Travel and tourism sector: Potential, opportunities and enabling framework for sustainable growth
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Travel and tourism sector: Potential, opportunities and enabling framework for sustainable growth

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The travel and tourism industry has emerged as one of the largest and fastest growing economic sectors globally. Its contribution to the global Gross Domestic Product (GDP) and employment has......

The travel and tourism industry has emerged as one of the largest and fastest growing economic sectors globally. Its contribution to the global Gross Domestic Product (GDP) and employment has increased significantly. With increasing tourist inflows over the past few years, it is a significant contributor to Indian economy as well. This report presents an overall landscape of the Indian Tourism sector and its potential across various states. It explores the various challenges faced by the sector and provides recommendations for its growth around areas of policy requirements, private sector participation and local community involvement.

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  • 1. Travel and tourism sector: Potential, opportunities and enabling framework for sustainable growth December 2013
  • 2. © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 3. Travel and tourism sector: Potential, opportunities and enabling framework for sustainable growth Theme Paper © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 4. Message The Indian tourism and hospitality industry has emerged as one of the key drivers of growth among the services sector in India. Tourism in India is a potential game changer. It is a sun rise industry, an employment generator, a significant source of foreign exchange for the country and an economic activity that helps local and host communities. India is a tourism product which is unparalleled in its beauty, uniqueness, rich culture and history has been aggressively pursuing the promotion of tourism both internationally as well as in the domestic market. Indian tourism industry is thriving due to an increase in foreign tourist arrivals and greater number of Indians travelling to domestic destinations than before. In the past few years the real growth has come from within the domestic sector as around 30 million Indians travel within the country in a year. India’s demographic dividend of a younger population compared to developed countries is leading to greater expenditure on leisure services. Travel and tourism sector’s contribution to capital investment is projected to grow at 6.5 per cent per annum during 2013-2023, above the global average of five per cent. Arjun Sharma Chairman, CII Tourism Fest 2013 Co-Chairman, CII National Committee on Tourism and Managing Director, Le Passage to India The Ministry of Tourism promotes the country’s various tourism products through its tactile campaigns under the Incredible India brand- both for international as well as domestic markets. The budget allocated for the Domestic Promotion & Publicity and Overseas Promotion & Publicity including Marketing Development stood at INR 1.1 billion (USD 17 million) and INR 3.5 billion (USD 56.41 million) for the financial year .73 2013-14. The ministry has set up a Hospitality Development and Promotion Board, which will monitor and facilitate hotel project approvals. The allocation for Ministry of Tourism in the Union Budget 2013-14 has been increased by INR 876.6 million (USD 14.13 million) to INR 12,976.6 million (USD 209.30 million). There is a need to take steps to improve the present scenario of tourism that includes extending facility of visa-on-arrival to tourists from more countries, simple tax rules and ensuring safety of tourists. There is a need for better marketing and brand strategies to promote the sector. The cost of obtaining an Indian visa is prohibitive and we need to take a relook at it. Creation of an enabling environment for the sector’s growth would lead to rise in foreign tourists’ inflows and foreign exchange earnings, thus, contributing to economic growth. This would also lead to creation of additional jobs in the sector, which would create opportunities for all sections of the society and in turn lead to attaining an all-inclusive development. Set against this backdrop, CII is organising a mega event ‘CII Tourism Fest’ from 5 to 7 December 2013 in Chandigarh to bring all critical stakeholders like policy makers, officials of Ministry of Tourism, State Governments, International Tourism Boards, hoteliers, hospitals, tour operators and travel agents on one platform. I hope that the deliberations not only reflect true voice of the industry, but also bring all stakeholders together to think alike to kick off a new campaign to create & establish roadmap for inclusive and seamless tourism. © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 5. Foreword The travel and tourism industry has emerged as one of the largest and fastest growing economic sectors globally. Its contribution to the global Gross Domestic Product (GDP) and employment has increased significantly. Increasingly, travel and tourism is emerging as an important category of services exports worldwide. Jaideep Ghosh Partner Management Consulting KPMG India With increasing tourist inflows over the past few years, it is a significant contributor to Indian economy as well. As per forecasts by the World travel and tourism Council its total contribution to GDP is expected to witness a growth rate of 12 per cent per annum during 2013-2023. Rising income levels and changing lifestyles, development of diverse tourism offerings and policy and regulatory support by the government are playing a pivotal role in shaping the travel and tourism sector in India. However, the sector is facing challenges such as lack of good quality tourism infrastructure, global concerns regarding health and safety of tourists, disparate passenger/road tax structures across various states and shortfall of adequately trained and skilled manpower. While several plans and programmes have already been devised for tackling these challenges, successful implementation would be critical to accelerate growth. Concerted efforts by all stakeholders such as the central and state governments, private sector and the community at large are pertinent for sustainable development and maintenance of the travel and tourism sector in the country. © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 6. Table of contents Executive summary 01 Introduction 03 1.1 Global tourism industry 04 1.2 Indian tourism industry 05 1.2.1 Growth in number of tourists 05 1.2.2 Impact of tourism sector on GDP 06 1.2.3 Impact of tourism sector on employment 07 1.2.4 Capital investment in tourism sector 07 1.2.5 Growth of tourism in India – Key drivers & trends 08 Performance of tourism sector in various states of India 09 2.1 Comparative assessment of major tourist states of India 10 2.2 Northern states in India 15 2.2.1 Growth of tourists in northern states 15 2.2.2 Profile of tourists in northern states 16 2.2.3 Role of government and private sector 18 2.2.4 Key tourism circuits in northern states 21 Seamless travel 23 3.1 Benefits of seamless travel 24 3.2 Case study: Seamless travel in European Union countries 24 3.3 Passenger/road tax structure in India 25 Key issues in tourism sector in India 27 4.1 Training and skill development 28 4.2 Safety and security of tourists 30 4.3 Healthcare for tourists 31 4.4 Infrastructure 32 Recommendations 34 About KPMG in India 35 About CII 36 © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 7. © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 8. 01 Travel and tourism sector: Potential, opportunities and enabling framework for sustainable growth Executive summary The travel and tourism industry has emerged as one of the fastest growing sectors contributing significantly to global economic growth and development. While traditionally Europe and America have remained among the tourism markets, new emerging markets are expected to witness high growth in international tourist visits over the next decade. India has significant potential to become a preferred tourist destination globally. Its rich and diverse cultural heritage, abundant natural resources and biodiversity provides numerous tourist attractions. The total tourist visits in India have been growing at a steady rate of about 16 per cent over the past five years. The travel and tourism sector in India provides significant socio economic benefits. While the direct contribution to GDP is estimated at INR 2222 billion in 2013, the total contribution is estimated at INR 7416 billion in the same year. These have further been forecasted to rise at a growth rate of 12 per cent over the next decade. While the sector supported 25 million direct and 40 million total jobs in 2012, these have been forecasted to increase at a growth rate of 2.1 per cent by 2023. Several industry drivers such as government initiatives, diverse product offerings, growing economy, increasing disposable income levels and marketing initiatives along with key trends such as increasing number of women and senior citizen travellers, multiple short trips and weekend holidays, introduction of innovative tourism concepts and customised tour packages are playing a pivotal role in shaping the Indian tourism sector. Total tourist visits in various states of India over a five year period reveal that while states of Karnataka, Delhi, Punjab, Chhattisgarh, Tamil Nadu and Jammu & Kashmir have improved their positions in 2012 as compared to 2008, those of Uttar Pradesh, Rajasthan, Uttarakhand, West Bengal, Himachal Pradesh and Kerala have witnessed decline. Key attributable reason to the success of tourism in states is the increase in state investments towards the tourism sector. While the key commercial and leisure destinations of Delhi and Maharashtra enjoy good quality transport and accommodation infrastructure, states of Jammu & Kashmir, Uttarakhand, Himachal Pradesh, Rajasthan and Jharkhand may need significant improvements in their rail, road and airport infrastructure. Tourist visits in the northern states of India witnessed a growth rate of 10.2 per cent during 2008-2012 compared to the national average growth rate of 16.3 per cent during the same period. U.S.A. and U.K. accounted for the maximum number of foreign tourist visits in the northern states of India in 2012. Fair share of tourists were received from non English speaking countries like Germany, Japan and UAE necessitating the availability of tourist information in multiple languages. While tourists visit states of Punjab, Haryana and Delhi for commercial and business related purposes, states of Himachal Pradesh, Uttarakhand, Jammu and Kashmir, Rajasthan and Punjab are preferred as leisure destinations. For religious tourism, they prefer states of Rajasthan, Uttar Pradesh, Uttarakhand and Jammu and Kashmir. While multiple tourism circuits based on diverse themes exist across northern states, low level of stay durations by both domestic and international tourists indicates the need for more entertainment and leisure activities. Abundant natural and cultural resources in the northern states provide ample opportunities for development of diverse tourism products along with a single integrated tourism circuit. While an array of ancient and modern temples may provide an opportunity for developing states in northern India to emerge pilgrimage destinations, presence of palaces, forts and historical monuments help define their multi cultural heritage. Also, wildlife sanctuaries with a wide variety of flora and fauna, mighty Himalayas, rivers, deserts, climate and diverse landscape provide attractive opportunities for thrill and adventure activities. Serene valleys of Himachal Pradesh provide an opportunity to promote medical, wellness and Source: India Tourism Statistics 2008, Ministry of Tourism and http://tourism.gov.in/writereaddata/ CMSPagePicture/file/marketresearch/New/2012%20Data.pdf WTTC travel and tourism economic impact 2013- India, Data taken at Nominal Prices © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 9. Travel and tourism sector: Potential, opportunities and enabling framework for sustainable growth spiritual tourism in the state. Its topography provides innumerable opportunities to promote adventure tourism with sport activities like river rafting, para-gliding, trekking etc. Scenic landscape, castles, gardens and forts in the state of Jammu and Kashmir attract tourists worldwide. Presence of holy shrines, ancient temples and mosques also provide an opportunity for promoting spiritual tourism. Pilgrimage destinations in Haryana offer a wide range of sacred places with religious and historical significance. While Delhi is a major commercial and business destination, it offers tourism opportunities in form of political landmarks, national museums, Islamic shrines, Hindu temples, green parks, trendy malls etc. Punjab offers an opportunity for utilising its culture, ancient civilisation, spirituality and epic history for promoting tourism. Vast sand dunes of the Thar desert in Rajasthan along with the palaces and forts and rich cultural heritage attract tourists worldwide. While the glaciers, snow-clad mountains, valley of flowers, skiing slopes and dense forests in Uttarakhand are attractive tourist destinations, presence of shrines and pilgrimage destinations provides opportunity for promoting spiritual tourism. The tourism sector in India faces several issues which require immediate attention. Several recommendations may be suggested based on studies of successful domestic and international tourism case studies. •• India’s image needs to be projected as a safe and secure tourist destination •• Regulatory and policy changes may be introduced in order to increase international tourist inflow •• Private sector investments may be encouraged through provision of fiscal and non fiscal incentives for boosting infrastructure development •• New tourist destinations may be identified and further development of the same for offering innovative tourism products or experiences 02 •• Integrated tourism circuits may be developed across states based on attributes, tourism potential, current and future connectivity and synergy within destinations •• Seamless travel may be facilitated across integrated circuits through introduction of integrated taxation regime, linkages between various public transportation modes and improvements in highway infrastructure such as petrol pumps, clean drinking water kiosks and sanitation facilities, road signages etc. •• Joint marketing programmes may be developed, usage of publicity material like brochures, print creative, audio video presentations, short films, radio jingles, online creatives and advertisements over media channels may be promoted and innovative marketing techniques over social media channels may be adopted along with increased involvement of local travel trade partners for promoting tourism in integrated circuits •• Participation in international events may be increased and customised tour packages with competitive pricing may be developed keeping in mind the profile of visitors, budget and travel requirements •• Training and skill development programmes may be introduced in order to not only meet the anticipated manpower shortfall but also develop an adequately skilled workforce •• Local community involvement may be encouraged through awareness programmes and workshops for sustainable development and maintenance of tourism in the country. Successful implementation of such recommendations may be achieved through government ownership of development programmes and active participation and involvement of private sector. © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 10. 