but oft-beaten one. The researcher’s discussion with a vast number
of players in the industry bearing varying size and volumes of businesses
threw up some interesting aspects, which are detailed below:
1. Government policy or the lack of it was the single biggest reason
why infrastructure had not picked up.
2. Almost everyone in the business agrees that the lack of proper
infrastructure was the biggest flaw bedeviling the tourism and hotel
sectors as thwarted its full potential from taking off.
3. India's infrastructure, even at the prevailing measly tourism levels
of 2.6- million, was already creaking in several areas of operation.
4. The ability to scale up infrastructure is therefore a vital issue
needing to be urgently addressed in this carrying forward. The
industry believed that even if the government policy were to
miraculously change and modernize, India would find it very difficult to
accommodate the sharp surge in visitors that could ensue in the wake
of such development.
5. There seemed to be a kind of mentality prevailing that only the
foreign tourists, with their dollars, felt a need and appreciated the
existence of good infrastructure. Look at the business generated in
this sector. International arrivals, presumably of tourists, numbered
2.6 million, while even the most conservative estimate for domestic
tourists put it at around 250 million. Developing a good infrastructure
for the Indian masses would therefore imply that it would result in
automatically developing these for the dollar segments as well. But
the Indian tourists do not seem to be on anybody’s radar present or in
the scheme of things relating to the value chain extant in this sector.
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6. Private players were not willing to partner the government in
projects in this sector because because of an innate abhorrence of
red tape, long lead times and lack of permission for FDI in this sector
as was a source of vital funding.
7. In many locales around India, private operators had also flouted
government rules on the ground that paying off the government on the
sly was cheaper than really investing into the business, a thought
process impossible to understand given that tourism benefits
everyone concerned.
8. Several associations like TAAI, IATO and WTO have made
presentations to the government over the years. A few suggestions
have been implemented, but otherwise not much impact is visible.
9. It would not be entirely correct to say that the government has no
policy or vision. But a look at the Ninth Five Year Plan document
reveals a central government allocation of about Rs 800 crore for this
sector while the Tenth (2002-07) allocated Rs 1,800 crore to this
sector. So while there has been an increase in allocation, its visibility
of impact on the ground is low. The action points outlined in Nineth
Plan still hold valid in the Tenth Plan.
An assessment of the situation would therefore be needed before any

meaningful assessment of potential can be gauged. According to the Tourism
Ministry , Government of India, had conducted the following important tourism-
related surveys/studies through consultancy agencies appointed for the
purpose during 2004-05:
1. A 20-year perspective plan had been developed for tourism development in
almost all the States/UTs of the country.
2. A study on the impact of tourism on the socio economic development in
Rajasthan and Kerala was conducted
3. A survey of foreign tourists expenditure on handicrafts was conducted.
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4. A development plan for Haridwar and Rishikesh in Uttaranchal was
developed.
5. A master plan for integrated development of tourist circuits in the North-
Eastern regions and central circuits (Madhya Pradesh) was developed.
6. A study to examine the taxes levied by State/Central Government in the
Indian tourism sectorhad been conducted.
7. A development plan for Mahabalipuram was formulated.
8. An international passenger survey 2003-04 was conducted
9. A domestic tourism expenditure survey was conducted.
Study on the impact of tourism: on employment generation and future

employment potential at selected destinations was carried out. The Tenth Five
Year plan allocations for the tourism industry, while detailing plan of action for
almost every segment of this industry, still reveal a very low level of
commitment as respect these aspects was the major finding.
1. Liberalizing in Indian skies to increase air seat capacity was proposed by
the Government as part of the above findings.
2. Having a visa-less/visa-on-arrival facility for tourists from selected
countries has also been mooted
3. Improving and modernizing airport infrastructure and services is being
undertaken.
4. Allowing free inter-state tourist vehicle movement has also been
contemplated.
5. Rationalizing and reducing taxes for the end customer and for making
destinations competitive inter-se have also been initiated.
6. Measure closing down Government of India Tourist Offices located
overseas and conducting publicity increasingly over the Internet and
other electronic media has been initiated.
7. Making tourism a national strategic priority for employment generation
has since been seriously addressed.
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8. Incorporating the sustainability perspective in the various tourism
development plans/ projects to prevent the kind of environmental
degradation that has taken place in Himachal Pradesh, Goa and Jammu
& Kashmir has been incorporated.
9. Providing impetus to rural tourism by linking village development with
restoration of heritage properties has been undertaken.
10. Creating public awareness about the economic and social benefits of
tourism is being advertised predominantly.
The tourism infrastructure in India has therefore been analyzed based on an

assessment carried out on consideration of the following. Analyzed from these
the status basic building blocks as prevailing in India in this sector by the
researcher undertook to study the extent of the development and growth in
these vital parameters in relation to the hotel and tourism sector.
1. Connectivity
2. Transport
3. Hotels
(A House In Disorder)
Connectivity: According to Tourism in India, 2005, the issue of connectivity,

is not for tourism alone. It is one requiring of seamless coordination. India,
unlike many other leading tourist destinations is a huge and complex country
with significantly varying levels of quality of roads, rail, and air and sea links.
All these have to come together in as best integrated form at least in their
correct required sequence, to make a tourist experience a memorable one- or
one perceived to be causing least discomfort.
Air, road and rail are the three main connectivity players in India. Given that
the vast majority of tourists to India are from Europe and the US, both of long-
haul origins, air travel is the mainstay of such transportation and, in fact, the
only way to reach India as the country does not as yet attract any cruise liners.
14
This makes the airports, at least those in the metros, the key gateways to
India. In this section, analysis of India's air tourist connections with some
international examples has been done.
Connectivity Infrastructure: Connectivity is not just about getting to a place.

Once a person gets there, it becomes necessary to know how to go about
within the place that is the destination incurring the least cost in and minimum
time. The researcher’s meetings with the trade suggested that problems with
connectivity were multifold and needed a complex series of solutions.
The common refrain of the airline trade was that there were not enough seats.
In the peak seasons, it was difficult to get any seats into India. This was partly
due to the fact that airlines did not really step up their service during those
times on the perception that a large Indian NRI population would heads back
to India. That NRIs do not really count as tourists and certainly do not spend
the dollars that India wants from tourism was the common refrain. During the
off peak period, in contrast, seats would go begging. While such a cycle was
perfectly normal trade feedback suggested that the aviation industry had not
really got its act together to phase out seat availability.
India is actually short of 1.4 million seats, which would be seen as not really
making a difference to inbound tourism. Explaining the logic behind the
shortfall, Amitabh Kant, Joint Secretary in the Ministry of Tourism, New Delhi
and the architect behind Kerala's success as a tourism destination, noted in
his article for ASSOCHAM's study of 'Aviation and Tourism' in 2005 that the
expected traffic had been pegged at 130.66 lakh, each on an annualized
basis. Based on a load factor of 70%, the requirement of seats in 2004-05
could therefore be worked out to be 186.6 lakh seats whereas the capacity
created was only about 170.42 lakh. Thus, there was a shortfall of about 16.2
lakh seats within the country itself.
15
Apart from the physical infrastructure at the airports, India is fortunate to
already have a robust information technology system for bookings in place,
which could be, scaled up with Amadeus and Galileo both operational in India.
Travel Agencies' Network

Amadeus Galileo
Travel Agency 61870 4700
Locations
Airlines 470 493
Car Rentals 48 28
Hotels 61500 52000
Employees 4490 3000
Countries 200 116
For a common cause, Tourism in India, Economic Times Intelligence Group
(2005).
India, notably Goa and Kerala is a preferred destination for most chartered
flights but more than just bringing in charters ground handling standards are
also crucial. According to charter rules, there are 14 airports, like Patna,
Jaipur and Agra, where customs and immigration facilities exist and charters
can be landed. There are three airports where the states involved provide this
service while there are 15 in the third category, namely those where customs
and immigration can be provided on request. Strangely, Jaipur, the gateway to
one of India's best-known tourism spots in the country is categorized in this
third category. One could expect Jaipur to be a full-fledged international
airport given the kind of revenues it generates from tourism. However question
frequently raised that Jaipur is too close to Delhi to merit a full set up, but the
revenues from tourism that may be generated at Jaipur itself could warrant
expanding that time and expense on it. Charters, as a means of making up
for the lack or commercial flights, have some merit for India, as bilateral rights
are always an issue for airlines in the country.
A CII pre-budget 2004-05 analysis reveals that for the same money, a
passenger can travel 41 %, greater distance on an international circuit than he
16
can on a domestic circuit. The CII memo further stated that domestic fares are
23-30% higher than international fares for a comparable block time and
distance. (A House In Disorder)
Timeshare: The profile of Indians using timeshare is changing. Earlier, the

average family income of buyers was Rs 25,000 per month, now it lips to Rs
50,000 - Rs 150,000. This means more disposable incomes and a greater
propensity to travel. This is good news for the timeshare industry. The other
thing is, when the travel industry is down, as it was these past 2-3 years, the
timeshare industry does well. These are because people have already paid in
advance for their weeks, and are loath to see it go waste.
Timeshare Sales
Year Sales [US $]

