Posted On 2016/02/15 By In News, Research, India Outbound With 252 Views

Outbound Travel Industry grows, but Challenges remain

The travel and tourism industry has emerged as one of the largest and fastest growing economic sectors globally. The growth in the Indian travel and tourism industry is driven by a combination of rising income levels and changing lifestyles, development of diverse tourism offerings, and policy and regulatory support by the government authorities.

Over the past year, this growth has reflected over all segments of tourism. The sluggish economy and poor sentiments did not have any adverse impact on the Indian outbound tourism market. India is one of the fastest-growing outbound travel markets in the world. Despite drastic fluctuations in rupee value recently, numbers of tourist’s departures from India did not take a hit. India has emerged as the world’s fastest-growing outbound market and in absolute numbers it is second only to China.

With more than 1.1 billion inhabitants and GDP increasing by more than seven percent every year, India offers enormous potential for future growth in outbound travel. Whether it is to meet a relative settled abroad, a shopping trip, a global sport event or just for leisure, Indians are increasingly travelling abroad. Personal and Official Travel for holiday/ leisure, business and MICE tourism are the most significant contributors for growing outbound travel.

The foreign tourism boards are gearing up to meet the growing number of Indians who are travelling abroad and splurging. While many of the National Tourism Organizations also have established their own offices in the country, others are making use of representations or their embassies/ cultural desks to test the waters, before taking the plunge.

The UNWTO predicts that India will account for 50 million outbound tourists by 2020. While business travel, holiday and VFR trips dominates outbound volumes, people are also opting for niche products like sports tourism, luxury travels, MICE, honeymoon packages and cruises.

Thailand, Singapore, United States, and Malaysia are some of the most preferred tourist destination for Indian travelers. Indian tourists have now started exploring new destinations as well. Among the emerging countries, Sri Lanka, Nepal, China, Japan and South Africa are becoming the destination of choice for Indian tourists. Japan is also focusing on plans to triple the number of tourists travelling from India to the country by 2020 from the 2013 level. Countries like Indonesia, Philippines, Mauritius and Egypt are also seeing an increase in influx of Indian tourists. Increased promotional activities by travel agents will further drive outbound departures to many new destinations in the years to come.

Factors that are driving tourists to go out of country:

Much of India’s outbound growth may be attributed to increasing disposable income, decreasing cost of international airfare and availability of affordable travel packages. In particular, the rise of low cost carriers (LCCs) in India has impacted the way Indians travel as they now have more alternatives, beyond domestic travel, when planning for short holidays.

o The proliferation of the internet has also significantly changed the way Indian travelers now plan and book their trips. The availability of information on the internet has instilled greater confidence among Indian travelers to look farther when planning their travels. With information readily available at the click of a mouse, consumers are no longer dependent on traditional travel agents. However, feedback and recommendation from travel agents is still held in high regard.

The Indian film industry, termed as Bollywood has significantly influenced Indian culture. According to an estimate, almost 14 million people in India enjoy Bollywood movies on a daily basis. Bollywood has always been recognized as having the strongest influence for potential Indian travelers. For example, Bollywood films such as Dilwale Dulhania Le Jayenge, Kabhi Khushi Khabhie Gham and Mujhse Dosti Karogi have all presented Switzerland in a new light to Indian tourists. Another example being that with the popularity of Bollywood blockbuster Zindagi Na Milegi Dobara (ZNMD), Spain witnessed a surge in the number of India tourist arrivals in 2012 and 2013.

However, there are many challenges in outbound travel. In India, companies tend to specialize in either inbound or outbound, few do both successfully. The skill sets and experience needed for both segments are unique and not complementary. The average Indian travel agent deals with customers who are extremely price sensitive and are inherent shoppers. Bargaining is a cultural trait.

There is basically a feeling that agents have no right to make money. In general, agencies in India are not equipped or trained in charging fees. Another hurdle for Indian outbound tourism market is the rupee depreciation that has become a very big hurdle for Indian outbound tourism. Destinations such as United States, Canada, London, France, Italy and Switzerland have seen a dip in bookings due to rupee depreciation.

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Article: The Economic Times / Image: G Morel

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Stefan (from Austria, Europe) has been living, studying and working in China since 2010. Stefan has worked on several research, publication and consulting projects focusing on the China Travel Market. He holds two Masters degrees and is an expert on China Outbound Tourism, Marketing and Social Media in China. Stefan works with BMG on the Global Ready China Seminars as well as the Global Ready China News and related projects. He also has teaching engagements in the areas of eMarketing and Tourism Strategy.