03 Travel and tourism sector: Potential, opportunities and enabling framework for sustainable growth Introduction © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 11. Travel and tourism sector: Potential, opportunities and enabling framework for sustainable growth 1.1 Global tourism industry The travel and tourism industry has emerged as one of the largest and fastest growing economic sectors globally. According to the United Nations World Tourism Organization (UNWTO) Tourism Highlights 2013, tourism’s total contribution to worldwide GDP is estimated at 9 per cent. Tourism exports in 2012 amounted to USD 1.3 trillion accounting for 6 per cent of the world’s exports. New tourist destinations, especially those in the emerging markets have started gaining prominence with traditional markets reaching maturity. Asia Pacific recorded the highest growth in the number of international tourist arrivals in 2012 at 7 per cent followed by Africa at 6 per cent. Figure 1.1: International tourist arrivals, million Source: UNWTO Tourism Highlights, 2013 International tourist arrivals are set to increase at a growth rate of 3.3 per cent per annum and amount to approximately 1.4 billion by 2020 and 1.8 billion by 2030 implying an increase of 43 million international tourist arrivals each year. While international tourist arrivals in Europe and America are expected to witness modest growth rates of 2.5 per cent and 2.2 per cent respectively by 2030, Africa and Asia Pacific regions are expected to witness higher growth rates at 5.7 per cent and 5.0 per cent per annum during the same period. The global travel and tourism industry is expected to witness certain key trends: • Increased inter region travel and hence increased air travel • Arrivals for the purpose of visiting friends and relatives, health, religion etc. are expected to witness faster growth than those for business and professional purposes © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 04
  • 12. 05 Travel and tourism sector: Potential, opportunities and enabling framework for sustainable growth 1.2 Indian tourism industry The travel and tourism sector holds strategic importance in the Indian economy providing several socio economic benefits. Provision of employment, income and foreign exchange, development or expansion of other industries such as agriculture, construction, handicrafts etc. are some of the important economic benefits provided by the tourism sector. In addition, investments in infrastructural facilities such as transportation, accommodation and other tourism related services lead to an overall development of infrastructure in the economy. According to the World Economic Forum’s Travel and Tourism Competitiveness Report 2013, India ranks 11th in the Asia pacific region and 65th globally out of 140 economies ranked on travel and tourism Competitiveness Index. India has been witnessing steady growth in its travel and tourism sector over the past few years. Total tourist visits have increased at a rate of 16.3 per cent per annum from 577 million tourists in 20081 to 1057 million tourists in 20122. 1.2.1 Growth in number of tourists With the international tourist arrivals in India (pegged at 7 million in 2013) .5 expected to witness an annual growth rate of 6.2 per cent over the next decade, visitor exports (expenditure generated by foreign tourists) are expected to amount to INR 2958 billion by 2023 growing at 9.6 per cent per annum3. This growth can mainly be attributed to the rising income levels and changing lifestyles, diverse tourism offerings and policy & infrastructural support by the government such as simplification of visa procedures and tax holidays for hotels. Figure 1.2: Tourist visits in India, million 1. India Tourism Statistics 2008, Ministry of Tourism 2. http://tourism.gov.in/writereaddata/CMSPagePicture/file/ marketresearch/New/2012%20Data.pdf 3. WTTC travel and tourism Economic Impact 2013- India, Data taken at Nominal Prices Source: India Tourism Statistics 2008, 2009, 2010, 2011, Ministry of Tourism http://tourism.gov.in/writereaddata/CMSPagePicture/file/marketresearch/New/2012%20Data.pdf Note: Domestic and foreign tourist visits to various states and union territories in India © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 13. Travel and tourism sector: Potential, opportunities and enabling framework for sustainable growth 1.2.2 Impact of tourism sector on GDP The travel and tourism sector directly contributed INR 1920 billion to India’s GDP in 2012 reflecting a growth CAGR of 14 per cent since 2007 This . is forecasted to grow at a CAGR of 12 per cent from the estimated INR 2222 billion in the year 2013 to INR 6818 billion by 20234. Figure 1.3: Travel and tourism direct contribution to GDP INR Billion , Source: WTTC travel and tourism Economic Impact 2013- India, Data taken at Nominal Prices While Figure 1.3 reflects the direct contribution of the travel and tourism sector, the total contribution is expected to be much higher. In addition to the impact of economic activities directly related to the sector such as accommodation, transportation and entertainment, the total contribution of the sector also takes into account the indirect impacts of investment or supply chain activities and induced income impacts resulting from spending by employees directly or indirectly related to the sector. For details on components of total contribution, please refer to Box 1. Such indirect and induced contribution of the industry results in a multiplier5 impact on the overall economy. Applying this multiplier impact, the total contribution of travel and tourism amounted to INR 6385 billion in 20124, around 3.3 times its direct contribution. This implies that for every rupee of direct contribution of tourism to GDP , additional 2.3 rupees is contributed to the economy when the indirect and induced effects of tourism are considered. In the year 2012, indirect and induced contributions amounted to INR 3500 billion and INR 966 billion respectively. The total GDP contribution is forecasted to rise at a CAGR of 12 per cent over the next decade with indirect and induced contributions forecasted to amount to INR 12939 billion and INR 3263 billion respectively by 20234. 4. WTTC travel and tourism Economic Impact 2013- India, Data taken at Nominal Prices 5. A multiplier measures total change throughout the economy from one unit change for a given sector Box 1: Components of total contribution to GDP 1. Direct contribution: The direct contribution of travel and tourism to GDP is calculated from total internal spending by netting out the purchases made by different tourism sectors such as hotels, airlines, airports, travel agents and leisure and recreation services that deal directly with tourists. Internal spending is total spending within a particular country on travel and tourism by residents and nonresidents for business and leisure purposes as well as government spending on travel and tourism services, directly linked to visitors such as cultural or recreational services. 2. Indirect contribution: It consists of the GDP supported by investment activities in travel and tourism sector such as purchase of new aircrafts and construction of new hotels; government collective spending in the sector on areas like tourism marketing and promotion, aviation, administration, security services, resort area security services, resort area sanitation services etc. and domestic purchases of goods and services by the sectors dealing directly with tourists such as purchase of food and cleaning services by hotels, of fuel and catering services by airlines, and IT services by travel agents. 3. Induced contribution: It consists of the GDP supported by the spending of those who are directly or indirectly employed by the travel and tourism industry. Source: WTTC Travel & Tourism Economic Impact 2013- India © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 06
  • 14. 07 Travel and tourism sector: Potential, opportunities and enabling framework for sustainable growth 1.2.3 Impact of tourism sector on employment The travel and tourism sector supported 25 million jobs in 2012 directly related to the tourism sector. Constituting 4.9 per cent of the total employment in the country in 2012, this is expected to amount to 31 million jobs by 20237. While these numbers indicate direct employment supported by the tourism sector reflecting employment by hotels, travel agents, passenger transportation services or other restaurant and leisure employment, the total contribution including indirect and induced effects is expected to cause a multiplier impact on the economy resulting in greater employment generation. Applying this multiplier impact, the travel and tourism sector supported a total employment of 40 million jobs in 2012 constituting 7 per cent of .7 the whole economy employment7. This implies that for every job directly supported by the tourism sector, an additional 0.6 job is supported in the economy when the indirect and induced effects of tourism is considered. 1.2.4 Capital investment in tourism sector Capital investments in the tourism sector include spending by all sectors directly involved in the travel and tourism industry. Spending by other industries on specific tourism assets such as new visitor accommodation and passenger transport equipment, as well as restaurants and leisure facilities for specific tourism use also form part of capital investments. Such investments lead to social development of an economy as infrastructure created for tourism purposes in areas of transportation, accommodation etc. can also be utilised by the community in general. Figure 1.4: Capital investment in travel & tourism sector, INR billion Source: WTTC travel and tourism Economic Impact 2013- India, Data taken at Nominal Prices 7 WTTC travel and tourism Economic Impact 2013- India, Data . taken at Nominal Prices Capital investment in the travel and tourism sector in 2012 was estimated at INR 1761.4 billion amounting to approximately 6.2 per cent of total investment in the Indian economy. It is expected to increase by 14.2 per cent in 2013, and witness further annual growth rate of 10.5 per cent by 2023 amounting to INR 5459 billion7. © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 15. Travel and tourism sector: Potential, opportunities and enabling framework for sustainable growth 08 1.2.5 Growth of tourism in India – Key drivers & trends The growth of the Indian travel and tourism industry is being impacted by several industry drivers. Domestic tourism • Healthy economic growth and rising income levels Inbound tourism • New product offerings Outbound tourism • Rising disposable income with the Indian consumer • Changing consumer lifestyles • Rich natural/cultural resources and geographical diversity • Availability of low cost airlines • Government initiatives and policy support • Diverse product offerings • Multiple marketing and promotion activities • International events and increased business travel • Easy finance availability • Healthy economic growth levels • Healthy economic growth • Host nation for major international events • Easy finance availability • Healthy economic growth and rising income levels: Favourable growth in the Indian economy, rise in middle class population (National Council of Applied Economic Research (NCAER) Study: number of middle class households expected to increase from 31.4 million in 2010 to 113.8 million by 2025-20268) and increasing levels of disposable income with increased affinity for leisure travel are some of the driving forces. • Changing consumer lifestyles: With more than 65 per cent9 of the Indian population falling in the age group of 15-64 years, Indian travelers are more open to holidays and are keen to explore newer destinations. • Diverse product offerings: Diverse tourism offerings in India such as rural, medical, pilgrimage, adventure and various other forms are driving tourism growth. • Easy finance availability: Increased adoption of credit culture and availability of holidays on Equated Monthly Installments (EMI) is another growth driver. 8. http://articles.economictimes.indiatimes.com/2011-02-06/ news/28424975_1_middle-class-households-applied-economicresearch 9. http://www.ncaer.org/popuppages/EventDetails/IPF_2012/ ShekharAiyarandAshokaMody.pdf • Rich natural/cultural resources and geographical diversity: With 28 world heritage sites, 25 bio-geographic zones along with a 7000 km10 long coastline India abounds in natural resources and offers a rich cultural heritage through multiple religions, traditions, fairs and festivals. • Government initiatives and policy support: Rise in FDI in the tourism sector (sector attracted second highest FDI in 2013 at USD 3.2 billion10 as on Feb 2013) is providing fillip to its growth. Policy actions such as 100 per cent FDI, plans for extension of visa on arrival scheme to a larger number of countries and a five year tax holiday for 2, 3 and 4 star category hotels located around UNESCO World Heritage sites10 among others are expected to drive future growth. • Host nation for major international events: India is fast emerging as the preferred nation for hosting of major international events such as the Commonwealth Games held in 2010. Meetings, Incentives, Conventions and Exhibitions (MICE) tourism is on a rise on account of increased business travel in India. • Attractive tour packages There are several key trends shaping the travel and tourism sector in India: • Visitor profile: With increasing number of women joining the Indian workforce, the number of women business travelers is on a rise (women business travellers approximated at 25 per cent of the total number of travellers in 2011 are set to witness a significant growth of 891 per cent by 203011). Population aged 65 years and above is emerging as an important category of Indian travellers (senior travellers approximated at 1.3 million in 2011, are set to rise to 7 million by 203011). .3 • Purpose of travel: While religious and social travel has and is expected to remain the biggest contributor, increased travel has been witnessed in the form of weekend getaways and family visits to foreign destinations. • Diverse offerings: New concepts such as medical, adventure, cruise, rural, golf, wellness, luxury & heritage tourism each with its distinct characteristics and offerings are increasingly playing a pivotal role in attracting tourists. In addition, customised tour packages with offbeat destinations and newer experiences are fast gaining ground. 