1975 50
1986 950
1996 2200
2003 5500
Room for More, Tourism in India, Economic Times Intelligence Group (2005)
Timeshare is already a big business overseas. In the US, which is its biggest
market, sales volumes rose 14% to US$ 5.5 billion, in spite of the troubles
after September 11th 2001. As per a market research report by Ragatz
Associations for RCI, one of timeshare's largest companies, nearly 1,600 US
timeshare resorts serve 3 million households, who own 4.9 million weeks or
equivalent in points. The report stated customer satisfaction with timeshare
being at 84%, converting into a 92% use of timeshares owned. This, in turn,
meant an expenditure of US$ 5.4 billion in local communities where timeshare
resorts existed and still rising all the time.
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Even if these numbers sound big, the RCI report found that fewer than 3%
households in the US owned a timeshare. The market penetration of
timeshare increased with income so that over 7% of households with incomes
over US$100,000 a year owned timeshare. Around 73% of all timeshares sold
were by property developers The average purchase price from a developer
was US$ 14,200 per week of annual use (once a year the 7 days could be
used at the resort).
Dream Merchants [US Timeshare Sellers]

Gifted, Inherited,
Others
4% P roperty Owners
Association
8%
Consumer Resale
15%
Developers
73%
Gifted, Inherited, Others Property Ow ners Association

Consumer Resale Developers
Dream merchants (US Time share Sellers)

Note: Tourism in India, Economic Times Intelligence Group (2005)
According to report, timeshare is as good a demand generator as any other,

which could serve as an indicator for Indian tourism as well. The average
American part spent US$ 1,205 on timeshare or about US$152 a day. No
clear numbers for India are available, but these will be high, as timeshare is
presently limited to the upper or upper-middle classes in India.
Timeshare as a viable tourism option has been developing for a restricted

class of Indians, that is those who know the means to boost tourism more than
any other class. As economic conditions improve, timeshare should also
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improve, and hopefully pull its weight in the overall scheme of arrangement
things in the tourism sector in India. (For a common cause)
Timeshare is as good a demand generator as any other (see table 24), which
could serve as an indicator for Indian tourism as well. The average American
part spent US$ 1,205 on timeshare or about US$152 a day. No clear numbers
for India are available, but these will be high, as timeshare is presently limited
to the upper or upper-middle classes in India.
Spending Locations
Location of Spending Spend (US$ million)

Restaurants & Bars 1459
Admissions 849
Rental Cars 601
Groceries 596
Entertainment, Sports 447
Rental Lodging 348
Sightseeing, Tours 253
Gambling 217
Shopping 117
Other Transport 41
Others 511
(2005)
Timeshare as a viable tourism option is developing for a restricted class of

Indians, but those who know the means to boost tourism more than any other
class. As economic conditions improve, timeshare should also improve, and
hopefully pull its weight in the overall scheme of things in tourism in India.
19
The foreign tourist charter flights generally originate from many places outside
India. Tourist charter flights can land at all 12 designated international airports
(namely, Ahmedabad, Amritsar, Bangalore, Kolkata, Chennai, Cochin, Delhi,
Goa, Gowahati, Hyderabad, Mumbai and Thiruvananthapuram and four
additional airports, namely, Agra, Jaipur, Varanasi and Port Blair. In addition,
tourist charter flights may also be permitted to land at airports having customs
and immigration facilities. Each tourist shall have a foreign passport with an
endorsement to visit India. However, their spouses can travel with them, even
if they hold Indian passports. Indian passport holders may be permitted to
travel on tourist charter flights on the return leg of the first flight and on the
onward leg of the last flight of the series of charter flights, provided a minimum
of 12 charters are operated in the series; and to Gaya, Patna, Varanasi,
Bhubaneshwar, Khajuraho, Port Blair, Guwahati and Bagdogra.
The charter flights will not be permitted, to be used for purposes other than for
carrying on board bona fide tourists. Since Free movement of cargo is
permitted within the country. DGCA data till 2000-01 showed a rise in such
traffic since 1998-9. The researcher’s discussions with tour operators also
suggest that a far greater growth was possible, but there were certain
procedures as only under the 'Open Sky Policy', carriage of cargo may be
permitted on tourist charter flights, etcetera as was retaining the full blooded
growth in this sector.
The charter flights shall operate to the airports in India as specified in the flight
clearance issued by Director General Of civil Aviation (DGCA). For any
change, the operator shall obtain prior approval of Director General of Civil
Aviation. All tourists carried on these flights should have booked the package
tours in the originating countries. The stay of tourists in India will be for a to a
maximum period of 45 days.
20
All arrangements in India for the tourists had to be done through Indian
Principal/Travel Agent/Tour Operator/Hotelier recognized by the Department
of Tourism and the charges for arrangements will be paid in foreign currency
in advance. A tourist charter flight could transport the tourists brought into the
country by the same operator, on domestic sectors in India as well. However,
the initial place of arrival and the final place of departure from India could be
from the airports listed. The tourists coming to India by tourist charter flights
may perform their return journey by other scheduled flights also.
There are also some other issues. For example, typically, the average spend
of a tourist arriving on a charter is lesser than that by those on a commercial
flight. This is so because the charter tourists book an entire end-to-end trip
where extra expenditure is limited. Moreover, charters typically attract budget
tourists only who spend only around US$ 80 or so a day in tourist spots like
Goa. This is not exactly what Goa or India needs in terms of average spend,
to really boost up this industry.
Airport Charges: India is ranked at 115 out of 224 airports worldwide in terms
of charges for B-747 aircraft, as far as their landing and take off in the country
are concerned. The charges at the Indian airports are around US$ 2,285 as
against the high charges of around US$ 10,292 at Frankfurt Airport, Germany
and lowest charges of US$ 101 at Guinea Bissau Airport for B-747 aircraft.
India charges Rs 8,040 to Rs 27.451 for Route; Navigational Facility Charges
(RNFC) depending upon a distance of 100 to 2000 nautical miles as
compared to charges in Australia (Rs 5,258 to Rs 105,162), Brazil (Rs 11,141
to Rs 222,824), Canada (Rs 3,824 to Rs 76.472) and Etiro Control (Rs 11,876
to Rs 237,520) for B-747 aircraft. RNFC is low in India when compared to
other countries in the world. However, the charges vary with the level of traffic
and the earning from on-traffic, revenue sources interviewed in this sector.
21
For this study, IATA furnished some indicative figures on airport charges in Asia.
A typical 295 tons B747 ('Jumbo') would find it quite expensive to refuel and load
up out of Mumbai. . This is another factor that hinders airlines from using bilateral
landing rights to the fullest and thereby, bringing in more tourists/visitors to India.
Even if seats were to be increased, the airlines face steep charge structures
which hike their costs involved in landing, navigating refueling at Mumbai's
airport thus making this quite expensive for the airlines, concerned which limit
their commitments about putting flights to India. The Charters flying in and flying
out from Goa, in fact, and parking their respective aircraft prefer to fuel up at
Dubai and not in Goa since it is relatively cheaper there.
India's international airports do not bear any mentionable class in so far as

amenities provided for tourists are concerned. This is because there is a point of
view that Indian airports are mere transit points for visitors for getting in and out
of the country. But this kind of opinion nevertheless leads to India missing out on
moneymaking opportunities for the airports as for instance from more revenues
that could have been secured duty-free restaurants and even the MICE segment.
But for making money one has to pump in money as well where it is required..
Most airports in India it is needless to mention get hopelessly overburdened
during peak traffic hours (usually during unearthly hours coming from 11 pm and
3 am etcetera) when the airports most closely resemble a Mumbai suburban
station at the peak 'rush hour'. The quality of such an experience by a tourist
leaves much therefore for him/her to desire.
Most international flights land in Mumbai at night, mainly because India, not being
a hot destination, gets rather inconvenient take-off times. Take the example of a
tourist who lands at Mumbai -- which is India's gateway in the absence of other
international landing links – for flights to Aurangabad for that tourist who desire to
hunt the Ellora caves. The international flights land at night may be around 1 am.
Since there are no connecting flights to Aurangabad the same night, the tourist
22
has not necessarily spend the night of no less than 10 hours, in a hotel near the
airport. The hotels near the airport do not enhance the experience at all. There are
either third rate overnighters at low prices or there are the five-stars where it
makes no money sense to spend US$ 100 for 10 hours. In other words,
evacuation of the tourists, once they land in India, is severely lacking. There have
to be enough facilities inside the terminals to, at least, ease the waiting period. But,
whatever facilities are available are rudimentary and worse than those offered by
many African airports, which allegedly are poorer than India. Cochin, in South
India, can show a way out.
Projections: According to Tourism In India (2005), as discussion on facility

