India’s GDP grew by 5.3% in the fourth quarter of fiscal year 2012: its worst performance in the last nine years. This slowdown was primarily a result of high inflation, high interest rates and policy paralysis. However, Indian tourism had a good year and registered growth, both in numbers of foreign tourist arrivals and foreign exchange earnings, registering an estimated INR 1,690 billion at the end of calendar year 2011. The industry plays an important role in the development of the country’s economy. It is a service oriented sector which creates substantial job opportunities and is the means of livelihood for millions of Indian citizens.
Ministry of Tourism regulates the tourism industry in India. The ministry has planned to increase the foreign tourist arrivals to 11.24 million by 2016 under the 12th five year plan. The number of foreign tourist arrivals in India for calendar year 2011 was recorded at 6.29 million, a YoY growth of 9 percent. Foreign exchange earnings grew to 16.56 billion registering a growth of 17 percent during the year. The year also witnessed a double digit growth in domestic tourism. According to World Travel & Tourism Council, domestic tourism accounted for 82 percent of the total spending on tourism in India for the year, while foreign tourists spent the remainder 18 percent. Domestic travel and tourism spending increased by 18 percent YoY and crossed INR 3.5 trillion by the end of the year. Outbound travel by Indian nationals also witnessed a spurt during the year. The spending on outbound travel and tourism by resident Indians touched INR 690 billion, a growth of 29 percent over year 2010 figures. The average occupancy rate of Indian hotels too grew by 1.3 percent and was estimated at 62.1 percent. Overall, the Indian tourism industry witnessed an all-round growth during the calendar year 2011. We expect the number of foreign tourist arrivals in India to cross 7 million by the end of calendar year 2012.
In fiscal year 2012, Indian Hotels Company Limited led the hotel industry by recording a total income of INR 34.3 billion, a YoY growth of 20 percent. However, its total expenses increased by 19 percent during the same period due to increased employee benefit costs. EIH Limited recorded total income of INR 14.2 billion and net profit of INR 1.2 billion in FY12. Mahindra Hotels and Resorts Limited registered an income of INR 6.2 billion and net profit of INR 1 billion in the fiscal year. Though the net income of hotels showed a double digit growth, their net profit was more or less stagnant due to equivalent rise in total expenses.
Two major travel operators, Thomas Cook India Limited (TCIL) and Cox & Kings Limited (CKL), registered an income growth of 23 percent and 71 percent respectively during the fiscal year 2012. TCIL registered net profit of 560 million in FY12 against a net profit of INR 470 million in FY11, an increase of 19 percent YoY. CKL on the other hand had been less sanguine in its profit growth owing to its forays in acquisitions. The company recorded a net loss of INR 270 million in the fourth quarter following a loss of INR 120 million in third the third quarter due to increased financing costs.
Salient Points
- In the first five months of calendar year 2012, the number of foreign tourist arrivals touched 2.8 million, recording a growth of 12 percent against the equivalent period in 2011.
- In the first five months of calendar year 2012, foreign exchange earnings from tourism grew by 11 percent in USD terms and touched USD 7.3 billion. In INR terms, growth in earnings was around 25 percent during the period. The depreciation of the INR in this period was responsible for lower growth in USD terms.
- Spending on domestic travel and tourism crossed INR 3.5 trillion in calendar year 2011, recording a growth of 18 percent YoY over 2010 figure. This was approximately five times that of the spending by foreign tourists in the same period
- Spending on outbound travel and tourism crossed INR 690 billion in calendar year 2011, recording a growth of 29 percent YoY over 2010 figure.
These are only a few of the findings in the new India Tourism Industry report. Learn more and purchase now>>