10. IBEF report on Tourism & Hospitality August 2013 11. http://articles.economictimes.indiatimes.com/2013-04-14/ news/38529310_1_direct-flights-indians-thai-airways © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 16. 09 Travel and tourism sector: Potential, opportunities and enabling framework for sustainable growth Performance of tourism sector in various states of India © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 17. Travel and tourism sector: Potential, opportunities and enabling framework for sustainable growth 10 2.1 Comparative assessment of major tourist states of India Table 2.1 compares the states of India on the basis of their market share. Table 2.1: Major tourist states of India by number of tourists Rank in 2012 Number of tourist visits (mn) in 2012 CAGR (20082012) Rank improvement (2008-2012) Tourism spend (INR mn) 2011-12 % of Overall likely state expenditure 2011-12 Andhra Pradesh 1 207 12% - 106 0.02% Tamil Nadu 2 188 17% 1 307 0.13% Uttar Pradesh 3 170 8% (1) 261 0.06% Karnataka 4 95 64% 6 2400 0.63% Maharashtra 5 71 33% - 4855 1.16% Madhya Pradesh 6 53 24% - 727 0.32% Rajasthan 7 30 0.2% (3) 281 0.10% Uttarakhand 8 27 7% (1) 1111 1.42% Gujarat 9 25 12% - 2691 0.71% West Bengal 10 24 4% (2) 430 0.19% Bihar 11 23 17% - 304 0.14% Delhi 12 21 47% 4 155 0.10% Jharkhand 13 20 36% - 250 0.20% Punjab 14 19 147% 3 224 0.19% Himachal Pradesh 15 16 13% (3) 174 0.52% Chhattisgarh 16 15 141% 3 479 0.29% Jammu & Kashmir 17 13 13% 1 1392 2.11% Kerala 1 11 7% (5) 1530 1.27% All India - 1057 16% - 23991 0.49% State Source: India Tourism Statistics 2008 Ministry of Tourism http://tourism.gov.in/writereaddata/CMSPagePicture/file/marketresearch/New/2012%20Data.pdf State wise/Sector wise Annual Plan 2011-12, Planning Commission • Andhra Pradesh has consistently stayed on top of the list during 2008-2012 even with a low level of state expenditure spend towards tourism sector. Being a major pilgrimage destination, it witnessed the highest number of tourist visits in 2012. Availability of good quality infrastructure further supports the growth of tourism. Tamil Nadu is another major pilgrimage destination in the south with major tourist attractions as Chennai, Madurai and Rameshwaram. • Karnataka witnessed the largest increase in rank with increased spend towards tourism sector at 0.63 per cent of the overall likely state expenditure during 2011-12. The effectiveness of its marketing campaign is evident from the fact that its website popularity improved by 7 ranks from 13 in 2009 to 6 in 2011. • Delhi being a key commercial and leisure destination in the country enjoys the necessary infrastructure and high number of tourist visits • Maharashtra, a key commercial and business destination scores well on all infrastructural, economic and demographic parameters with fifth largest number of branded rooms per sq km of area, fifth largest GDP per capita in the country and 83 per cent state literacy rate1 © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 18. 11 Travel and tourism sector: Potential, opportunities and enabling framework for sustainable growth • Gujarat with 0.71 per cent of state expenditure allocated for the tourism sector witnessed a considerable increase in its budgetary allocation proportion. With the success of the Gujarat tourism campaign with the brand ambassador as Amitabh Bachchan and other marketing and promotional activities, Gujarat has improved upon its tourism appeal many fold. For a detailed case study on Gujarat, please refer to Box 2 • Marketing and promotional campaigns such as ‘Bioscope : Hindustan Ka Dil Dekho’ in 2006, ‘Eyes Campaign’ and advertisements with hand shadowgraphy with the theme as ‘MP ajab hai, sabse gajab hai’ in 2010 helped Madhya Pradesh gain position amongst the top 10 tourist states of India. New ad campaigns based on the idea of presenting the state through beautiful, vivid colours in 2013 are expected to further augment the tourism potential of the state2 • Rajasthan, West Bengal, Himachal Pradesh, Uttarakhand and Kerala are states that have witnessed decline in their positions as preferred tourist destinations. While an increase in funds allocated towards tourism sector in these states is required, effective implementation of the funds may require careful assessment of the impact of marketing and promotion activities in the state. Other areas requiring consideration are improvements in overall state infrastructure • While Kerala scores highest on literacy levels, low GDP per capita and low urbanisation levels have had a negative effect on the tourism appeal. However, adequate infrastructure in areas of accommodation and passenger transportation along with the government’s focused marketing and promotion activities are expected to help Kerala regain its lost position. For a detailed case study on Kerala please refer to Box 3. 1. HVS State Ranking Survey 2011 2. http://www.exchange4media.com/50324_new-mp-tourism-adpasses-with-flying-colours.html © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 19. Travel and tourism sector: Potential, opportunities and enabling framework for sustainable growth Box 2: Case study on tourism in Gujarat The state government of Gujarat has taken multiple initiatives in order to enhance the tourism appeal of the state. Some of these are: • Land bank scheme: Areas have been earmarked in the Gujarat Industrial Development Corporation estates and SEZs for development of hotels, resorts, restaurants and other tourist amenities. Concessions are provided either on lease and its tenure or on the rate to be charged for government land and on stamp duty and registration fee on land transaction for tourism projects. • Tourism incentive package scheme: Special incentives are proposed to be provided over 2010-2015 including tax holidays on luxury tax on hotels, reduction in VAT charges on food and beverages and natural gas, reduction in entertainment tax, concessions such as interest subsidy, reduction of electricity duty and modifications in the lending criteria to cover wider tourism related projects like amusement parks, wayside facilities, service oriented projects like travel agencies, tour operators etc. • Marketing & branding: Brand campaign ‘Khushboo Gujarat Ki’ was launched with Amitabh Bachchan as the brand ambassador to increase awareness of the state’s diverse tourism aspects. Several tourism information centres have been opened across India. The state website has been launched in seven different languages, especially to cater to both national and international tourists. • Exhibitions, events & road shows: Gujarat tourism organises several exhibitions and road shows especially in the southern India for marketing diverse tourism aspects of Gujarat. Several road shows for 2013 have been planned in states of Kolkata, Hyderabad, Guwahati, Bangalore, Chennai, Ludhiana and Aurangabad. Events such as kite flying festivals are organised in order to attract tourists from various countries. In addition events like Gujarat Tourism Summit and Gujarat Travel Mart help create tourism potential awareness across all stakeholders. Gujarat tourism has signed various MoUs with various states such as West Bengal, Tamil Nadu, Rajasthan, Kerala, Uttar Pradesh and Himachal Pradesh for collaborative tourism development. • Infrastructure development: An outlay of INR 7 billion has .3 been planned for development of tourism infrastructure in 22 districts across the state. PPP is being encouraged for the development of accommodation facilities, booking infrastructure, site operations and retail and development of eight tourism hubs. Government has entered into a tie up with IL&FS to develop 50 tourism sites and more than INR 20 billion of tourism related infra investments. • Kids tourism, golf tourism and coastal tourism: Gujarat Tourism plans to introduce kids tourism during summer vacations in places that would be of interest to kids. Another new tourism concept on ‘Rama trail is planned to make tourists experience the journey that Lord Rama, Sita and Laxman undertook as part of their 14-year exile covering locations such as Sita Van, Ram Sarovar, Unai and Shabari Dham. For promotion of golf tourism in the state, private golf courses have been planned for development. There are plans to develop cruise terminals for dolphin sighting trips etc. for boosting coastal tourism in the state for which INR 1.6 billion have been allocated across 16 identified beaches. • Training & skill development: Training and skill development for employees engaged in providing tourism services through 335 Kaushalya Vardhan Kendras providing vocational skills to rural youth in various sectors including tourism. Source: http://www.gujarattourism.com/downloads/ tourism_sector_profile_new.pdf http://www.india.diplo.de/contentblob/3839178/ Daten/3075252/Economics_India_Figures_ Gujarat_VDMA_Report_DD.pdf http://tourism.gov.in/writereaddata/ CMSPagePicture/file/marketresearch/ Tentavely%20Identified%20circuit%20for%20 various%20states/new/Gujarat.pdf http://www.vibrantgujarat.com/images/pdf/ Service-Sector-Profile.pdf © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 12
  • 20. 13 Travel and tourism sector: Potential, opportunities and enabling framework for sustainable growth Box 3: Case study on tourism in Kerala Tourism initiatives in Kerala date back to the 1980s. A comprehensive tourism policy launched in 1995 kick started focused efforts towards development of tourism which have since then been followed by several tourism planning and development initiatives categorised as per following: • Policy initiatives: First state in India to launch Tourism Vision 2025 strategy document. First to launch Kerala Travel Mart as a permanent organisation to promote tourist attractions worldwide. Launched the India International Boat show, the first of its stature in South Asia. • Product development: Addition of new tourist destinations, launch of innovative products like houseboats, tree houses and ayurvedic rejuvenation. Identification of backwaters and ayurveda as core sectors of focus. • Marketing: Creation of specific products accompanied with product specific marketing and promotion activities including invitations to world’s leading travel magazines and newspapers to discover Kerala. 360 degree brand building campaign ‘God’s Own Country’ was launched to utilise below the line promotion activities in addition to print and TV advertisements. Steps were taken to improve the state tourism website which was made available in a number of languages including English, French, German, Italian and Spanish for targeting visitors from these countries. In the year 2008, Kerala Tourism became the first state in the country to develop tourism related web content compatible with mobile phones. • Infrastructure: Kerala Tourism focused on developing the core and linkage infrastructure both in terms of accommodation units as well as passenger transportation. • Tourism services: Focused on building a critical mass of tourism workers, increasing technical skills, strengthening community entrepreneurial skills and augmenting managerial capacity. While such initiatives have helped Kerala strengthen its tourism appeal, The Kerala Tourism Policy 2012 has been launched to augment past efforts and aid in developing a responsible tourism movement in the state: • Tourism infrastructure development: Task force on infrastructure development to be launched for development of local leisure destinations, wayside facilities and provision of tourist information centres at major tourist destinations. Around 11 infrastructure projects with an outlay of INR 50 billion have been planned over the next four years including a tourism complex at Veli in Thiruvananthapuram and an Ayurveda manufacturing unit at Punalur. • Encouraging investment: Steps to encourage PPP participation such as fast track clearance to tourism projects with investment above INR 0.1 billion, residential tariff for home stays and other fiscal and non fiscal incentives. • Brand building: Kerala Convention Promotion Bureau (KCPB) plans to market Kerala aggressively in the MICE business segment especially in countries of Australia and China. Formulation of marketing strategies and destination specific campaigns along with usage of social networking sites such as Facebook and Twitter for promotional campaigns is being implemented. Participation in both national and international road shows/fairs such as Top Resa, Paris; JATA Travel Mart, Tokyo; WTM, London; ITB, Berlin etc. and conducting workshops in countries such as Geneva, UK, New York, Chicago, Los Angeles, Paris etc. being carried out to attract international tourists. International Campaigns such as ‘Your Moment is Waiting’ reflect the increased focus on attracting international tourists. • Usage of IT & communication: In the year 2012, Kerala became the first state in the country to profile all tourist destinations across the state and to list services available along with connectivity by integrating a new set of mobile-based services and IT-driven projects. Other instances of IT usage include WAP guide, applications for Android and iOS and Bluetooth kiosks. • From products to experiences: Plans to start ‘Spice Route tourism’ on lines of Silk Route tourism of China which is expected to start from Muziris port in Kerala up to Venice in Italy passing through 31 countries. Success of steps outlined above is being reinforced through cooperation and collaboration between various stakeholders such as tour operators, property owners, travel agencies, government agencies etc. through various partnership meets organised by Kerala Tourism in various parts of the country. Source: http://tourism.gov.in/writereaddata/ CMSPagePicture/file/marketresearch/ Tentavely%20Identified%20circuit%20for%20 various%20states/new/Kerala.pdf http://www.keralatourism.org/international-fair/ http://www.business-standard.com/article/ economy-policy/kerala-tourism-plans-tostrengthen-digital-campaign-113081300889_1. html http://www.traveltechie.com/news/Keralatourism-plans-to-woo-tourists-from-USA-Japanmarkets/7175 © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 21. Travel and tourism sector: Potential, opportunities and enabling framework for sustainable growth © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 14