and ideas becomes imperative against the backdrop of ambition and without
vision, of the government of India for which proper planning and
implementation need to be carried out. The projections of airline passengers
coming into India should result in airport revenues rising for Mumbai, the
gateway airport, from at least from Rs 500 crore to over it Rs 1, 000 crore. The
Tenth five year plan had allocated over Rs 12,000crore, as outlays for this
sector since a the Standing Committee of the Rajya Sabha had noted thus in
one of its meetings held in Nov 2003: About 65 percent of the total five-year
investment plan, generated from the Airport Authority of India's internal
resources, is t be kept for expansion modernization and construction of new
terminal buildings to be mainly located at Delhi, Mumbai and
Thiruvananthapuram. An additional 28 per cent had been reserved for
upgrading navigational aids and cargo warehouses at the airport. In addition
to the planned outlays, preliminary feasibility studies and proposals were
being reviewed and revamped by the various State governments in India in
consultation with the private sector for vitalizing this sector and making it
vibrant.
Other initiatives, as were not included in the Airports Authority of India's plan,
envisaged an outlay of the order of about Rs 19,100 crore. Such investments
as were contemplated for the new airports namely Mumbai, Bangalore, Goa
23
and Hyderabad amounted to about Rs 14,600 crore, and embraced
modernization programme for the terminal buildings at the various airports
aggregating to Rs. 2,400 crores, creation of related supporting airport
infrastructure aggregates Rs 1,500 crore and cargo facilities of Rs 600 crore.
If all these investments proposals were to be realized, the total investment gap
would increase significantly l from the original estimate of Rs 1,101 crore to Rs
20,201 crore.
The Ministry Of Civil Aviation has brought out the fact that the present system
of management at airport as entrusted to the responsibility of public sector
entity such as the Airports Authority of India has several in-built deficiencies
such as the following:
(i) The service conditions of employees are formulated by the directives
originated from Department of Public Enterprises, which make it very
difficult to reward/punish errant staff leading to a lack of professionalism
and poor commitment to work and in consequence result in poor service
standards.
(ii) AAI being a public sector entity, every aspect of its functioning is open to
scrutiny under an elaborate institutional mechanism of accountability
riddled with problems of misuse as may at times focus on procedural
formalities rather than substantive results, leading to fostering a civil tax
of cautious working style being adopted by the management. Invariably,
the development of such an attitude often stifles initiative risk
management innovation. These are even delays in decision making that
render the functioning of airports unauthorized and hence commercially
uncompetitive a fiercely competitive from the perspective of a global
backdrop.
(iii) Because of such service conditions, there is a relative lack of sensitivity
about needs and aspirations of the passengers and other users, leading
to poor quality of service being rendered or standards maintained despite
heavy investment made to modernize facilities at the airport.
24
(iv) Lack of professionalism and initiative creates an atmosphere not
conducive or facilitate for rapid and total absorption of new technology as
well as new management techniques.
Being a public sector organization, the Airports Authority of India has to go

navigate the course of lengthy procedures involving the Ministry of Civil
Aviation, the Public Investment Board and Cabinet Committee on Economic
Affairs for getting a clearance on major investments contemplated. This leads
to a delay in implementation and over/under-investment and never the
optimum. (A House in Disorder)
It may not be out of the place to mention changes need not necessarily cost
money. A lot of ideas can be implemented without money- it only needs a
vision and a leader/manager to drive the human resource component in this
system. Some examples could be the following:
1. At most Indian airports toilets and facilities are poor, or are very
poorly maintained. It takes hardly much money to just swipe a mop
across the floors to keep them clean anyway, as should be made
in task assigned to the sweepers on the airport.
2. Every Indian airport is overstaffed with many people just hanging
around the terminal. While downsizing may not be possible all at
once, it should be possible to prevent unnecessary loitering around
the people. This needs a boss who leads from politicized unions
can be handled is another issue altogether.
3. The total lack of an attractive and appealing atmosphere inside the
premises of the airports generates lethargy and low enthusiasm
levels with the result that interest secure, no one really cares much
for jobs being accomplished or goals being achieved.
4. The least the AAI could do is to talk to the taxi unions to ask their
drivers to dress well. Agreed, the flights do land at night, but if taxi
25
drivers can spruce up their dress/appearance, it would go a long
way in cheering up the overall image.
5. There are literally no designated places to drop off a luggage
trolley at the airports. The result is that: trolleys litter the roads and
passages everywhere at the airports. It just needs signage and
some discipline to ensure that trolleys don't create this kind of a
clutter.
The Ministry's brief however states that the Airports Authority of India's 9th
Five Year Plan target is, on the one hand, unrealistic when compared to its
past investment performance and, on the other hand, unambiguous in relation
with such investments proposed contemplated in the other countries of the
world. Besides this, it is doubtful that the proposed investments levels will help
upgrade the principal international gateway provide airports to compelling
world -class standards.
The above text adopted from the interactions within the government reveal to
what extent the development of infrastructure is difficult in India. Everyone
recognizes the need, but no one agrees on the requirement of implementing
small changes everywhere that do not cost monetary outlays but which
nevertheless can significantly improve tourist experience and engender
allowed satisfaction.
Apart from the costs associated with the airports in India, the sales taxes on
aviation fuel is also quite high, which drives up costs (see table 25). The issue
gets more complicated because each state has its own tax structure, which in
turn does not enable proper tax planning or quick route expansion denied by
most airlines.
Aviation Turbine Fuel Tax
Sale Tax On ATF
State-wise sales tax (2004-2005)
26
States Rate (%)
Delhi 20
Kerala 39.10
Tamil Nadu 25.20
Maharashtra 25
Bonded 20
Madya Pradesh 28.75
Rajasthan 26.70
* Bonded 13.48
Uttar Pradesh 20
Jammu & Kashmir 21
Punjab 22
Chandigarh 22
Himachal Pradesh 20
Manipur 20
Assam 22
Bihar 26.25
Goa 20
Gujrat 27.60
Bonded 36
Karnataka 28
Tripura 25
Orissa 20
West Bengal 25
Andhra Pradesh 4
Note: * Upto 31/03.2005 only
Air to Rail: According to Tourism Of India (2005), from the airport the,
evacuation of passengers can be by rail or road as well. There has been a
debate raging all over the world that could rail ever take the place of road
(cars/ buses/ vans) for primary evacuation of passengers and their luggage
from airports. The argument in favour of a rail link is that it would cut transit
times, reduce pollution, evacuates faster out of the airports than any other
kind of wild transport could. But the arguments against it are the quantum and
level required for it of investments, the expenses on the maintenance function
and the fund requirement for eventual replacement of all worn out rail it out
and systems after 30 years of non-stop use is of daunting magnitude that
defies revenue consideration. Air passengers typically carry a larger bulk of
luggage which would be difficult to load and handle with so many other
27
passengers desiring to board on the train. Taxi services will assist in enabling
the passenger reach his doorstep .One would still need taxi/buses to take one
person home therefore involving increased outlay of time, effort and money.
The argument in favour of using the rail link is clearly laid down in the Air/Train
website of New York's JFK International airport, which states the benefit of
utilizing the Air/ Train, when complete, would:
1. It reduces highway congestion and; improves air quality.
2. It generates 4,150 construction jobs in the US aggregates to payment of
the order of $580 million in wages and $980 million in sales
3. It stimulates the country’s economy.
4. It provides the local residents who work at JFK airport with a transit
connection to their work place from their homes and vice versa.
5. It would boost New York City's international business and $15billion-a-
year tourism industry.
Arguments notwithstanding, rail links would be a crucial for infrastructure

requirement, if the planning and vision were there. The prime connector could
be the rail link. No Indian airport is linked by a railhead to the rest of the city or
the country. A study of all major airports will reveal that airports are part of the
chain, not as an elite entry point. The airport Schipol Airport in Amsterdam,
Netherlands is an indicator the near perfect and synchronized benefits of
having an Air/Rail link for travel to any point within the city and to destinations
across the country.
28
Rail Links
Airport Distanc Links Entry Type of Rail Cost by Cost by