  • 22. Travel and tourism sector: Potential, opportunities and enabling framework for sustainable growth 2.2 Northern states in India 2.2.1 Growth of tourists in northern states Compared to the national average growth rate of 16.3 per cent, the total number of tourist visits in the northern states of India witnessed a growth rate of 10.2 per cent during the period 2008-20123. While the total number of tourist visits in India amounted to 1057 million in 20124, those in northern states amounted to 303 million in the same year4. The domestic and international tourist visits in northern states witnessed growth rates of 10.4 per cent and 3.2 per cent respectively during 2008-2012 amounting to 296 million domestic tourists and 7 million international tourists in 20124. Figure 2.1: Tourist visits in northern states of India, million 7.7% 170 2008 6.9% 21 10 16 8 13 21 27 2012 CAGR reflecting growth of tourist visits during 2008-2012 3.8% 0.2% 30 30 Rajasthan 6 7 Haryana 4 Uttarakhand 12.9% UP 19 13.4% J&K 0.5 46.9% HP 146.9% Delhi 126 Punjab 15 Source: India Tourism Statistics 2008 Ministry of Tourism http://tourism.gov.in/writereaddata/CMSPagePicture/file/marketresearch/New/2012%20Data.pdf The total market share of the Northern states in overall India tourist visits declined from 36 per cent in 20083 to 29 per cent in 20124. Figure 2.2: Market shares of northern states in overall tourist visits in India Source: India Tourism Statistics 2008 Ministry of Tourism http://tourism.gov.in/writereaddata/CMSPagePicture/file/marketresearch/New/2012%20Data.pdf 3. India Tourism Statistics 2008, Ministry of Tourism 4. http://tourism.gov.in/writereaddata/CMSPagePicture/file/ marketresearch/New/2012%20Data.pdf The state of Punjab witnessed the largest increase in market share of 1.7 per cent much of which can be attributed to increase in the domestic market share. Similarly the state of Delhi witnessed a market share increase of 1.2 per cent during the same period. While the domestic market share for Delhi witnessed considerable increase in 2012, the international market share suffered a decline4. Other northern states such as Rajasthan, Haryana, Uttarakhand, Uttar Pradesh, Jammu & Kashmir and Himachal Pradesh witnessed decline in market shares in overall India tourist visits. Uttar Pradesh witnessed the largest market share decline of 5.8 per cent followed by Rajasthan, Uttarakhand and Haryana at 2.3 per cent, 1 per cent and 0.4 per cent respectively. © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 23. Travel and tourism sector: Potential, opportunities and enabling framework for sustainable growth 2.2.2 Profile of tourists in northern states In line with the overall tourist profile in India, major proportion of tourist visits in northern states of India comprised of domestic tourists in 2012. Figure 2.3: Tourist visits in northern states of India, 2012 Source: http://tourism.gov.in/writereaddata/CMSPagePicture/file/marketresearch/New/2012%20Data.pdf Note: Northern states include Punjab, Delhi, HP J&K, UP Uttarakhand, Haryana and Rajasthan , , Punjab witnessed the highest growth rate both in terms of domestic (147%) as well as international tourists (114%) during 2008-20125. While Delhi witnessed high growth in terms of domestic tourists (72%), it witnessed almost negligible growth (0.1%) in international tourist visits during the same period5. While Haryana witnessed low growth in terms of increase in domestic tourists, increase in international tourists for the state (28%) was second only to Punjab5. Figure 2.4: Tourist visits in northern states of India by nationality Source: Ministry of Tourism, Statistical Surveys for States 5. India Tourism Statistics 2008, Ministry of Tourism, http://tourism. gov.in/writereaddata/CMSPagePicture/file/marketresearch/ New/2012%20Data.pdf 6. India Tourism Statistics 2011, Ministry of Tourism U.S.A. and U.K. account for the maximum number of foreign tourist visits in the northern states of India. This is in line with the overall India figures where these countries accounted for 16 per cent and 13 per cent respectively for the total foreign tourist visits in India in 20116. Apart from English speaking countries like U.K., U.S.A., Australia and Canada, a fair share of foreign tourists arrive from non English speaking countries like Germany, Japan and UAE. Thus, providing tourist related information on the state tourism websites and at the tourist information centers in multiple languages may add to the convenience of the foreign tourists. © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 16
  • 24. 17 Travel and tourism sector: Potential, opportunities and enabling framework for sustainable growth Table 2.2: Proportion of total tourist visits in northern states of India by purpose of visit Haryana (2012) Himachal Pradesh (2012) Delhi (2010) Punjab (2010) Business 31% 12% 38% 16% Holidays, leisure & recreation 13% 48% 18% 47% Social activity 20% 7% 20% 10% Pilgrimage 13% 13% 6% 5% Education 3% 3% 6% 7% Medical 1% 1% 3% 3% Others 23% 15% 8% 11% Purpose of Visit Source: Ministry of Tourism, Statistical Surveys for States Note: Overlap in Purpose of Visit for state of Delhi ‘Others’ includes visits for getting work done, shopping etc. While Haryana and Delhi are majorly commercial and business related destinations, Himachal Pradesh and Punjab emerge clearly as destinations preferred for leisure activities. Education and medical appear as areas that require focused efforts by state governments for promotion and marketing of the state avenues in these fields to attract more tourists. Table 2.3: Average duration of stay in northern states (Days) Haryana (2012) Himachal Pradesh (2012) Delhi (2010) Punjab (2010) Domestic 1.3 1.8 1.2 1.1 International 1.5 2.4 1.2 1.4 Total 1.3 1.9 1.2 1.1 Visitor Source: Ministry of Tourism, Statistical Surveys for States Himachal Pradesh witnessed the longest duration of stay by both domestic and international tourists which is evident because of its preference as a state for leisure and vacationing purposes. Average duration of stay is highest for the month of September for domestic tourists and December for international tourists. Delhi primarily a business centre witnesses more of business and work related tourists with short stay durations. There is a need for enhancing the infrastructure and tourism appeal of the states in northern India in order to achieve longer tourist stays. Special strategies and promotion activities may be adopted by the state governments especially in peak months in order to increase the stay duration for tourists. © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 25. Travel and tourism sector: Potential, opportunities and enabling framework for sustainable growth 2.2.3 Role of government and private sector States in North India have adopted multiple tourism strategies in order to enhance the tourism potential. Various fiscal incentives and investor friendly policies are being adopted by the state governments for development of state infrastructure. Table 2.4: Incentives & policy support by state governments in northern states State Fiscal incentives Policy support Tourism/civic infrastructure development plans Himachal Pradesh7 • 10 year tax holiday for entertainment units • Deferred payment of luxury tax by hotels and tourism units • Special incentive package for satellite towns and cyber cities with investment of over USD 21.5 million by NRIs and foreign investors • Special priority to Tourism sector for grant of power connections • Single window clearance • Destination Himachal Funds for marketing activities • Development Institution Funding of USD 95 million from ADB • Increase in helipads to 70, aerial ropeways at 12 identified places, wayside amenities, spas and resorts, ski slopes, tourist centres, multiplexes, parking, amusement parks, golf course, 4/5 Star Hotels, budget accommodation etc. at priority areas Punjab8 • Land allotment on easy terms for developing hotels on selective basis • Provision of soft loans for new tourism projects and expansion of existing ones • Collaboration with UNWTO for technical assistance • Sikh Circuit Tourism Plan worth INR 2.5 billion • Single window clearance • PPP development of roads, expressways, hotel management institutes, hotels and convention centres, tourist complexes, sports complex, parking facilities etc. Haryana 9 • INR 1 billion and above or employing more than 500 persons projects- financial assistance at 50% of tax paid for seven years (five years for investment up to INR 30 million) as Interest Free Loan (IFL) for five years • Five year exemption from electricity duty • Customized incentives- INR 0.3 billion/ above projects • Facilitation of land auction and institutional finance • Single window clearance • Task force headed by the Tourism Minister for finalization of tourism proposals • Declaration of Special Controlled Areas from Tourism point of view • Development of Gurgaon as convention, exhibition hub and golf city along with adventure sites, theme parks, camping sites in Sohna and Damdama, Kurukshetra as a pilgrim destination & Morni, Kalesar and Sultanpur as eco tourism sites • Planned upgradation of existing resorts, setting up theme parks and multiplexes, Tourist Reception Centres Uttarakhand10 • Three year 100% entertainment tax exemption; 30% for further five years • Five year 100% exemption for new amusement parks, ropeways • Capital investment subsidy in new project at ceiling of INR 3 million • Five year Rebate/ Deferred payment of luxury tax for new units • 20% assistance for investments up to INR 1 million • Land availability on reasonable terms/ price or as equity • Single window clearance • Government rest houses to be utilised for tourism • Provision of beer bar licenses to hotel units with attached restaurant facilities • Establishment of separate funds for tourism development • Concessions for infrastructure projects on merit basis • Five ropeway projects and connectivity improvements for identified seven tourism zones • Adventure centers planned at 19 locations for promoting outdoor activities like trekking, mountaineering, river rafting, kayaking, canoeing, rowing, water and snow skiing • Focus on infrastructure development through PPP Jammu & Kashmir11 • Capital subsidy for taxi operators up to INR 0.7 million • Capital investment subsidy up to INR 10 million for tourism units more than INR 250 million • Investment subsidy for modernisation of travel agencies to 50% of project cost • Single window clearance • Special area development programme in place for heritage conservation of old Srinagar city • INR 1.2 billion allocation during 2012-13 for infrastructure development and upgradation through public investment • Development of nine and 18 hole golf courses, chairlift facilities, Yatri Niwas, clubs and youth hostels, museums, tourist resorts, convention centres, renovation of heritage sites, industrial training institutes etc. • DG subsidy- INR 0.4 million • Timber subsidy for houseboat repairs • Subsidy for adventure equipment up to INR 0.7 million 7 Himachal Pradesh Tourism Policy 2005 . http://www.pppinindia.com/state-policy-himachal-pradesh.php 9. Haryana Tourism Policy 2008 http://www.pppinindia.com/ppp-initiatives-haryana.php 8. Punjab Tourism Policy 2009 http://www.pppinindia.com/state-policy-punjab.php 10. Uttarakhand Tourism Policy 2001 11. http://www.pppinindia.com/policy-initiatives-jammu-kashmir.php www.jandkplanning.com/images/Economic_Survey/32-tourism. pdf‎ © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 18
  • 26. 19 Travel and tourism sector: Potential, opportunities and enabling framework for sustainable growth Table 2.4: Incentives & Policy Support by State Governments in Northern states State Fiscal Incentives Policy Support Tourism/Civic Infrastructure Development plans Rajasthan15 • Exemptions for new tourism units for seven years: 100% luxury tax, 50% stamp duty, 50% entertainment duty, 50% electrical duty, 50% conversion charges • Interest subsidy to hotel, motel etc. • Low land conversion charges at select areas • Liberal Floor Area Ratio at two • Facilitation of institutional finance • Single window clearance • Simplification of rules for land allotment & conversion • Expeditious disposal of applications • Usage of government buildings for tourism • Simplified and time bound procedures for hotels for obtaining bar license • 25-year vision for infrastructure development including tourism sector • Promotion of PPP in development of accommodation units and hotels • Establishment of modern well equipped tourist reception centres at important entry points and destinations Uttar Pradesh16 • Five year exemption/deferred payment for luxury, entertainment tax for new ropeways, trade tax for restaurants • Entertainment tax exemption for paying guest scheme units • 100% exemption from stamp duty • Interest free loan for pioneer units • Heritage hotels and capital investment subsidy schemes with a subsidy of 10% • Facilitation of institutional finance and financial assistance to units in hill areas • Single window clearance • Simplified approval procedures • Rationalised luxury tax assessment • Paryatan Mitra committee solving entrepreneurial issues • Outlay of INR 34.6 billion planned during 2002-2022 for creation of connectivity and tourism infrastructure • Creation of special funds to finance infrastructural facilities in identified circuits • Priority to develop basic infrastructure facilities viz. roads, aviation services rail, surface and water transport assured electrical supply, telecom facilities, drinking water, sewage facilities and accommodation through PPP State governments are increasingly recognising the role of private sector participation in development of tourist infrastructure. While capital intensive destination development projects may require government funding and support, projects such as setting up of hotels, convention centres, golf courses etc. require professional expertise and hence may 15. Rajasthan Tourism Policy 2007 http://www.pppinindia.com/state-policy-rajasthan.php http://www.rajasthantourism.gov.in/App_Themes/Green/ NewHotel%20Policy/UDH-2013.pdf http://www.rajasthantourism.gov.in/Quick-Links/ Touristunitpolicy2007 .aspx be developed through private sector participation with the government playing the role of a facilitator. An example of increased private sector participation in tourism development initiatives is the state of Goa where the government has taken several key initiatives in collaboration with the private sector. For a detailed case study on Goa please refer to Box 4. 16. Uttar Pradesh Tourism Policy 1998 http://www.phdcci.in/admin/userfiles/file/Research-Bureau/ Uttar-Pradesh.pdf http://tourism.gov.in/CMSPagePicture/file/marketresearch/ statewise20yrsplan/up.pdf http://www.rajasthantourism.gov.in/Business/Investment-inHospitality.aspx © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 27. Travel and tourism sector: Potential, opportunities and enabling framework for sustainable growth Box 4: Case study on tourism in Goa Goa started gaining popularity as a tourism destination in the late 1960s. Initially the government put in place infrastructure to facilitate tourism in the state and the private sector was cautious on account of low returns at that point of time. The Goa Tourism Development Corporation Limited (GTDC) was set up in 1982 as a public limited company, to look after the commercial activities of the government and to set up and maintain tourism infrastructure in the state. In the recent past, with significant private sector investment and interest, the government has shifted focus to playing the role of a ‘facilitator’. Recognising that tourism cannot sustainably grow without private sector investment and that a passive approach to investors can be detrimental to the state’s tourism prospects, the government has been partnering with the private sector in several key initiatives. An early initiative was the Goa International Tourism Mart 2010, which was jointly promoted by the government and associations of private sector entities in the tourism industry. The last couple of years have seen several key initiatives taken in collaboration with the private sector. One of the examples is the formation of a ‘state-level marketing and promotion committee’ with members from the government and private players in the tourism industry. The terms of reference of the committee includes putting in place procedures and standards for marketing and promotional activities. The Committee Source: http://www.hotelierindia.com/article-10093-investing_in_goa/ These initiatives indicate a growing collaboration between the public and private sector and bode well for the long-term sustainability of tourism in Goa. http://www.business-standard.com/article/pti-stories/brand-consultantfor-goa-tourism-industry-soon-minister-113040800226_1.html http://articles.timesofindia.indiatimes.com/2013-05-31/goa/39654732_1_ goa-tourism-marketing-strategies-promotion-committee has the power to sanction and authorise marketing and promotional budgets allocated by the government for promotion of Goa tourism. Some of the other initiatives with private sector involvement include constitution of expert committees comprising of key members of private players in the Goa tourism industry for drafting of terms of reference and evaluation/selection of consultants. GTDC has recently announced plans of forming joint ventures with the private sector for renovation of their existing properties as well as development of new properties. http://articles.timesofindia.indiatimes.com/2013-09-25/goa/42392405_1_ cctv-cameras-goa-tourism-development-corporation-gtdc Viable business models may be developed for encouraging private sector participation in activities such as: • Developing and managing operations of tourist facilities at important tourist places • Laying down industry standards, ethics and fair practices in consultation with the government • Actively participating in preservation and protection of tourist attractions • Encouraging green practices research and implementation • Taking steps to encourage local community involvement in planning, development and maintenance of tourism projects • Providing adequate training and skill development opportunities for employment creation as well as provision of quality services to tourists • Undertaking promotion and marketing activities for tourist destinations in collaboration with government. © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 20
  • 28. 21 Travel and tourism sector: Potential, opportunities and enabling framework for sustainable growth 2.2.4 Key tourism circuits in northern states States in North India have adopted multiple tourism strategies in order to enhance the tourism potential. Various fiscal incentives and investor friendly policies have been adopted by the state governments for development of state infrastructure. Table 2.5: Key tourism circuits in northern states of India State Major tourism circuits Key tourist destinations Punjab17 • Amritsar circuit (Amritsar – Ram Tirath - Sarai Amanat Khan -Wagha Border) • Pathankot circuit (Amritsar - Dera Baba Nanak - Qadian-Kalanaur- Gurdaspur) • Jalandhar circuit (Amritsar - Tarn Taran – Hari – Ke - Pattan - Goindwal Sahib - Sultanpur Lodhi – Kapurthala Kanjli lake) • Jalandhar circuit (Amritsar - Baba Bakala – Kartarpur) • Chandigarh circuit (Chandigarh, Ropar (Rup Nagar)- Anandpur Sahib, Bhakra - Nangal, Ropar) • Faridkot circuit (Ludhiana - Moga - Ferozepur - Bhatinda - Malout – Muktsar) • Chandigarh circuit (Patiala-Nabha-Malerkotla - Ludhiana - Fatehgarh Sahib – Chandigarh Jalandhar Hoshiarpur, either back to Jalandhar or Ropar) Identified circuits • Sikh Circuit (Akal Takht in Amritsar, SriKeshgarh Sahib in Anandpur and Sri Damdama Sahib at Talwandi Sabo Bhatinda district) • Eco tourism circuit (Chandigarh - Ropar - Hoshiarpur - Talwara - Ranjit Sagar Dam) • Heritage circuit (Nabha - Patiala -Sangrur - Bathinda - Faridkot - Kapurthala) • Freedom trail (Patiala - Nabha - Malerkotla - Jagraon - Ferozpur - Amritsar - Ajnala) Amritsar, Golden Temple, Wagah Border, Patiala, Anandpur Sahib, Jalianwala Bagh Delhi18 • Delhi- Agra- Jaipur • Delhi- Agra- Jaipur- Khajurao • Delhi- Chandigarh- Amritsar Identified circuits • Heritage circuit covering heritage monuments and structure in National Capital Region • Religious circuit covering Akshardham, Bahai Temple, Jama Masjid, Nizamuddin Dargah, Gurdwara Bangla Sahab etc. Connaught place, Chandni Chowk, Raj Ghat, Rajpath, Gurdwara Bangla Sahib, Lodi Garden, Jantar Mantar, India Gate, Red Fort, Qutab Minar, Lotus Temple Himachal Pradesh19 • Dhauladhar circuit (Delhi -Chintpurni - Jwalamukhi -Kangra - Dalhousie - Khajjiar - Chamba Dharamsala - Chamunda - Palampur - Jogindernagar – Delhi) • Beas circuit (Delhi - Swarghat - Bilaspur - Mandi - Rewalsar - Kullu - Manali - Rohtang - Naggar Manikaran - Delhi) • Tribal circuit (Delhi - Shimla - Sarahan - Sangla - Kalpa - Nako - Tabo - Dhankar - Pin Vally Kaza - Losar Kunzum - Koksar - Sissu - Tandi - Udaipur - Trilokpur - Rohtang Pass – Manali - Delhi) • Sutlej circuit (Delhi - Parwanoo - Kasauli- Barog - Solan - Chail - Hatkoti - Rampur - Sarahan Narkanda - Naldehra - Tattapani - Shimla - Kiarighat - Delhi) Identified circuits • Shimla Circuit (Kalka - Solan - Shimla- Chail - Kufri - Naldara) Dalhousie, Shimla, Mandi, Hamirpur, Chamba, Manali, Kullu, Solan, Dharamshala, Kangra, Narkanda, Sarchan, Rohtang • Dharamshala Circuit (Dharamshala - Kangra - Palampur - Chamba) Jammu & Kashmir20 • Naagar Nagar circuit (Watlab – Hazratbal – Tumullah – Mansbal - Wullur Lake Identified circuits • Yousmarg – Aharbal – Pahalgam – Verinag - Kokernag – Kishtwar - Bhaderwah • Lakhanpur – Basoli – Surinsar – Mansar – Jammu – Katra –Shivkhori – Shud Mahadev – Patnitop • Nyoma – Tangtse – Leh – Basgo – Hundar(Nubra)- Turtuk (Nubra) – Mangue – Temigang - Khaltsi Mubarak Mandi Heritage Complex, Gulmarg, The Mughal Gardens of Kashmir, Pahalgam, Sonamarg, Leh, Kargil, Vaishno Devi Uttarakhand21 • Haridwar- Rishikesh- Muni- Ki- Reti Identified Circuits • Dehradun – Musoorie – Dhanaulti – Kanatal – Rishikesh – Haridwar - Dehradun • Corbett – Nainital - Corbett • AdiBadri – Simli – Karyprayag – Chamoli – Pipalkoti –Urgam – VradhBadri – Joshimath - Bhavishya Badri -Yogdhyan Badri (Pandukeshwar) – Tapovan – Malari - Niti village • Nankmatta – Tanakpur – Purnagiri – Champawat – Lohaghat – AbbotMount – Pithoragarh - Jaul Jibi - Madkot – Munsiyari – Shyama – Kamkot – Bageshwar –Takula - Almora Dhanaulti, Dehradun, Jim Corbett, Mukteshwar, Mussoorie, Nainital, Haridwar, Char Dham 17 http://tourism.gov.in/writereaddata/CMSPagePicture/file/ . marketresearch/Tentavely%20Identified%20circuit%20for%20 various%20states/new/Punjab.pdf 18. http://www.destinations-india.com/famous-tourist-circuits.html http://tourism.gov.in/writereaddata/CMSPagePicture/file/ marketresearch/Tentavely%20Identified%20circuit%20for%20 various%20states/new/Delhi.pdf 19. http://tourism.gov.in/writereaddata/CMSPagePicture/file/ marketresearch/Tentavely%20Identified%20circuit%20for%20 various%20states/new/HimachalPradesh.pdf 20. http://tourism.gov.in/writereaddata/CMSPagePicture/file/ marketresearch/Tentavely%20Identified%20circuit%20for%20 various%20states/new/Jammu.pdf 21. http://tourism.gov.in/writereaddata/CMSPagePicture/file/ marketresearch/Tentavely%20Identified%20circuit%20for%20 various%20states/new/Uttarakhand.pdf © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 29. Travel and tourism sector: Potential, opportunities and enabling framework for sustainable growth 22 Table 2.5: Key Tourism Circuits in Northern states of India State Major Tourism Circuits Key Tourist Destinations Uttar Pradesh22 • Agra- Braj • Varanasi- Sarnath- Ramnagar • Mahabharat circuit (Hastinapur- Baghpat – Bijnor) • Ram Van-Gaman Yatra circuit (Ayodhya, Bharatkund, Belha Devi-Pratapgarh, Shrangverpur, Allahabad, Chitrakoot) • Circuit related to Ist War of Independence in 1857: (Jhansi – Meerut – Lucknow – Raibareily – Unnao – Kanpur – Bithoor – Sitapur – Badaun – Bareilly – Hathras – Shahjahanpur – Mainpuri – Firozabad – Gorakhpur – Devaria – Azamgarh – Balia – Varanasi - Allahabad) • Jain Circuit (Shravasti – Kaushambi – Allahabad – Ayodhya – Faizabad – Ronahi – Kampil – Hastinapur – Sauripur – Agra – Banaras – Kushinagar • Sikh Circuit (Gurudwara Pakki Sangat (Allahabad)- Gurudwara Ahrora, Gurudwara Chota & Gurudwara Bhuili (Mirzapur)- Gurudwara Nichibagh, Gurudwara Gurubagh (Varanasi - Guru Teg Bahadur Ji ki Tapsthali, Chachakpur, Gurudwara Raasmandal (Jaunpur)- Gurudwara Brahmkund (Ayodhya)- Gurudwara Ahyiyaganj (Lucknow)- Gurudwara Singh Sabha (Mathura)- Gurudwara Hathighat, Gurudwara Guru ka Taal (Agra)) • Sufi Circuit (Fatehpur Sikri – Rampur – Badaun – Bareilly – Lucknow – Kakori - Dewasharif (Barabanki) – Bahraich - Kichocha Sharif - Kade Shah - Kada (Kaushambi) – Allahabad - Kantit Sharif (Mirzapur)) • Christian circuit ( Merut-Sardhana – Agra – Kanpur – Lucknow – Allahabad – Varanasi – Gorakhpur) • Handicraft circuit (Lucknow – Agra – Aligarh – Firozabad – Rampur – Kanpur – Kannauj – Vrindavan – Muradabad – Khurja – Varanasi – Bhadohi – Mirzapur – Chunar – Jaunpur – Gorakhpur) Identified circuits • Awadh - Ayodhya circuit • Allahabad- Varanasi circuit • Uttar Pradesh buddhist circuit Taj Mahal, Agra Fort, Fatehpur Sikri, forts at Allahabad, Jhansi, Bithoor, Lucknow, Varanasi, Sarnath Haryana23 • Panipat- Kurukshetra- Pinjore • Kurukshetra-Pehowa-Hardwar-Hodal Identified circuits • Kalka - Panchkula – Naraingarh - Yamuna Nagar –Kurukshetra - Thanesar – Pehowa - Panipat • Rohtak – Meham – Hansi – Hissar – Dabwali • Surajkund – Damdama Lake – Faridabad (Badhkal Lake) – Palwal • Mahendragarh – Madhogarh – Narnaul Ambala, Karnal, Panchkula, Kurukshetra, Jyotisar, Thanesar, Morni Hills, Pinjore Rajasthan24 • Dhundhar circuit (Jaipur – Amer - Dausa) • Hadoti circuit (Bundi - Kota - Jhalawar) • Merwara-Marwar circuit (Ajmer- Nagaur) • Mewat-Brij circuit (Alwar – Bharatpur - Ranthambhor - Tonk) • Vagad circuit (Dungarpur - Banswara) • Shekhawati circuit (Sikar - Jhunjhunun - Churu) • Godwad circuit (Mount Abu - Ranakpur - Jalore) Identified circuits • Desert circuit (Jodhpur – Bikaner - Jaisalmer) • Jaipur – Ajmer - Pushkar • Chittaurgarh – Udaipur – Mt. Abu • Udaipur – Ranakpur – Kumbhalgarh – Nathdwara Alwar, Dargah Sharif-tomb of the Sufi saint Khwaja Moinuddin Chisti at Ajmer Palaces and forts at Bundi, Diwan-e-aam, Hathia Pol, and Naubat Khana at Bundi, Bikaner, Jaisalmer fort, Jodhpur, Mount Abu, Ranthambor National Park, Udaipur, Jaipur Multiple tourism circuits across states based on varied themes of pilgrimage, adventure, natural flora and fauna, cultural heritage, national history, famous personalities, moments, rivers and other topographic diversity provide ample opportunities for increasing the tourism potential of northern states of India. This may further be enhanced through: • Identification and development of new tourism circuits or enhancement of existing ones • Development of integrated circuits in collaboration with neighboring states • Infrastructural development focusing on tourist destinations as well as civic infrastructure • Encouragement for private sector participation in form of financial incentives such as lower taxes, subsidies, easy finance options or availability of land banks • Establishment of required administrative set up • Development of innovative marketing and promotion techniques • Leverage key strength of the state in terms of natural resources, flora and fauna, rich and cultural heritage etc. to promote different forms of tourism. 22. http://www.up-tourism.com/tourism_circuits.htm http://tourism.gov.in/writereaddata/CMSPagePicture/file/ marketresearch/Identified%20circuit%20for%20various%20 states%20phase%202/new/UttarII.pdf 23. http://tourism.gov.in/writereaddata/CMSPagePicture/file/ marketresearch/Tentavely%20Identified%20circuit%20 for%20various%20states/new/Haryana.pdf 24. http://www.rajasthantrip.com/rajasthan-travel-circuits.html http://tourism.gov.in/writereaddata/CMSPagePicture/file/ marketresearch/Tentavely%20Identified%20circuit%20 for%20various%20states/Rajasthan.pdf © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 30. 23 Travel and tourism sector: Potential, opportunities and enabling framework for sustainable growth Seamless travel © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 31. Travel and tourism sector: Potential, opportunities and enabling framework for sustainable growth 3.1 Benefits of seamless travel Last mile connectivity catering to smooth and seamless travel is increasingly being recognised as an important prerequisite for boosting tourism globally. It holds special relevance for India which has been witnessing steady growth in the sector over the past few years. The current public transport system suffers from lack of intermodal linkage between operations of various traffic modes causing a stressful experience to travellers. Disparate fares, complex tax levies, longer travel times, unintegrated information services and lack of an integrated management of transportation systems and operations, lack of wayside amenities such as petrol pumps, clean drinking water kiosks & sanitation facilities, road signages etc. are some of the challenges that tourists face due to lack of a seamless transportation system. Seamless travel requires smooth and intelligent connections between different modes of transportation offering multiple advantages: • Physical continuity: Availability of an integrated transport system encompassing various modes of transportation in the country • Reduced time requirements: Significant time savings in transfer, access and waiting times through rationalization of operation schedules • Cost savings: Establishment of a competitive transport fare inclusive of applied discounts, seasonal passes, discounted fare policies etc. help save money for the tourists • Information availability: User convenience is enhanced with provision of real time information on transport modes, facilities and transfer stations. A seamless transportation system aids in enhancing the overall administrative systems and procedures. It benefits the economy in the form of reduced demand for high cost investments in individual facilities and leads to preference for public transportation networks over private passenger cars thus being in line with the global agenda of green and sustainable growth. 