e from point of Link Train to Taxi To
City rail link City City Centre
Centre in Centre
(Kms) airport
Mumbai 23 Road Nil Nil Rs 80 Rs 350
Kuala 75 Rail. At check 'Dedicated high RM 35 RM 67
Lumpur Road In speed
Singapore 12 Rail. At Metro SGD2 SGD 26
Road Check In
Dubai 5 Road Nil Nil Nil AED 15
Hong 10 Rail, At Dedicated high HKD 100 HKD 335
Kong Road Check In speed
(2005)
Compared with the analysis given below Mumbai gets far lesser passengers
and flights than do counterpart airports in Asia. The absence of a railhead
connection is in itself not a problem. The issue relates to the evacuation of the
people away from the terminal as fast as they land so that even a bigger
terminal would prove insufficient under the circumstances. A tour of the
airports around India would reveal the extent to which India lags behind
foreign countries in functional capabilities such as forecasts, planning and
implementing the development of the plans relating to development of the
infrastructure linking railways with air transport – and all just not for tourism
but also for improving quality of life of the locals. Each major city should have
links, of a scalable magnitude, which should increase as the city expands,
29
Annual Non-Scheduled Operations of Pawan Hans
Years Aircraft Leased Hours Flown Passengers Revenue (Rs.
at Year End Flown Mn)
2000-01 25 21,472 469,378 1,211.4
2001-02 22 18,027 354,017 1,068.6
2002-03 21 17,890 401,584 1,083.7
2003-04 26 17,937 404,495 1,103.1
2004-05 24 18,798 399,410 1,211.9
For a common cause, Tourism in India, Economic Times Intelligence
Group (2005)
For a starter, take Singapore's Changi airport. It was long voted as one of the
world's best airports and now has the ail to the city. The Metro was not a
dedicated rail link, connecting the city to Changi, which is at one end of the
island. This link was opened in February 2005. The MRT station is located in
Terminal 2 and is also accessible via the Sky train from Terminal 1. It takes
about 27 minutes to reach the city. The travel fare (from the airport to the city)
is below S$2.00 (not inclusive the S$l refundable deposit for a single trip
ticket). In fact, a trip from Changi airport to Orchard Road, located in the
centre of the city, will take about 3 minutes and cost S$ 1.6 for a single
journey, as per the SMRT, which operates the Singapore Mass Rail Transit
System.
Or take Hong Kong, the other city in Asia that vies with Singapore for a
leadership in infrastructure system subsisting in the tourism sector. Its 'Airport
Express', a service dedicated to linking the airport to the city, has its own site
service facilities and stations. It is one of the few dedicated airport railways
link in the world, covering the 35.3km between the airport at Chek Lap Kok
and Central Hongkong district in just 23 minutes.
Kuala Lumpur is a smaller city vis-a-vis the other cities in Asia, but its vision is
to become a preferred destination for Asia. The rail link becomes vital and
more crucial for KL because its Kuala Lampur International Airport is 75 km
30
from the city. KLIA express started up in 2002 under a 30-year contract with
Express Rail Link. This RM 2.4 Malaysian Rengitt(MR)billion project carried its
1 millionth passenger in January 2003. The rail link is cheaper for a single
traveler, but for more than two people traveling together it makes as much
more sense in taking a taxi, which costs the same as the train. Yet, the
concept is ready. Under its Vision 2020, the administrative capital of Malaysia
at, Putrajaya is coming up between KI City and the airport, which should see
the usage of the express increase manifold compared with this no such
parallax exists in India .However this country has the Pawan Hans helipcopter
service in Mumbai which is presently being used mainly by the government
and ONGC officials for their trips to Mumbai High and similar such
installations. Technically, these helicopters could be extended for tourism
purposes as well. However sufficient demand need to develop for such
linkages to materialize to places like Alibaug, Lonavala or within Mumbai itself.
Rail Links: The railways have their own role to play. Indian railways is the
largest transport system in the world, and with all its, failings, it needs to be
admitted that it renders an absolutely invaluable and, on the whole, very good
services to the Indian masses to travel from one destination to another. The
railways have been traditionally seen as cheap and appropriate transport by
Indians, but tourists from overseas are neither encouraged by the condition of
the railway nor they are visible any significant city this mode of transport except
at Agora and one or two similar tourist site. There, however exist, provision for
foreigners wanting to cut costs and see more of India. To start with, there are
Indrail passes, similar to the Euro pass for railways in Europe. The two serve the
same clientele and segment, but the rates are not comparable because of the
complications in travel rules, the sheer size of India and the overall quality of
travel experienced. The rates besides are also high and leave much scope for
rationalization.
Indian Rail Tourist Passes
31
Validity AC Class AC-2 Tier, First Class Sleeper Class II
(Days) AC-3 Tier, AC-Chair Class (Non AC)
Car
Adult Child Adult Child Adult Child
1/2 57 29 26 13 11 6
1 95 47 43 22 19 10
2 160 80 70 35 90
15
4 220 110 110 55 50
25
7 270 135 135 68 80
40
15 370 185 185 95 90
45
21 396 198 198 99 100
50
30 495 248 248 126 125
65
60 800 400 400 200 185
95
90 1,060 530 530 265 235
120
(US$)
(2005)
Indrail passes can only be purchased by foreign nationals and NRIs on payment
of US Dollars, Pound Sterling or other convertible foreign currencies. This pass is
issued by Indian Railways to foreign (that is non Indian) nationals and Indians
residing outside India to undertake travel by to destination of their choice within
India
The pass allows unlimited travel on all regular rail tourist routes as per the wish of
the traveller but only during the validity of the pass for which reservations must be
made separately. The pass may be purchased for 1st class, AC sleeper (2-tier or 3-
tier) or AC chair car class, or 2nd class, for varying durations as desired ranging
however from a half-day pass to a 90-day one. A pass for one class is also valid for
use in on the lower (that is. less expensive) class of travel should the tourist so
desire. Fares differ in respect of adults and children. Payments need to be made in
US dollars or any other convertible foreign currency. Identity of the tourist that
he/she may carry in the form of his passport or some other document is required.
The main advantage of an Indrail pass is the convenience it provides by way of not
32
having to buy separate tickets for segment or all segments of the journey. It also
saves money which is that if holding a first class or AC class travel (although not as
much as it used to do) states the tourist need not by his buying all the tickets and
making reservations separately, especially if one intends to travel a lot. The passes
for shorter durations are less of a bargain than the ones for longer durations. One
also gets access to the Tourist and VIP quotas for reservations, and an Indian rail
pass usually makes things much smoother at a Tourist Guide or Tourist Booking
Counter at a railway station.
Taxis: If one cuts out rail for intra-city travel, the only solution, which remains,
is a taxi. But experiences of even Indians returning from overseas have been
horrific. Taxis are old, drivers unshaven and uncouth. and there's absolutely
no attempt to help. Instead. the first look makes one suspicious of being
cheated, which unfortunately does happen often. The Indian tourist office in
Mumbai, of course has a different view: it does not acknowledge any problem.
Ram Chopra, regional director, Mumbai office of India tourism says it has
trained over 5,000 taxi drivers of the black and yellow cabs, and that 'there are
very few complaints, mainly related to touting or cheating.
That is understating the case. The taxi fleet must rate as one of the worst in
the world, with most yellow tops being extremely shoddy in quality driven by
equally bad drivers. Its not uncommon to find a surly and uncouth driver; its
quite common to find the pre-paid taxi counter issuing a receipt for a taxi
whose driver is not there nor is the taxi easily traceable in a badly lit parking
lot. Policemen are hard to find. For an Indian, it's like returning to the earth
with a thud; for a foreigner it's the worst nightmare at night in a new city and
an arrival like this. It hardly does anything for India's image. And yet nothing
changes fast enough. There have been occasions when taxis have stopped at
remote locations or a flyover and drivers have demanded extra money to
carryon with the journey. But while Mumbai is far better disciplined, other cities
33
in India receive a far worse review from most of the international sites or
traveler books, with almost every review advising caution.
Caution is usually advised when there is lack of information about a subject. In

India's case, lack of knowledge is the key issue. Foreigners are aware of India's
situation, and come to India after a conscious decision. Imparting the best
information one can simply remove some obstacles to spending, if it take that
view. Take, for example a comparison of airport websites around Asia and India.
Mumbai comes out the worst (see table 29). A look at the internet-based chat
and feedback rooms reveals the extent of the malaise, and the feedback is bad,
to put it mildly. Information infrastructure, as it is physical is today as important to
development as anything else.
Reaching Out Information From Indian International Airport Websites
Parameter Mumbai Delhi Kolcutta Chennai Cochin

Website Accessible Yes Yes Yes Yes Yes
Contact Information Yes Yes Yes Yes Yes
Right Timetable No Yes Yes Yes Yes
Online Right No No No .No Yes
Information
Travel Details Taxis, No Yes' Yes Yes Yes
Buses
Customs Information No Yes Yes Yes Yes
Tourist Information No Yes Yes Yes Yes
Consulate details No Yes Yes Yes Yes
Ease Of Navigating Yes Yes Yes Yes Yes
The Site
(2005)
Currently only Cochin airport has any online flight status link or data. Neither
Delhi nor Mumbai have any links or data at all and these are supposed to be
the leading airports of India. While all the airport websites visited have the
34
standardized list of links on their left side of the page, in the case of Mumbai
(www.saharairport.com) none of these links connect to anything. Most other
airport sites have an offline airline timetable, like railways have, which is still a
good enough guide. Only Cochin airport has an online flight status on their
site, which can be compared to any airport in Asia.
There are options that have been developed over the years in India as well as
overseas. In India, for example, there are hired taxis (mainly a range of cars
with the yellow number plates) that may be hired by the passenger's relatives
or business associates to pick him up at the airport. Such taxis are bountiful in
India. Now with the cost of cars falling and the general tendency to avoid the
pre-paid taxis is rising. But these can be expensive, since the pricing is based
on the assumption that any person flying into International airports could well
afford a little overcharging - a fact that no one disputes yet.
The other option is that hotels send their own cars to pick up people who stay
with them. But such numbers are very few. Call-a-taxi from telephones is still
not common in Mumbai or Chennai, though somewhat more common in Delhi.
Overseas, there are taxi services that specialize in airport transfers. For
example, for London's Heathrow, a firm called' Airport Taxis' has its own call
centers where travelers can book any variant of vehicle by providing flight
details. The taxi driver would wait outside with the name on a board; very
similar to India's hired taxi routine. In this case, though, online booking is also
possible.
IT and Tourism: The study deals into with the two segments of business
hotels and resort hotels, separately making the observation that several
business hotels also get a number of holiday travelers and vice-versa. In the
business hotel category, the study has found that 96.3% of the 5 star and 5
star deluxe hotels have 24-hour access to Internet through a dial-up service.
35
However, only 51.8% of these hotels have installed plug-n-play or broadband
Internet service.
The IT-related services in 3 and 4-star business hotels are in the much
smaller range, compared to 5 star and 5-star deluxe hotels. While 48.2% of
such hotels are providing dial-up Internet accesses to the guests from the
guestrooms, only 25.9% are providing broadband service.
The study shows that 48.2% and 32.5'10 of the guests in the two segments use
the Internet services. This is followed in terms of usage by services like DVD on
demand, data port telephone line in the guestroom and the voice mail
The research shows that technology or supply of higher bandwidth by the service
providers is not really a problem, but buying higher bandwidths may cost
substantial funds in laying infrastructure and in monthly charges. Many hotels still
see internet access for guests as a revenue earning model and they wish 10 PUI
in only that much of investment as will get them returns. Thus, it is more a
question of mindset or attitude of hotel management, rather than the availability
of technology and this is precisely what the hotel managers need to look at
immediately.
36
Data Presentation
Presentation
1. All India average revenue has grown substantially from Rs. 5.18 crore
during 2003-04 to Rs. 9.15 crore during 2004 –05 and is expected to
see a significant improvement in the next few years.
2. The All India average Net Income (Net income before depreciation,
interest payment and taxes) also increased from Rs. 1.95 crore (24.0%)
in 2003-04 to Rs.2.80 crore(30.7%)in 2003-04,reflecting overall
improvement in the industry.
Indian Hotel Industry-Revenue & Profitability-Average Per Hotel
10 9.15
9
8
Rs. (Crore)
7
6 5.18
4.49 4.59 4.54
5
4 2.8
3 1.95
2 1.25 1.25 0.97
1
0
2000-2001All 2001-2002 All 2002-2003 All 2003-2004 All 2004-2005 All
India Average India Average India Average India Average India Average
Revenue (in Rs crore) Net Income (in Rs crore)
Figure: Indian Hotel Industry-Revenue and Profitability – Average per Hotel

Note: The Indian Hotel Industry, Survey Of The Tourist And Hotel Sector,
Ministry Of Tourism (2005).
3. House profit (gross operating profit after deducting franchise and

management fees) as a percentage of revenue increased from 29.2% in
2002-03 to 34.8 %in 2003-04. This is the second successive year that
house profit has shown upward growth.
37
House Profit (in %)
40.00%
34.80%
35.00% 32.30% 31.70%
29.20%
30.00%
25.90%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
1999-2000 All 2000-2001 All 2001-2002 All 2002-2003 All 2003-2004 All
Figure: House Profit

4. The number of hotels having training department increased in all star

categories, with all India average being 25.8 % compared to 19.9 % in
2002-03. Five star deluxe hotels had the highest percentage of hotels
with a training department. There has been an increase in the number
of three star hotels with a training department: 24.3% in 2003-04
compared to 21.0% in the previous year. This reflects the growing
importance being paid to employee retention and productivity
enhancement through training.
38
Trends in Rooms and F&B Revenue on Available Room
700000 607328
600000
500000 416158
400721 380562 398802
400000 332217
300000 245970
199655 210327 220976
200000
100000
0
1999-2000 All 2000-2001 All 2001-2002 All 2002-2003 All 2003-2004 All
Rooms Food & Beverage
Figure: Trends in Rooms and F&B Revenue on Available Room

5. December followed by November and February, was the busiest month

in 2003-04. Average occupancy was at its highest in December at
67.1%, while November and February registered average occupancy of
65.9% and 63.2% respectively. June through August was the slowest
period, with august witnessing the lowest occupancy (52.1%).
Trends in Monthly Occupancy (All India Average)
70 66.3
65.9
63 63.5 64 64.2
61.9 61.9 62
59.5 60 59.5 59.9 60.2 59.9
60 58 58 57.5 57.9 57.957 58.3 57.9
56.5 56.4 57
55 5655.5 54.9 56.2
53.5
53.55353.5 53.95454.3
54.3
54.3
5352.5 53.9
53.5 53.5
53.5 52.9 53
52.4 52.5 52.5 52.5 52.2
51.9
50 50 49 49 50.5
49.8
50
Occupancy(%)
40
30
20
10
0
J an Feb M ar Apr M ay J un J uly Aug Sep Oct Nov Dec
1999-2000 2000-2001 2001-2002 2002-2003 2003-2004
Figure: Trends in Monthly Occupancy (All India Average)
39
6. While print advertising continues to be the most popular marketing

medium used by hotels across India (93.0%), there has been an
increase in the use of hotel websites as effective marketing media
across all segments of hotels. Direct mail is also the preferred
marketing media for all categories, with an increase in utilization to
81.4% from 78.8% in the previous year.
7. Use of telemarketing as marketing media has increased, particularly in
the three star segments. Although the utilization of loyalty card
programmes has increased from 27.9% to 31.0 %, there is decline in its
usage by five star deluxe and five star hotels, possibly due to saturation
in the market, with hotels targeting the same customer profile.
8. Interestingly, radio advertisement and television advertisement have
grown in use as marketing media during 2004-05. Five –star and four-
star hotels used this mode of marketing the most, particularly for F& B
promotions and weekend or holiday packages.
40
Table
Trends in key operating Statistics
Avg total rooms 63 62 63 66 82 63 62 63 66 82 63 62 63 66 82
per hotel
Avg occupied 11829 12659 11727 13129 18435 11829 12659 11727 13129 18435 11829 12659 11727 13129 18435
rooms per hotel
Avg occupancy 51.7% 55.6% 53.2% 54.8% 59.7% 51.7% 55.6% 53.2% 54.8% 59.7% 51.7% 55.6% 53.2% 54.8% 59.7%
per hotel
Avg rate per Rs Rs Rs Rs Rs Rs Rs Rs Rs Rs Rs Rs Rs Rs Rs
hotel 2123 2046 2058 2004 2689 2123 2046 2058 2004 2689 2123 2046 2058 2004 2689
Percentage of Revenue Amount of Available Room Amount Per Occupied Room
Revenue
Rooms 55.9% 56.4% 53.2% 50.8% 54.8% Rs Rs Rs Rs Rs Rs Rs Rs Rs Rs
400721 416158 380561 398802 607328 2123 2046 2058 2004 2689
food and 27.8 28.5 30.9 .31.3 29.6 199665 210327 220976 245970 1058 1034 1195 1236 1417
beverages 332217
Banquet & 6.0 6.5 6.8 8.9 7.8 42851 48016 48324 69850 87662 227 236 261 351 338
conferences
Telephone and 4.2 3.6 3.1 2.5 2.3 29982 26622 22063 19884 25202 159 131 119 100 112
Others
Minor operated* 3.1 2.2 2.7 2.8 3.4 21957 16341 19336 21901 38420 116 80 105 110 170
Rental& Other 3.1 2.8 3.4 3.6 2.7 22178 20538 24338 28581 30172 117 101 132 144 134
Income
Total 100.1 100.0 100.0 100.0 100.0 717334 738003 715599 784949 1121000 3800 3629 3869 3945 4965
Departmental
expenses
Rooms 17.1 19.4 20.6 20.7 17.8 68650 80534 78234 82462 108205 364 396 423 414 479
Food and 62.4 61.7 62.2 58.7 55.9 151340 159268 167450 185236 234771 802 783 905 931 1040
beverages
Telephones 57.5 56.8 57.7 50.0 47.6 17237 15124 12732 9921 12007 91 74 69 50 53
&others
Minor operated* 59.1 50.5 51.8 52.7 53.7 12981 8256 10016 11547 20624 69 41 54 58 91
Rental &other 12.8 7.3 10.1 7.3 8.1 2834 1502 2466 2097 2919 15 7 13 11 14
income
Total 35.3 35.9 37.9 37.4 33.7 253041 264658 270898 293662 378052 1340 1302 1465 1476 1674
Departmental 64.8 64.1 62.1 62.6 66.3 464303 473318 444701 491286 742949 2459 2328 2405 2469 3291
income
41
Operating
expenses
Administrative & 9.4 8.9 10.3 8.5 8.4 67592 65596 73323 66228 94401 358 323 396 333 418
general
Management fee 2.0 2.0 2.4 2.3 2.3 14541 14525 16944 18302 25842 7 71 92 92 114
Marketing 2.8 2.8 3.5 3.2 3.6 20154 20409 24718 24980 40681 107 100 134 126 180
Franchise fees 0.4 0.4 0.4 0.5 0.4 2725 3301 2796 4145 3874 14 16 15 21 17
Property 7.2 7.1 7.3 6.9 6.2 51296 52644 52179 54321 69735 272 259 282 273 309
operation &
maintenance
Energy 10.7 11.3 12.5 12.3 10.5 76502 83005 89228 96439 118093 405 408 482 485 523
total 32.5 32.5 36.2 33.4 31.5 232809 239480 259188 262117 352626 1233 1178 1401 1317 1562
House profit 32.3 31.7 25.9 29.2 34.8 231491 233839 185512 229169 390323 1226 1150 1003 1152 1729
Fixed expenses
Property taxes 0.9 1.0 1.1 1.1 1.0 6558 7584 7831 8919 11068 35 37 42 45 49
Insurances 0.8 0.6 0.7 0.8 0.6 5874 4236 4992 6131 6845 31 21 27 31 30
Other fixed 1.9 2.1 1.8 1.1 1.6 13957 15253 13104 8740 17840 74 75 71 44 79
expenses
Rent 0.7 0.8 0.9 1.3 1.0 5016 5650 6482 10115 10947 27 28 35 51 48
Total 4.3 4.4 4.5 4.3 4.2 31505 32723 32408 33905 46700 167 161 175 170 207
NET INCOME** 28.0% 27.2% 21.4% 24.9% 30.7% Rs Rs Rs Rs Rs Rs Rs Rs Rs Rs
199989 201116 153103 195264 343622 1059 989 828 981 1521
*Minor operated departments include: laundry, gift, business centre, news stand, sports, health club, garage, parking and so forth
** Net Income is before depreciation, interest payment and tax
42
To enable better comparability of data it has been presented as the financial
statements up to net income, before any deduction of depreciation and
interest, which are too hotel /owner specific to render their comparison to be
meaningful.
All amounts presented in this report have been rounded up the nearest whole
number and are in Indian rupees (Rs) for fiscal year 2004-05(April-March).In
the financial statements ,Rupee amounts are shown as amounts per available
room(PAR) and per occupied room(POR) in order to eliminate differences in
the size of hotels surveyed. Market mixes, ratios of various sales and
appropriate departmental expenses have also been presented. In addition,
highlights have been throughout the document to reflect certain key aspects of
our findings. Market data has been presented as an average of the respective
segments and as a percentage. Financial data has been presented according
to the most common measures of industry performance: as a percentage of
revenue and as amount PAR and POR.
The amounts and ratios presented should not be considered a standard for
any type of property, region, city, star category or price category, but only as a
guideline for comparison with the operating results of a specific category.
Readers of this report must also keep in mind that large differences from one
year to the next for a particular item may be partly on account of a different
mix of survey participants (thus affecting the average figure), rather than an
actual year-to-year change.
Air connectivity takes on an even greater importance given the projections of