3.2 Case study: Seamless travel in European Union countries Europe with its enticing beauty is a preferred tourism destination for tourists globally. As per the World Economic Forum’s Travel and Tourism Competitiveness Report 2013, it maintained its position as the leading region for travel and tourism competitiveness. The 28 EU member states rank high on all parameters especially on the Infrastructure availability. Several agreements between the EU nations provide easy and seamless travel to visitors: • Schengen agreement: The Schengen Borders Agreement permits people to travel freely within the Schengen area (26 European countries)1 if the traveler otherwise qualifies to enter the Schengen area, by crossing an official external border during regular hours of operation and obtaining an entry stamp in the passport. With this there are no national border controls and visitors travel from country to country without systematic passport checks. • Single currency: Euro is the common currency used by 17 out of 28 EU countries covering 332 million people1. It offers several advantages such as eliminating exchange rate fluctuation and hence exchange costs. Easy cross border trade as a result of a single currency aids in economic growth and multiple user choices. • No visa requirements: Qualified tourism visitors or people with a valid US passport who are on vacation in the EU for less than 90 days are exempted from visa requirements. The EU offers seamless travel between member states across all modes of transportation. Extensive international passenger services are provided through railway length of more than 212,000 kms2. Several countries in the EU enjoy more than 6000 kms of high speed railway lines with speeds up to 350 km/h2. A single pass system called as international Eurail pass is available at prices of USD 5002 for passengers/tourists for a seamless travel between any locations within member states. The aviation sector in the European Union enjoys a single European market for air transport called as the ‘Single European Sky’ by which the design, management and regulation of airspace is coordinated throughout the European Union rather than separate member states ensuring safe and efficient utilisation of airspace and the air traffic management system. This helps users enjoy more affordable airfares and a vast array of choices for both traditional and low cost carriers. For example, a flight from Brussels to more than 70 destinations across Europe often costs less than USD 27 each way2. Lessons from the seamless travel capabilities of the European Union may be applied in the Indian context in order to make travel for tourists more easy and enjoyable. 1. http://travel.state.gov/travel/cis_pa_tw/cis/cis_4361.html 2. euinsight, November 2011 © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 24
  • 32. 25 Travel and tourism sector: Potential, opportunities and enabling framework for sustainable growth 3.3 Passenger/road tax structure in India There are two mechanisms for the levy of passenger/road tax in India. While the states of Manipur and Himachal Pradesh follow the ‘basis allocation of fare’ mechanism, where tax is levied as a percentage of the actual fare charged from the passengers; Haryana follows the ‘composite tax’ mechanism for small passenger vehicles, where tax is levied based on the criteria of seating capacity, occupancy ratio etc. Table 3.1: Passenger tax structure in select states of India State Tax structure Haryana Under the Punjab Passengers and Goods Taxation Act, 1952, as applicable to the State of Haryana, • Tax at 25% of value of fare is charged on passengers carried by a motor vehicle • Lump sum rates of tax varying from INR 6000 to INR 16000 per month have been fixed for permit holders on link routes • Lump sum amount varying from INR 1200 to INR 14400 per annum is payable by smaller passengers vehicles Gujarat • 1% of the amount of fare collected for municipal areas • 17.5% for the area outside the municipal areas Himachal Pradesh • 40% of the fare and 20% surcharge on the passenger tax Rajasthan In case of passenger vehicles registered in the state, special road tax is broadly based on the cost of vehicle/chassis and its seating capacity. In case of vehicles registered outside the state, special Road tax is based on the basis of seating capacity for the passenger vehicles Source: Report on Road User Taxes in India issued by Foundation for Public Economics and Policy Research, 2010 Imposition of tax on commercial vehicles such as tourist taxis, maxi cabs, all India tourist buses etc. proves to be an additional burden on the tourists travelling pan India and has several negative effects. Existence of large number of check points for collection of passenger tax/road tax causes monetary loss to transporters due to wastage of time. Large number of check points causes considerable waste of time arising from traffic stoppages. Manual processing of tax papers at interstate check posts, leads to delays and hampers smooth traffic flow. Single window integrated check posts may help address such issues. In addition to levy of passenger tax, tourist tax is collected at some major tourist destinations. Inefficient system of collection, high rates and non-uniformity of Passenger Tax/ Road is a source of irritation and harassment to tourists. Requisite steps are required to develop alternate mechanisms to not only to augment state revenue but also to reduce the hassles faced by the tourists/commercial vehicles: • Need for development of an Integrated Tourism Circuit for various 3. http://www.domain-b.com/industry/Tourism/20100722_tourism_ takes.html states with an integrated taxation regime • Replace various road transport related taxes/levies (road tax, goods tax, passenger tax, etc.) by a single composite tax • Transport check gates may be replaced with integrated check gates combining check posts of sales tax, forest etc. into one Some of the recommendations such as the integrated taxation regime have already been initiated in India. Seamless travel initiatives in the golden triangle circuit in India3 The ministry of tourism, India recognises the importance of seamless travel for boosting tourism in the country and hence several efforts have been initiated towards achievement of the same. Ministry of Tourism in collaboration with the Ministry of Road Transport & Highways and the State Governments of NCT of Delhi, Rajasthan, Haryana & Uttar Pradesh in 2010 announced that taxes would be collected centrally at each of the four starting nodes at Delhi, Gurgaon, Jaipur and Agra for allowing unhindered movement in the Golden Triangle of Agra-Delhi-Jaipur. Taxes collected would be apportioned. For Delhi, the Delhi transport authority would collect taxes from government approved tour operators or tourist transport operators on behalf of concerned states. This would be based on type of vehicle, travel itinerary and prevalent tax structure. These taxes would be collected as separate drafts and the Delhi Transport Authority would issue a composite permit for unhindered movement through the circuit. Speedy implementation of such programs along with increasing awareness of the same is required. Success of the seamless interstate taxation regime in golden triangle has encouraged the states of Karnataka, Kerala, Tamil Nadu and Andhra Pradesh in southern India which are considering formation of an integrated circuit comprising these states4. Other integrated circuits such as Deccan-Odyssey and LonavalaMatheran-Nasik-Shirdi-AurangabadPune-Mahabaleshwar have also been planned. 4. http://www.ttgasia.com/article.php?article_id=21691 © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 33. Travel and tourism sector: Potential, opportunities and enabling framework for sustainable growth Other initiatives for providing seamless travel across the country include: • The Urban Development Ministry announced the National Common Mobility Card (NCMC) in 20115 by the name ‘c’ to enable citizens to use transport networks across the country with a single CMC card being used across cities and for different modes of transport and for parking and toll purposes. The implementation would be partly funded by the Central Government under the JnNURM scheme covering buses sanctioned under the scheme. Jaipur City Transport Services Ltd., Karnataka State Road Transport Corporation, Bangalore Municipal Corporation and Bhopal Municipal Corporation are some of the first participants. There is a need for expediting the implementation of such programs enabling seamless travel in the country • Bangalore witnessed steps towards integration of the various transport modes in 2011. The Metro Bus Transit (MBT) pass6 was launched by the Metro and the Bangalore Metropolitan Transport Corporation enabling passengers to travel via buses and metros as many times a day with a single card. • AAI selected IT Solutions provider SITA in 20137 to equip 25 airports in India (including non-metros) with common use passenger processing systems to enhance passenger experience by maximising the use of check-in counters and gates especially during the peak rush hours. In addition, tender has been floated for setting up of Airport Operations Control Centre at 10 airports providing solutions like resource management and data base, flight information systems, passenger flow monitoring etc. • Incredible India-Yes Bank Travel Card was introduced for inbound travelers at ITB Berlin in 20138. The card allows visitors to pay seamlessly in Indian rupee at shops or restaurants with point of sale terminals or to withdraw cash at ATMs and can be bought and topped up at licensed travel agencies, Yes Bank branches, airport counters, money changers, hotels, airport kiosks, etc. Several other such steps have been initiated in several parts of the country in order to provide seamless travel opportunities to visitors. However, an overall integration of various modes of transport and across various regions and states in the country covering key tourist destinations is required in order to reap benefits of a seamless transportation system. 5. http://pib.nic.in/newsite/erelease.aspx?relid=78167 6. http://www.thehindu.com/news/cities/bangalore/bmrcl-bmtcsign-mou-for-common-day-metrobus-transit-passes-in-bangalore/ article1458642.ece 7 http://www.sita.aero/content/aai-partners-with-sita-to-improve. passenger-experience-at-25-indian-airports 8. http://travel.financialexpress.com/latest-updates/1241-yes-banklaunches-incredible-india-travel-card © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 26
  • 34. 27 Travel and tourism sector: Potential, opportunities and enabling framework for sustainable growth Key issues in tourism sector in India © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 35. Travel and tourism sector: Potential, opportunities and enabling framework for sustainable growth 4.1 Training and skill development Travel and tourism sector in India includes employees such as inbound tour operators, travel agents, tourist transport operators, adventure tour operators and domestic tour operators in the travel trade segment and those employed in hotels and restaurants in various functions of front office, F&B and housekeeping among others. While the tourism sector in India is targeted to grow at an annual rate of 12 per cent during 2011-20161, adequate training and skill development infrastructure and hence availability of trained manpower has not kept pace with growth. This has led to an existing as well as forecasted shortfall of trained manpower in various segments of tourism sector in India. The hospitality sector alone witnessed a shortfall of 0.5 million employees during 2011-2012 which is expected to rise to 0.8 million by 2017 and 1.1 million by 20221 as per the target growth levels. As per a study by the Ministry of Tourism, only 50 per cent of the employees in the key functional domains of hotels are fully trained with this statistics reducing to 35 per cent for restaurants and other eating outlets2. This necessitates the immediate need for formal training especially for the hospitality sector employees. In addition, proper selection of hotel management students, increased focus on grooming and communication skills, on the job training, courses in foreign languages and standardisation and monitoring of curricula in private institutions may be required. There exists a forecasted requirement of around 2.8 million employees for restaurants, 4.1 million employees for hotels and 0.3 million employees for the travel trade segment by 2022 resulting in an incremental requirement of a total of 2.7 million employees for the tourism sector as compared to 2012 employment figures2. An assessment of the training infrastructure estimates a total of 337 training institutes in the Hospitality sector and 101 travel and tour institutes offering courses related to ticketing and tourism as in March 2010 which appears to be significantly low2. Several skill development areas have been identified for employees engaged in the tourism sector in India. Table 4.1 Skill development areas for employees engaged in travel and tourism sector in India Function Technical skills Soft skills Hotels and restaurants Front office • Managing guests • Call handling – incoming and outgoing • Billing • Maintaining registers • Paying attention to details • • • • F&B services • Managing guests • Adequate knowledge of menu and cuisines • Cleanliness and hygiene • Simple billing • Complaint handling • Communication skills • Dedication towards work • Behavioural skills F&B kitchen • Latest cuisines • Innovation/creative skill towards developing new offerings • Handling kitchen equipments • Yield management • Staff management • Cost management • Hygiene and cleanliness • Communication skills • Dedication towards work • Behavioural skills • Time management skills Housekeeping • Inspection of rooms, consumables, etc. • Complaint handling • Responding to guest requirements • Up keeping of public places, restaurants, conference halls etc. • Cleanliness and hygiene • Ability to use all the housekeeping equipments • Communication skills • Team work skills • Attitude towards work 1. India Tourism Statistics 2011, Ministry of Tourism Communication skills Team work skills Attitude to listen Behavioural and interpersonal skills 2. Human Resource and Skill Development requirements in the Tourism, Travel, Hospitality & Trade sector, 2022 report by National Skills Development Council © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 28