the department of civil aviation, tourism and Director General Of civil Aviation
(DGCA), who are the ones to implement the goal of five million tourists by
2006. The AAI has projected till 2011 the scenario facing it. Considering the
forecasts made by different organizations and taking a reasonably pragmatic
view, the expected traffic scenario up to the year 20 10-11 has been projected
43
by the Foundation for Aviation and Sustainable Tourism. These projects have
been extended up to the year 20 16-17 by AAI.
During the next twenty years, there is a quantum jump in the projected traffic,
four times in passenger and six times in cargo traffic. It will, therefore, be
necessary to take a host of measures so that the ground infrastructure keeps
pace with the growth of traffic.
ICAO forecasts predict worldwide growth in air traffic at 5% a year or doubling

in the volume of traffic once in 14 years. The Asia Pacific region is set for
higher than average growth. According to an AUTC study, it might account for
more than 50% of the world air traffic by 2010. Clearly, there's a long way to
go yet.
Compare the 1.58 million visitors that the Indian airports serviced in 2003-04
with the massive numbers elsewhere in the world, and the plans for the future
take on a totally different hue.
Projected Domestic Traffic Up To 2016-17*
Domestic Increase International Increase

Passengers * (%) Passengers * (%)
1996-97 120.0 10.5 108.9 7.0
(Actual)
1997-98 132.6 116.5
1998-99 146.5 124.7
1999-00 161.9 133.4
2000-01 175.7 141.4
2001-02 190.6 8.5 149.9 6.0
2002-03 206.8 158.9
2003-04 224.4 168.4
2004-05 243.5 178.5
2005-06 250.5 7.0 188.4 5.5
2006-07 278.7 198.7
2007-08 298.2 209.6
2008-09 319.1 221.6
2009-10 341.5 233.3
44
2010-11 365.4 246.2
2011-12 390.9 259.7
2012-13 414.4 6.0 272.4 4.9
2013-14 439.3 285.8
2014-15 465.6 299.8
2015-16 493.5 314.5
2016-17 523.2 329.9
Room For More, Tourism In India, Economic Times Intelligence
Group(2004)
Responses to Questionnaire Administered In Survey Conducted By ITDC

Manager’s views on the tourism industry in India?
Asia has been fast emerging as a chosen destination among globetrotters.

India has always been a strong contender with its main market sources being
UK, US, Sri Lanka, France, Germany, Canada, Japan, Australia and
Singapore. Rajasthan and Agra in the north, Goa in the west and Kerala in the
south have been attracting overseas travellers from these countries.
India has been a late starter in tourism. However, international arrivals have
grown over the last eight years and have recorded a figure of 2.6 million in
2000 (India Tourist Statistics) - a far cry from 15,000 in 1950.
Majority of these are in the younger age bracket (25-44 years). India is still far
behind China, Hong Kong, Thailand, Dubai and the Maldives.. India’s share in
the world tourism has also virtually stagnant at 0.38% for a greater part of the
last decade.
Statistics reveal that the average stay of an international traveller to India has
been 31.2 days. This indicates that the character of the average visitor is a
serious minder and studious explorer of history and culture. This is also the
way India has been promoted overseas. Interestingly over 63.3 million tourist
days do not find reflection in corresponding hotel room nights.
45
There exists a hidden dimension to Indian tourism that has figured little in the
policy planning of most industry players. This is the rise of domestic tourism.
Over the last 10 - 12 years, there has been an increase of over 100 million
travellers. Today, there are over 176 million visitors who travel within India.
This is a by-product of economic development. People are using their
disposable income to travel. A significant amount of this is for religious
purposes, but a lot of it can be attributed to sightseeing. As the earnings are
going up, people are looking for better and often more expensive methods of
travel arid accommodation.
Future requirement of hotel accommodation during the Tenth Five-Year Plan'

is estimated at 1,25,000 rooms in the approved categories from the 80,000 or
so rooms that exist currently.
Tourism has been the second largest contributor to Indian economy. A start
has been made and some steps have been taken to improve the situation.
The new aviation policy will hopefully attract serious private players. Efforts
are being made to privatize national carriers - Indian Airlines and Air-India.
Indian skies are being opened up. The proposed dismantling of FIB will lead to
a more investment friendly climate. Tourism Awareness Program launched in
1999 by PATA has given the industry a greater focus.
Manager thinking about where this industry is headed in the future and what
further developments can it incorporate? What is the kind of cooperation it
need from the government for hospitality to play a large role in tourism?
India, as a leisure destination, offers a unique bounty of nature. One can do so

much here - from climbing to rafting to lazing in the sun to bird watching. This
complements the rich heritage sites dotting the country. India is also one of
the few countries that have a thriving business community and high levels of
46
entrepreneurship. To many overseas players, its considered an emerging
market in Asia.
Some of the immediate measures that are essential to establish a stable

foundation for tourism include upgrading basic tourist facilities. Private sector
participation should be welcome to maintain and market India's national
heritage. Opening of more international airports and upgrading the existing
ones will certainly help. This will help in increased air traffic and augment seat
availability. Visa procedures should also be simplified. Lower taxes will mean
better scope for hoteliers and this will encourage new players and will also
help in consolidating the market. The Government of India should recognize
the potential for this industry and work towards uniform policy decisions that
will help in its growth. State priority and programs have to be radically altered
to help tourism.
India has to be projected not as Agra, Rajasthan or Kerala but as India. India
today is not only a country that has an envious past but also an exciting future.
It is important that this young fresh face of India is projected overseas.
Manager’s thinking on events like September 11 attacks or war impact the

industry?
Travel advisories and warnings issued by foreign governments have ignored

the powerful. 'Peace Making' role of tourism and constitute a' form of
'Economic Sanction' against India. This is the conclusion reached in a snap
survey conducted among 147 experienced international travelers, staying in
17 leading hotels in 12 major tourist destination cities in India by the apex
hotel industry organization, the Hotel Association of India (HAl). An
overwhelming 99.2% of tourists who participated in the HAl Survey in the
second week of June 2002 did not perceive any threat to their safety and
security. Over 97.8 % described the standards of safety and security in hotels
47
they stayed in as "excellent", "100% safe and secure" and "having perfect
security”.
A vast majority of 98% of those surveyed preferred air travel in India only on
account of safety. As many as 96% of foreign tourists unhesitatingly stated
that On their return home they would recommend to their family and friends to
visit India as a preferred holiday destination. A miniscule 4% of foreign tourists
expressed need for caution while traveling by road in India owing to poor road
conditions, occasional congestions and trash driving. The survey reveals that
experienced foreign travelers to India shrugged off the travel advisories and
warnings as coloured by political considerations or based on inadequate
knowledge of ground realities. The steps taken by the various governments in
USA, Western Europe, Japan and Australia with a lead role played by
America have been hasty and have ignored the "peace-making" role of
tourism.
The effect of travel advisories issued by the foreign governments, fuelled by

media hype, on the tourism economy, business and leisure travel and hotel
occupancies has been catastrophic, leading to large-scale cancellation of
visits by foreign travelers over the next two months. A recent study of
international visitor arrivals in the metro city of Mumbai indicated that the
numbers have dropped from 46,128 in May 2001 to 34,943 in May 2002,
recording a decline of 24.2%. As a consequence, the local hospitality industry
has witnessed 25% downtrend in foreign visitors in just one month. A similar
downward trend is visible in other major centers of tourist interest in the
country.
The unfortunate events since the September 11 attacks in the USA, the war in
Afghanistan, followed by travel advisories and warnings, mass-scale
withdrawal of diplomatic staff, pressure on MNCs and foreign corporate bodies
to send their executives back home to their respective countries and wide
48
publicity advising people not to visit or stay in the country have unfairly
projected travel to India as being hazardous. The withdrawal of travel
insurance cover by foreign insurance companies under pressure from their
governments has proved a major deterrent and stumbling block to tourist
movements.
Manager’s thinking on training programs?
Training is an integral part of our culture. It starts at the department level

where all HoDs work closely with the HR Department to identify specific
training courses for each employee. The detailed induction programme
introduces the new entrant to the company culture.
Over and above this, all management trainees undergo an exhaustive training
in various disciplines under the supervision of internal and visiting faculty.
Every year candidates from within the units are identified and are also sent to
various institutes overseas to hone their skills. Senior Managers are
nominated for special courses to Cornell Hotel School.
Address security concerns of tourists?
Security is an integral part of the hotel. The specially trained security

personnel are on constant vigil throughout the public spaces. Closed circuit
cameras keep an eye on all that is happening.
Security personnel are on-duty in the corridors at night. Manager on Duty

systems introduced in the hotels ensures that each night a Head of a
Department is on personal rounds.
Electronic room key cards to each room create its own safety barrier. No two
cards are the same and one cannot open the other room. These are specially
49
programmed to store data that can be decoded to reveal the details of the
room usage. In the rooms there are fire escape plans. The staff is trained to
handle emergencies. First-aid kits are available with the various departments.
Doctors are on call and any emergencies can be easily handled.
To ensure that the valuables of the guests are protected, In-room safes are
provided in addition to the safe deposit lockers available at the front office.
Guest information is kept completely confidential.
Why do hotels publish rack rates and then give discounts? Isn't it better to
offer one invitation rate in which case the clients drawn in could be more?
Discounts are usually given on the number of room nights promised by a

corporate.
Managements approach to hospitality as part of the tourism industry?
The tourism and hospitality sector has the 'potential of boosting the GDP to a
higher growth path. Tourism and hospitality sector has demonstrated its vast
potential to generate foreign exchange and investment far more effectively
and gainfully than the industrial and manufacturing sectors.
Hospitality forms an integral part of tourism; inadequacy of hotel rooms is a

deterrent to growth of tourism. Hence, promoting hospitality is a primary task,
which should be undertaken prior to promoting tourism. There are at present
only 82,114 hotel rooms in India in the approved categories (recognized by
the Ministry of Tourism), as against over 9,00,000 hotel rooms in China,
3,00,000 in Thailand, 2,50,000 in Indonesia and 1,10,000 in Malaysia.
50
Hotels provide primary support in the development of the economy by
providing -accommodation, which is the basic need along with transport and
other facilities considered. The hotel sector helps In (i) generating greater real
employment opportunities, (H) developing remote and industrially back ward
areas, (Hi) promotion and development of rural art and culture, and (iv)
earning foreign exchange for the country.
What is the percentage of Indian and overseas tourists in hotel/chain?
Due to our positioning a niche has been created a niche in the industry, both
nationally and internationally. The percentage of overseas tourists vis-à-vis
Indian will perhaps be at about 40:60.
What has been the effect of SARS for the Park Group of Hotels? Has the
number of guests coming in dwindled? If yes, what is the percentage vis a vis
last year? Which part of the world's traveling population has stopped
travelling, according to the Hotel's regular guest inflow and which part has
increased?
The effect of SARS has not been substantial. There has been no cancellation
from the East so far. The effect of SARS has not dwindled the percentage of
guest bookings. The guest inflow has not dropped. However, it has been seen
that the banking and IT people travelling to Singapore and from Singapore has
reduced as seen at The Park Chennai.
51
Questionnaire
Survey Result
1. Out of the respondents interviewed 60% were of the opinion that the
government concern addressing the tourism sector as of today are
“Satisfactory”
Question 1
Unsatisfactory,
45%
Satisfactory,
55%
1.
2. In respect of question two in the questionnaire regarding the impact of

crime rates in Delhi as could affect foreign tourist arrival 55.5% of the
respondents stated that it would.
Question 2
no, 44.50% yes,

55.50%
52
3. As regard to question three relating to percentage increase in funds
needed to reach a satisfactory level in the tourism sector a huge
majority of 70% confirmed that funds of the order of 30-40% would need
to be infused in this sector.
Question 3
20-30%,
30%
30-40%,
70%
4. As regards question four respectively the ranking of roads, security,

transport, pricing and tax structure their relative order of priority and
importance for the development the tourism sector, the majority of
respondents felt security the first priority followed by transport, pricing
roads and tax structure in that of priority and importance.
53
FINDINGS
While the last three to four years have been a little tough on the hotels
business, any pick up in economic activity in India can lead to substantial
gains. Also, the long-term potential of tourism remains though it is difficult to
see any dramatic turnaround in the short term. While a lot of activities are
being carried on the room additions end, the growing middle class earning
population has led to a rethinking in strategies for a number of hoteliers that
are having plans to set up budget hotels. A part of the reason for the state of
tourist traffic had been the category availability of hotels to suit to each pocket.
Now, with the private players taking interest in creating capacity in this class,
Indian tourism only needs that fillip from the government side too to move up
from here. One will have to wait and see, if these plans do transform the
Indian tourism industry to a higher level.
A deeper analysis highlights a number of constraining factors that have

reinforced each other to limit the growth of tourist arrivals. These constraining
factors are:
1. There remained a critical need to promote India as a tourist destination
in key markets
2. There was a plethora of civil aviation regulatory bottlenecks.
3. There was a conspicuous absence of a dynamic tourism infrastructure.
4. However, all is not lost. The tourism industry in India has developed in
spite of, many such bottlenecks and government shortsightedness. The
industry is vastly below its potential, by heavily overtaxed and treated
badly everywhere.
Some of the concerns that India faces along with the rest of the world, for
making MICE take off is one of the apprehensions any foreign visitor, more
specifically a MICE visitor would have when coming to India, about be India's
54
strained relationship with its neighbor. Considering low level of security in the
country, be it at the hotels or MICE venues or be it on the streets today, for
MICE, security is the first major concern. The world's leading organizations
like the ICCA, UIA, and PATA have conducted seminars and conferences to
address key issues on this. The question of security has gained immense
priority in the MICE industry Post 9/11 crash, the Bali blast and so on and so
forth.
However in the efforts made by all concerned, even other countries have
started to see India as an important MICE destination. All thanks to India's rich
and diverse cultural heritage and its tourism policy. All this will be music to a
range of companies, people and industries that have the MICE segment as
their mainstay.
So where do the hotels feature in the hierarchy for the Indian tourist.
According to industry estimates, so far, the targets for the hoteliers have been
the foreign tourist and the corporate customer. This is because there is better
realization from this category as compared to the low class hotels. Another
factor is the capital cost of constructing a hotel and rooms. For an average
four star upward categorized hotel, the cost of a room works to anywhere in
the range of Rs 30 lakh per room upwards (inclusive of the furnishings,
fittings, allocation of electricity, overheads etceteraetra.) For a lower grade of
hotel obviously, these costs are marginalized, but the common factor that
affects all the hotels is the land acquisition cash. This depends on the area
and the land size.
55
RECOMMENDATIONS
As respects India as a destination for meetings, incentives, conferences and

exhibition (MICE)
1. The basic problem of hotel accommodation and land availability at
reasonable rates must be dealt with. The Governments have taken
steps for hotels for enhancing of floor area ratio, so that more rooms
can be made on the same space. However, control of high tariffs of
hotel rooms in metros can be reused only on proper handling of land
and taxes in the key metros.
2. There is a need to cut down and expedite permissions and licenses
for hotels/centers
3. The cities involved must understand the importance of MICE for their
cities and invest into it.
4. The conference organizers could enter into barter arrangements
with international carriers for getting concession fares and in
return, appropriate branding can be put forth for all concerned at
the relevant places
5. International airlines and even India's national carriers Air-India and
Indian Airlines could set up exclusive MICE divisions and create
schemes for submitting bids to host conferences in India
6. India must be represented in the international Trade fairs for the
MICE segment
7. There is a need to undertake sustained ad campaign in both
domestic and international forums
8. There is a need to study the cities in India with a view to
comparing them to others in Asia for MICE facility.
9. There is a need to enhance and continue income tax breaks under
section 80IE of the IT act.
56
CONCLUSION
There is a lot that could still be done. The Indian hotels industry is poised for
take off, but there are some issues that still need to fall into place to realize its
full potential like infrastructure the most important being the cleaning on call
for the airports need to be upgraded urgently. There is also a need to increase
capacity on the international sectors, particularly, by promoting more seats
from important sectors such as the European countries and America. A
friendlier visa regime, making it easier for people to come into the country. An
aggressive marketing campaign could be launched to promote India and
handle its brand image appropriately.
There is an imperative need to