  • 36. 29 Travel and tourism sector: Potential, opportunities and enabling framework for sustainable growth Table 4.1 Skill Development areas for employees engaged in travel and tourism sector in India Function Technical skills Soft skills Hotels and restaurants Ticketing • Passenger routing skills • Ability to act as a travel advisors • Maintaining a cordial relationship with the clients/ travelers • Geographical knowledge • Knowledge on various hotels and site seeing locations • Networking skills • Ability to use ticketing software • Procedural knowledge on visa/ passports • Time management • Telephone etiquette • Communication skills Tour guides • Knowledge/awareness on the area, people, culture etc. • Historical knowledge/significance of tourist locations • Skill to handle tourists • Skill to understand the tourist requirements • Decision making skills • Organizing ability • Time management • Communication skills Source: Human Resource and Skill Development requirements in the Tourism, Travel, Hospitality & Trade sector, 2022 report by National Skills Development Council In order to meet the high anticipated demand for employees over the next decade, concerted efforts are required for augmenting the existing training infrastructure through provision of additional training institutes and enhancing the capacity and infrastructure of the existing ones. In addition short term courses may be introduced in order to enhance the skill sets of existing employees. 3. Human Resource and Skill Development requirements in the Tourism, Travel, Hospitality & Trade sector, 2022 report by National Skills Development Councilf Formally trained managerial staff accounts for only 16 per cent of the total hospitality sector and 21 per cent of the total travel and trade sector workforce3. Efforts are thus required for enhancing the skill sets of non managerial staff in the sector. With 20 per cent3 of the travel and trade sector employees comprised of casual workers, development of basic skill set is important. These include health and personal hygiene, cleanliness, basic service techniques, cooking techniques, garbage disposal, etiquette and basic manners, basic nutrition values, basic tourism awareness, first aid, client handling and behavioural skills etc. © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 37. Travel and tourism sector: Potential, opportunities and enabling framework for sustainable growth 4.2 Safety and security of tourists Safety and security of tourists is of paramount importance in any country as it majorly impacts the inflow of foreign tourists in the country. Domestic tourist movements are impacted in states and tourist locations where tourists consider a threat to their safety and security. It holds special significance for India which has been ranked at a low level of 74 amongst 140 global economies on safety and security parameters as per the World Economic Forum’s T&T Competitiveness Report 2013. Government has made concerted efforts towards increasing the safety and security of tourists in India. One of the main efforts in this direction includes setting up of a special tourist police. Following Kochi in Kerala where the first tourist police station in the country was set up in 20104, several other states such as Andhra Pradesh, Delhi, Goa, Himachal Pradesh, Jammu and Kashmir, Karnataka, Kerala, Maharashtra, Madhya Pradesh, Odisha, Punjab, Rajasthan, and Uttar Pradesh have deployed Tourist Police in one form or the other5. The indicative tasks of the tourist police include ensuring safety and security of tourists by providing them information on safe lodging and transportation, effective and fast handling of enquiries and complaints, regular surveillance and immediate action in case of any identified misconduct. The tourism ministry is also making efforts towards sensitising various stakeholders through electronic and print campaigns for ensuring the safety and security of tourists. Provision of funds under the Central Financial Assistance to states of Rajasthan, Uttar Pradesh and Andhra Pradesh for setting up of Tourist Facilitation and Security Organization on a pilot basis and issuance of guidelines for adoption of code of conduct for safe and honorable tourism issued to hotels, guides, tour operators and other professionals and institutions are other important steps. With rise in number of women travelers both in terms of domestic as well as foreign tourists, ensuring their safety has emerged as a major concern. The Ministry of Tourism has launched a sensitization campaign, ‘I respect women’, with an aim to raise awareness about the need for sensitive behavior towards women and to provide greater security6. Guidelines issued at the 2012 APEC Tourism Ministerial Meeting7 towards ensuring tourist safety may also be implemented: • Encouragement of risk assessment and management by the private sector before commencement of travel • National tourist administrations of APEC economies to compile and exchange best practices of establishing appropriate regulations • Maintain a transparent and balanced mechanism for generating travel advisories • Develop online travel registration tools for collecting data on outbound tourists • Put in place administrative arrangements to get quick access to tourists data without compromising the data privacy for identifying tourists in times of emergency • Regulation and monitoring of various service providers in tourism value chain to ensure compliance and safety While steps have already been initiated in this direction, there is a need for ensuring effective implementation of the policies and actions drafted to ensuring safety and security of tourists. 4. http://www.thefreelibrary.com/India’s/first/tourist/police/station/ opens/in/Kochi.-a0220034757 5. http://in.news.yahoo.com/government-favours-special-forcesafety-tourists-112538680.html 6. http://www.travelbizmonitor.com/mot-unveils-i-respect-womencampaign-21069 7 http://www.apec.org/Meeting-Papers/Ministerial-Statements/ . Tourism/2012_tourism/annex_c.aspx © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 30
  • 38. 31 Travel and tourism sector: Potential, opportunities and enabling framework for sustainable growth 4.3 Healthcare for tourists There is a significant need for improvement in ensuring sound health of tourists in India especially considering the low rank of 109 for India in terms of health and hygiene standards as compared for 140 world economies8. Indicative parameters reveal dismal results. Physician density at 0.7 per 1000 population and 9 hospital beds for every 10,000 people in India are extremely low for a country that considers tourism as a sector of high importance for the economy8. Only 34 per cent of the population in the country has access to improved sanitation services and 8 per cent of the population still does not have access to clean drinking water8. Urban areas in India have excellent or good medical facilities such as long distance road ambulance, air ambulance, state of the art hospitals meeting international standards, pharmacies etc. However, rural areas in India are devoid of such facilities which may hamper the growth of rural tourism in India. There is also a wide state wise disparity in terms of medical infrastructure availability. Several issues surround tourist destinations in the country. Lack of clean drinking water kiosks, lack of clean toilet facilities, lack of first aid and medical facilities in immediate vicinity especially in hilly and remote areas and lack of good quality transportation ambulances to medical centres in case of emergency are some of the major concern areas. The ministry of tourism has taken steps for improving sanitation facilities by asking the tourism departments of all states and union territories to establish adequate wayside amenities. Helicopter services have been proposed for emergency medical situations. Steps are also being taken to provide good quality medical facilities at tourist destinations. However, an overall development of medical infrastructure in the country is required for provision of a safe and healthy experience to tourists visiting India. The central government has given priority to healthcare and is making significant investments to improve the infrastructure and delivery mechanism jointly with the state governments through National Rural Health Mission. It has decided to increase healthcare expenditure to 2.5 per cent of GDP by the end of the 12th Five Year Plan by 20179. In addition, several precautionary measures may be taken in order to avoid instances of tourist illness in the country by: • Providing information on important vaccinations • Increasing awareness on importance of consuming food and water from organised vendors with clean and hygienic premises • Timely and transparent communication of travel advisories in situations of disease outbreaks • Careful screening of tourists at airports for any kind of existing disease/infection 8. World Economic Forum’s travel and tourism Competitiveness Report 2013 9. http://www.indianexpress.com/news/healthcare-spend-to-rise-to2.5--of-gdp/918380/ © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 39. Travel and tourism sector: Potential, opportunities and enabling framework for sustainable growth 4.4 Infrastructure As per the World Economic Forum’s T&T Competitiveness Report 2013 for 140 world economies, India’s air transport infrastructure, ground transport infrastructure and tourism infrastructure have been ranked 39, 42 and 95 respectively indicating considerable scope for improvement. Other infrastructure requirements such as availability of good quality and reasonably priced hotel rooms, parking spaces, tourist cars etc. are also a cause of concern. Some of these have been discussed below. Air Transport Infrastructure: While the overall airport infrastructure in India is ranked well, quality of infrastructure, airport density per million population and number of departures along with rising airfares are a cause of concern. State wise comparison reflects wide disparity with Maharashtra and Delhi leading at more than 0.25 million aircraft movements in 2010 as compared to Punjab, Manipur and Jharkhand with less than 0.01 million aircraft movements10. Road Transport Infrastructure: While India is ranked high (30)11 in terms of road density per million population, quality of roads is unsatisfactory especially in rural areas. In addition there is a lack of feeder stations even on proper roads with not enough stops for pick up. The national and state highways account for 2 per cent and 4 per cent respectively of the total roads in India12. Hence, just 6 per cent of the overall roads in India accounting for 80 per cent12 of the total traffic signify the need for improvement in the national road and highway network. Lack of parking facilities, police stations and tourist information centres in vicinity of tourist destinations is another cause of concern. Lack of public amenities such as clean toilets and clean drinking water kiosks poses health concerns for tourists. Lack of proper road signage (visibility, language etc.) causes trouble in identifying locations especially to the tourists travelling by road. Rail Transport Infrastructure: India enjoys good quality rail infrastructure, however there is scope for state wise improvement. While Northern states such as Delhi and Punjab enjoy railway route length of 12.3 km and 4.2 km per 100 sq km of area10, states in eastern part of India have negligible railway route lengths. In addition there exists a significant demand supply gap for railway tickets on major routes Hotel room availability: India ranks very low in terms of number of branded hotel rooms per 100 population (rank 136)11. With just a little more than 68,800 branded rooms10 for the country India has only two branded rooms per 100 sq km area10 which is concentrated in top cities and urban areas. In addition there is a lack of budget hotels offering good quality services at reasonable prices Government recognizes the need for upgradation of tourism infrastructure in India and has proposed an outlay of INR 152.2 billion13 for the tourism sector under the 12th five year plan. This includes creation of basic infrastructure such as improving road connectivity and wayside amenities, development of helipads, heliports and air strips, upgradation of passenger terminals and creation of tourist infrastructure in collaboration with the private sector. Efficient implementation of such plans is pertinent for achieving an overall infrastructural development in the country. 10. HVS State Ranking Survey 2011 11. World Economic Forum’s travel and tourism Competitiveness Report 2013 12. Ministry of Road Transport & Highways 13. Report of the Working Group on Tourism, 12th Five Year Plan, Ministry of Tourism, Government of India © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 32
  • 40. 33 Travel and tourism sector: Potential, opportunities and enabling framework for sustainable growth Recommendations © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 41. Travel and tourism sector: Potential, opportunities and enabling framework for sustainable growth Key Recommendations for boosting tourism sector in India have been summarised below: • Projection of India’s image as a safe and secure tourist destination Tourist Police Task Force has been established by various state governments for ensuring safety and security for tourists. Special sensitisation campaigns may be implemented for women tourists and to publicise these campaigns on global platforms. Health concerns for tourists visiting India also needs to be mitigated. • Attract private investment Private sector players may be encouraged to participate in development of tourism infrastructure by provision of fiscal as well as non fiscal incentives. PPP projects and formation of Special Purpose Vehicles for mega tourism projects may be required • Infrastructural development Investments in tourism infrastructure may include development of both tourism as well as civic infrastructure. This may also involve provision of way side amenities, tourist information bureaus and websites for providing requisite tourist information. Efforts towards enhancement of overall transport infrastructure in the form of good quality roads, rail network, airports, helipads, availability of tourist vehicles etc. may also be strengthened in order to improve the overall infrastructure • Development of tourism destinations An extensive market research and evaluation exercise may be undertaken in order to identify desired tourist destination attributes and major markets and segments. Identified tourist destinations may then be developed through flagship projects involving state governments and private sector players. These may be developed either as ‘products’ such as religious, wellness, adventure, nature, rural or agriculture tourisms or as ‘experiences’ such as the Rama trail planned in Gujarat or the Spice Route Tourism planned in Kerala. • Development of tourist circuits across states Key tourism circuits across the country may be identified basis discussions with key stakeholders such as state governments, local travel trade partners etc. Key attributes, tourism potential, current and future connectivity and synergy within destinations may be studied • Seamless travel within circuits Steps may be taken in order to enhance travel experience for visitors across states. Payment of road tax, toll etc. while entering each state may be replaced by an integrated taxation regime. This may further be augmented by development of an integrated public transport system at a national level on lines of the Eurail network in Europe • Joint marketing programs With tourist circuits spanning across various states, collaborative marketing efforts may be required for promotion of the same: –– ­ Focused branding and promotional campaigns may be designed –– ­ Marketing material like brochures, print creative, audio video presentations, short films, radio jingles, creation of web-sites, online creatives, advertisements over media channels like print, radio or internet etc. may be utilised –– ­ Involvement of local travel trade partners may be encouraged. Trips to involved destinations, informative sessions, financial support and incentives may be provided –– ­ Direct and intensive reach marketing programs may be executed through social networking sites such as twitter, facebook etc. in order to reach out to the young tech savvy global population –– ­ Focused websites, exhaustive in content, user friendly and attractive in visual appeal may be developed in multiple languages of target countries –– ­ Participation in international events may be increased and a greater number of domestic tourism events and road shows may be organized in order to offset seasonality of tourist inflow. Events may be based on innovative themes of music, dance, sports, food, fruits, handicrafts, Indian culture and traditions, Indian villages, festivals etc. –– ­ Customised tour packages may be developed keeping in mind the profile of visitors, budget and travel requirements. Comparative pricing of tourism products may also need to be considered after analysis of other tourism packages and products available • Differentiated tourism offerings for repeat travelers Customized packages with different tourism products and discounts may be provided to repeat travelers in order to provide a different and enriching experience on each visit • Partnership oriented marketing Travel trade partnerships may be extended beyond tour operators, guides etc. to partners from other industries such as international hotel chains, airlines or credit card companies • Human resource development Provision of additional training institutes, enhancing capacity of existing ones along with introduction of short term courses providing specific skills directed at hospitality and travel trade sector employees may be required for catering to the increased manpower and skill requirements. Development of basis skill sets for casual workers especially those in the travel trade segment are required. Rural youth may be provided vocational training through special institutes to provide them employment opportunities. © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 34