1. To strengthen/up gradation the conference infrastructure in the
country to the international standards.
2. To consider the MICE segment also for the 'Incredible India'
advertisement campaign of the Department of Tourism, GOI.
3. To formulate a scheme for providing assistance to conference
organizers towards bidding for international conferences.
4. For airlines to earmark FOC tickets for the conference organizers
towards bidding of international concurrences
5. For grant of visas to conference delegates with tourist visitors
6. For setting up of single window in important ministries/government
departments for according clearances to international conferences
7. For conventions/conference hotels and venues to formulate
competitive packages for conference
8. Schemes to provide soft loans to conference organizers
To develop an integrated convention centre of international standards
comparable to countries in Southeast Asia Recommendations
57
To boost tourism the government should strive towards achievement of the
following targets
i. The plan outlay for tourism has been abysmally low over the years.
The share of outlay for tourism must be increased substantially.
nce a sizeable amount of money is made available to this sector,
only then correct allocation of funds can be made to set up the
proper infrastructure necessary for facilitating tourism. Once a
proper infrastructure is in place, tourism is bound to flourish.
ii. For the next five years, the government should have an intensive
focus on tourism, providing incentives and removing all
disincentives in consultation with the industry. The government
should actively support capital formation in the form of domestic
and foreign investment and encourage participation of the
organized sector especially in the hotel sector.
iii. In terms of support, government should provide facilities in terms of
offering quick clearances preferably single-window clearances) to
potential investors for various projects:
1. Land should be made available to hotel and other tourism
projects at reasonable rates. In order to make business ventures
viable, the government must urgently rationalize the tax structure.
There exists a plethora of taxes and sometimes duplication of
taxes at both the central and the state levels, which need to be
adequate linkages between Centre and the States on the tax
front.
2. The Central and the State governments need to announce
various tax-concessions and incentives to enable genesis of new
tourism projects. In order to enable tax rationalization, tourism
may be placed in the Concurrent List. The New Tourism Policy
has already initiated action on this front:
iv. As India is a long-haul destination, civil aviation must play a very
crucial role. The Civil Aviation Policy (which has been on anvil for
58
quite a few months now), with respect to bilateral, airport
development and airlines, must be in tune with the National
Tourism Policy
v. The scrapping of the proposal of visa-on-arrival for security
reasons is understandable. However, this practice may be
restricted for select nations, which pose a security threat.
vi. Tourism's benefits are yet to sink in amongst the masses. Thus, a
massive awareness campaign needs to be initiated to educate how
tourism can be a powerful engine for economic growth. In a
country which has believed in 'Atithi devo-bhava' (The guest is like
God), tourism must involve the communities and local people and
transformed it into a 'People's Movement'.
vii. India's heritage and culture, natural or manmade, should be
leveraged as her unique selling proposition (USP). For heritage in
the man-made category, government needs to actively promote
private participation in terms of adoption of monuments and
heritage buildings by providing adequate incentives to the private
sector.
viii. Cleanliness and hygiene at tourist spots figured as one of the
major negatives in a survey conducted by CII & AT Kearney on the
experience of foreign tourists in India. Thus, it is imperative need to
maintain cleanliness at least in and around all the major tourist
attractions.
Human Resource Development (HRD) is a very crucial aspect for an industry

that is largely service-oriented. A focused approach on manpower training is
an absolute must. Educational courses at primary level should include
tourism. A National Volunteer Corps for Tourism may be modeled on the lines
of NCC and some 'learn-and-earn' programmes may be started for students
and youth during their vacations. A fund is set up for special training for
heritage management.
59
The Central government should actively support the State governments to
build their own 'brand-image' and market at both domestic and international
levels, as some states have already started doing recently.
Of late there has been some degree of sensitization, amongst the English
dailies on the benefits of tourism, and they have started bringing out tourism
supplements. The vernacular or regional press also needs to bring out such
publications so that the message can be conveyed to the masses.
There is a need for better co-ordination at three levels:

i. Between the Central Government and the State
Governments
ii. Amongst the Central Government Ministries and other
concerned Organizations and Departments
iii. Between the Government and the Industry
iv. To tide over the current crisis, the government can take some
immediate steps to give a fillip to domestic tourism:
1. A focused media campaign must be launched
projecting India as a 'safe destination'. On the international front,
special focus should be on the main source markets for India
2. Luxury tax be imposed on realized room rate
and not on rack rate in all states
3. The government should actively consider
keeping Leave Travel Allowance (LTA) out side the tax-net for its
employees undertaking vacation travel.
4. The government should ensure that land
availability for tourism projects be made easier and the procedure for
obtaining clearances be simplified to attract more investment to the
sector
60
5. For each tourist spot a Destination
Management Authority be created comprising empowered local
bodies so as to involve local communities to ensure cleanliness and
hygiene. Destinations need to be classified in terms of the mix of
tourist traffic that they attract, the kind of facilities they should have
and the kind of safety and security arrangement that they deserve
with the hotels of the area also participate in such an exercise.
6. A happy tourist is the best ambassador of any
destination. Proper certified short-duration training modules (of
various grades) on courtesy, manners, and language etcetera. be
started for people like guides, money changers, taxi drivers, baggage
handlers etcetera who form the primary interface with the tourists.
The students of the Institute of Hotel Management of the government
can be used for conducting these training modules. People
undergoing these courses should be issued a Pass Book, which
would acknowledge the various grades of t raining modules they
have completed
7. The tourist guide is probably the most crucial
interface for any tourist. But the present licensing policy for them is
completely non-transparent. The Tourism industry must be
associated with the selection and recruitment of tourist guides and
their licensing
8. Tourism must be made a mandatory subject at
school levels to foster a better sense of belonging and instill a sense
of pride for motherland amongst the future generations
9. Indian politicians, on their foreign trips, should
act as Tourism Ambassadors and project India's image as a safe and
beautiful destination with loads of attractions on offer
10. Tourists while traveling through various states
face unlimited difficulties because of the various taxes that need .to
61
be paid to State Governments. Taxes on inter-state travel of tourist
vehicles be abolished
11. There is an unjust need to abolish Inland Air
Travel Tax (IATT) to make domestic flights cheaper.
Instead of having so many travel and tourism associations and various

chambers of commerce with tourism committees to advise the Government on
tourism matters, there is an urgent need to form an organization which would
represent the entire travel and tourism industry and speak with one voice.
Such an apex body should consist of a restricted number of those involved
actively in each segment of the industry. More importantly, the committee
members should have the time and inclination to contribute significantly to the
improvement of the entire industry.
The apex body would also ensure that its recommendations are unbiased and
for the benefit of the entire industry. Items like fiscal benefits, tax relief, easy
availability of finance, removal of dual currency policies which are currently
under discussion, could all be taken up and resolved to the benefit of all
concerned
There is a crying need to upgrade the aviation infrastructure and enhance and
strengthen alliances amongst different segments of the trade for effective
marketing of tourism both internationally and domestic, even reaching out to
rural areas where the potential for tourism is as yet unexplored.
*****
62
BIBLIOGRAPHY
 Growth of Civil Aviation. Retrieved September

17,2005,http:/indiabudget.nic.in/es2004-05/chapt2005/tab129.pdf
 AAI Today. Retrieved October10,2005

http://www.airportsindia.org.in/aai/about_us_link_sub1.htm
 Budget Allocation. Retrieved October 22,

2005,http://indiabudget.nic.in/ub2005_06/eb/sbe93.pdf
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http://www.fhrai.com/Mag-News/magIHS.asp
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http://civilaviation.nic.in/moca/airppol.htm
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http://planningcommission.nic.in/plans/mta/mta-9702/mta-ch23.pdf
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64

Hotel Industry Trends in India

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TOURISM AND HOTEL INDUSTRY

2. PURPOSE OF RESEARCH STUDY 4

3. RESEARCH METHODOLOGY 5-7

4. DATA ANALYSIS 8-53

Opportunities abound in the traditional tourism related areas and in novel

Strong government support

THE PURPOSE OF MY RESEARCH STUDY IS TO

UNDERSTAND AND CRITICALLY ANALYZE THE VARIOUS

IMPORTANT ASPECTS OF TOURISM IN INDIA: AND TO

ENABLE THE MARKET ANALYSIS OF THE TOURISM

A Research Methodology defines the purpose of the research, how it

The appropriate research design formulated is detailed below.

 Exploratory research: this kind of research has the primary objective of

The present study contemplated an exploratory research.

RESEARCH DESIGN AND METHODS

Data collection Methods

Limitations of the Research

The researcher’s informal interviews with numerous senior hotel managers

Since this is a people intensive-industry, it has a high proportion of manpower

Employment Pattern in Hotels: Tourism is an economic activity, which is

An assessment of the situation would therefore be needed before any

Study on the impact of tourism: on employment generation and future

The tourism infrastructure in India has therefore been analyzed based on an

Connectivity: According to Tourism in India, 2005, the issue of connectivity,

Connectivity Infrastructure: Connectivity is not just about getting to a place.

Travel Agencies' Network

Timeshare: The profile of Indians using timeshare is changing. Earlier, the

Year Sales [US $]

Dream Merchants [US Timeshare Sellers]

Gifted, Inherited, Others Property Ow ners Association

Dream merchants (US Time share Sellers)

According to report, timeshare is as good a demand generator as any other,

Timeshare as a viable tourism option has been developing for a restricted

Location of Spending Spend (US$ million)

Timeshare as a viable tourism option is developing for a restricted class of

India's international airports do not bear any mentionable class in so far as

Projections: According to Tourism In India (2005), as discussion on facility

Being a public sector organization, the Airports Authority of India has to go

Arguments notwithstanding, rail links would be a crucial for infrastructure

Airport Distanc Links Entry Type of Rail Cost by Cost by

Indian Rail Tourist Passes

Caution is usually advised when there is lack of information about a subject. In

Reaching Out Information From Indian International Airport Websites

Parameter Mumbai Delhi Kolcutta Chennai Cochin

Indian Hotel Industry-Revenue & Profitability-Average Per Hotel

Revenue (in Rs crore) Net Income (in Rs crore)

Figure: Indian Hotel Industry-Revenue and Profitability – Average per Hotel

3. House profit (gross operating profit after deducting franchise and

Figure: House Profit

4. The number of hotels having training department increased in all star

Rooms Food & Beverage

Figure: Trends in Rooms and F&B Revenue on Available Room

5. December followed by November and February, was the busiest month

Trends in Monthly Occupancy (All India Average)

1999-2000 2000-2001 2001-2002 2002-2003 2003-2004

Figure: Trends in Monthly Occupancy (All India Average)

6. While print advertising continues to be the most popular marketing

Air connectivity takes on an even greater importance given the projections of

ICAO forecasts predict worldwide growth in air traffic at 5% a year or doubling

Projected Domestic Traffic Up To 2016-17*

Domestic Increase International Increase

Responses to Questionnaire Administered In Survey Conducted By ITDC