  • 42. 35 Travel and tourism sector: Potential, opportunities and enabling framework for sustainable growth • Inclusive growth There is a need to spread education and awareness on the importance of tourism sector and increase stakeholder participation involving the government, private sector and the community at large. Marketing campaigns like ‘Atithidevo Bhava’ may be implemented at regular intervals. Tourism awareness programs and workshops may be organized to enhance sensitisation towards tourists and tourism destinations and for sustainable development and maintenance of tourism sites in the country Several of the stated recommendations have also been implemented by tourism countries such as Thailand, Singapore and Malaysia. Please refer to Box 5 for details on initiatives carried out by these countries. Box 5: Case study tourism development initiatives in South East Asian countries Several tourism development initiatives have been planned and implemented by countries like Thailand1, Singapore2 and Malaysia3 around key areas of infrastructure development, development of tourist destinations, marketing campaigns and events, training and development and stakeholder participation. • Development of good quality transport and social infrastructure • Singapore: Ground and air transport ranked seocnd and 14th respectively due to availability of high-quality roads, railroads, and ports –– Seamless travel in ground transport networks –– Strong Information, Communication and Technology (ICT) infrastructure –– Good educational systems and training facilities along with flexible labor market places, safe and secure destinations • Development of tourist amenities and services as per international standards •• Malaysia: Several infrastructure developments being implemented under the National Economic Transformation Programme, 2010. –– Enhancing connectivity to priority medium-haul markets and improving rates, mix and quality of hotels –– New luxury hotels expected to commence operations –– KLIA2 a new low cost carrier terminal & Malindo airways, a new low cost airline to commence operations in 2013 • Allocation of funds for tourism development •• Singapore: Several tourism development funds have been allocated –– Tourism Product Development Fund amounting to 2 billion Singapore dollars for creation of new tourism products as well as rejuvenation of existing ones during 2005-2015 –– Kickstart fund to encourage innovative content in lifestyle –– Cruise Development Fund to help cruise companies cultivate products and demand –– Tourism Technology Fund for encouraging development of new products by leveraging modern technology • Infrastructural Developments including new leisure zones & attractions •• Malaysia: Several tourism infrastructure developments being implemented under the National Economic Transformation programme, 2010: –– 22 parks and gardens under parks and gardens tourism –– Development of an eco-nature integrated resort in Sabah –– 2012: First Legoland theme park to be built in Asia, Legoland Malaysia and Puteri Harbour Indoor theme park –– Establishment of dedicated entertainment zones • Rehabilitation and sustainable development of tourism sites •• Singapore: Upgradation of existing facilities planned like Sentosa park in Singapore to introduce Port of Lost Wonder, Singapore’s first kids club by the beach and iFly Singapore, world’s largest indoor skydiving venue • Events & festivals leveraging cultural heritage in terms of religion, art and crafts and languages •• Malaysia: Events and programmes organized basis varied themes of: –– Duty free shopping destination: Events such as Grand prix sale, Mega sale carnival, Yearend sale and International shoe festival planned during 2013-14 –– Sports: Sports events planned such as F1 Petronas Malaysia Grand Prix and Malaysian Open ATP World Tour 250 etc. –– Business: Malaysia helicopter tour package launched in 2011 •• Singapore: Themes of art and culture, food, sports, business etc. –– Singapore Arts Festival, Singapore Sun Festival and Singapore Food festival encourage inbound travel –– Singapore Sports Hub has been host to the Singtel Formula one Singapore Grand Prix and inaugural Youth Olympic Games Source: 1. aimp.apec.org/Documents/2012/TWG/TWG1/12_twg1_003.pdf 2. Singapore’s Tourism Sector Performance for 2012, Singapore Tourism Board 3. http://icis.apceo.com/Files/speech%20in%20Gansu/speech%20afternoon/2.Hooi%20Lai%20Wan.pdf http://malaysiatravelnews.com/malaysia-is-10-in-worlds-top-tourist-destination-from-unwto/ Malaysia’s Tourism Success Story, Asean Tourism Forum 2013 www.lpptourism.org/download/AW_TourismPromotion.pdf © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 43. Travel and tourism sector: Potential, opportunities and enabling framework for sustainable growth • Promotional and Branding Campaigns •• Malaysia: Several tourism promotion events and campaigns planned • Partnership Oriented Marketing •• Singapore: Emphasis on long term engagement with industry partners such as with Wholesaler Overseas Travel Agency for development of tailored packages or Mastercard’s ‘Priceless Singapore’ partnership that endorses Singapore by establishing it in same league as New York, London, Sydney and Beijing • Differentiated offerings for various tourism segments •• Thailand: The Strategic Marketing Action Plan 2012 encourages travel trade partners to formulate special packages for expansion of high-income market, niche customer-segments such as golfers, wedding, single women travelers, encouraging repeat travelers etc. –– ‘Visit Malaysia Year’ campaign planned for 2017 –– Promotional events such as MAS travel fair, MATTA fair and Cuti-Cuti Malaysia, Malaysia Mega Sale Carnival, Colours of Malaysia showcasing rich cultural traditions and promoting culture of planned holidays •• Singapore: Differentiated campaigns for target countries such as ‘The Holiday You Take Home With You’ for India, ‘New Discoveries’ for China and ‘Get Lost’ campaign for Australia •• Singapore: Differentiated approach to be adopted for proximate markets like Indonesia offering opportunities for frequent visits or for markets like Japan and Vietnam which are expected to show good results with increased investments • Training and awareness programs for travel trade partners •• Singapore: Training Industry Professional in Tourism Scheme to support companies in employee upgrading and talent development. NATAS accreditation aimed at encouraging tourism professionals to upgrade skill sets through certified courses • Rehabilitation and sustainable development of tourism sites •• Singapore: Upgradation of existing facilities planned like Sentosa park in Singapore to introduce Port of Lost Wonder, Singapore’s first kids club by the beach and iFly Singapore, world’s largest indoor skydiving venue • Encourage participation from government sectors, civil societies and local administration •• Malaysia: Rigorous governance structure adopted for successful implementation of the National Economic Transformation programme, 2010 with delivery task force being led by the prime minister and the minister for tourism in the country • Policy and regulatory support •• Thailand: The National Tourism Development Plan, 2012-2017 includes as focus areas steps to improve efficiency in issuing visas, waive visa fee for visitors from FTA partner countries or those in trade and investment relations and waive visa requirements for tourists from target countries •• Singapore: Availability of favourable policies facilitating foreign ownership and FDI, well-protected property rights and few visa restrictions. Review of Travel Agents Act & Regulations and Tourist Guide Regulations has been planned to help industry cater to requirements of customised itineraries © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 36
  • 44. 37 Travel and tourism sector: Potential, opportunities and enabling framework for sustainable growth About KPMG in India KPMG in India, a professional services firm, is the Indian member firm of KPMG International and was established in September 1993. Our professionals leverage the global network of firms, providing detailed knowledge of local laws, regulations, markets and competition. KPMG in India provide services to over 4,500 international and national clients, in India. KPMG has offices across India in Delhi, Chandigarh, Ahmedabad, Mumbai, Pune, Chennai, Bangalore, Kochi, Hyderabad and Kolkata. The Indian firm has access to more than 7 ,000 Indian and expatriate professionals, many of whom are internationally trained. We strive to provide rapid, performance-based, industry-focused and technologyenabled services, which reflect a shared knowledge of global and local industries and our experience of the Indian business environment. KPMG is a global network of professional firms providing Audit, Tax and Advisory services. We operate in 156 countries and have 152,000 people working in member firms around the world. Our Audit practice endeavors to provide robust and risk based audit services that address our firms’ clients’ strategic priorities and business processes. KPMG’s Tax services are designed to reflect the unique needs and objectives of each client, whether we are dealing with the tax aspects of a cross-border acquisition or developing and helping to implement a global transfer pricing strategy. In practical terms that means, KPMG firms’ work with their clients to assist them in achieving effective tax compliance and managing tax risks, while helping to control costs. KPMG Advisory professionals provide advice and assistance to enable companies, intermediaries and public sector bodies to mitigate risk, improve performance, and create value. KPMG firms provide a wide range of Risk Consulting, Management Consulting and Transactions & Restructuring services that can help clients respond to immediate needs as well as put in place the strategies for the longer term. © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 45. Travel and tourism sector: Potential, opportunities and enabling framework for sustainable growth About 38 CII The Confederation of Indian Industry (CII) works to create and sustain an environment conducive to the development of India, partnering industry, Government, and civil society, through advisory and consultative processes. CII is a non-government, not-for-profit, industry-led and industry-managed organisation, playing a proactive role in India’s development process. Founded over 118 years ago, India’s premier business association has over 7100 members, from the private as well as public sectors, including SMEs and MNCs, and an indirect membership of over 90,000 enterprises from around 257 national and regional sectoral industry bodies. CII charts change by working closely with Government on policy issues, interfacing with thought leaders, and enhancing efficiency, competitiveness and business opportunities for industry through a range of specialized services and strategic global linkages. It also provides a platform for consensus-building and networking on key issues. Extending its agenda beyond business, CII assists industry to identify and execute corporate citizenship programmes. Partnerships with civil society organisations carry forward corporate initiatives for integrated and inclusive development across diverse domains including affirmative action, healthcare, education, livelihood, diversity management, skill development, empowerment of women, and water, to name a few. The CII Theme for 2013-14 is Accelerating Economic Growth through Innovation, Transformation, Inclusion and Governance. Towards this, CII advocacy will accord top priority to stepping up the growth trajectory of the nation, while retaining a strong focus on accountability, transparency and measurement in the corporate and social eco-system, building a knowledge economy, and broad-basing development to help deliver the fruits of progress to all. With 63 offices, including 10 Centres of Excellence, in India, and 7 overseas offices in Australia, China, Egypt, France, Singapore, UK, and USA, as well as institutional partnerships with 224 counterpart organizations in 90 countries, CII serves as a reference point for Indian industry and the international business community. © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
  • 46. KPMG India Contacts CII Contacts Pradeep Udhas Partner and Head Markets T: +91 22 3090 2040 E: pudhas@kpmg.com Jasdeep Singh Head Trade Fairs - Northern Region, Chandigarh T: +91 0172- 2607228, 2605868, 5022522 E: Tradefairs.nr@cii.in Jaideep Ghosh Partner Management Consulting T: +91 124 307 4152 E: jaideepghosh@kpmg.com Follow us on: Twitter - @KPMGIndia kpmg.com/in Latest insights and updates are now available on the KPMG India app. Scan the QR code below to download the app on your smart device. Google Play | App Store The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. Printed in India.