PROJECT REPORT ON Service Industry a Boom for Tourism Session: 2010-2013SUBMITTED TO: - SUBMITTED BY:-Haramb Nayk Megha AggarwalAsst. Professor Enrollment No.02514905010Dept. Of Business Administration Course: BBA (T&TM) 3rd Sem. MAHARAJA SURAJMAL INSTITUTE (Affiliated to Guru Gobind Singh Indraprastha University) (Recognized by UGC U/S2 (F)) C-4 JANAK PURI, NEW DELHI-58
TABLE OF CONTENTS.no Particulars Page no1 Introduction to service 12 Tourism Service 1-43 Performance of services sector 4-54 Importance of Tourism 65 World Tourism Statistics and Rankings 6-76 Most-visited countries by international tourist arrivals 7-97 Foreign Tourist Arrivals in India 9-128 Conclusion 139 Referrals 14
INTRODUCTION TO SERVICEThe mechanized system of development has now paved ways for social-economic transformationwhich has made possible an increase in the level of disposable income. When we earn more, welike to spend more. We take interest in utilizing our leisure time and availing the modernamenities and facilities. These are provided by service sector. A service is an activityor benefitthat one party can offer to another and does not result in ownership of anything. Services areintangible activities which provide want satisfaction. Each type of service is intangible andperishable. It cannot be separated from the provider and hence while selling of servicesownership is not transferred to the buyer. Because of these decent characteristics service industrydefers from manufacturing industry. But it is helpful for the development of manufacturingindustry. In the present world the service sector is growing at a very fast rate. Services sector hasbecome important for many economies in the world and very important particularly for India. itis important to accelerate the growth of industrial sector particularly manufacturing sector tocatch up with the growth of services sector and maintain a decent and stable growth ofagricultural sector. Services can be classified according to the market or the user to whom theyare offered example tourism services.Tourism ServicesTourism has been a major social phenomenon of societies all over the world. It is driven by thenatural urge of every human being for new experiences, and the desire to be both educated andentertained. The motivations for tourism also include religious and business interests; the spreadof education has fostered a desire to know more about different parts of the globe. The basichuman thirst for new experience and knowledge has become stronger, as communication barriersare getting overcome by technological advances. Progress in air transport and development oftourist facilities has encouraged people to venture beyond the boundaries.As it is evident from economic trends in the world, the service sector is growing at a faster ratethan any other sector of economy. Consumer markets are becoming increasingly mature withgrowing information input. As a result, consumer expectation are changing vary fast and creatingchallenges for business. These challenges make tourism as an emerging area for attraction anddevelopment of India. It is boom time for Indias Tourism and Hospitality sector to show its
presence in global map. The emergence of India as one of the fastest growing economies in theworld during the 1990s is attributable to the rapid growth of its services sector to a great extent.Travel & Tourism sector has emerged as one of the leading service industry generatingsignificant amount of employment and revenues. To encourage the growth of the sector, medicaltourism, wellness tourism, adventure tourism, cruise tourism etc have been introduced. Thegrowth in the sector has catalyzed fresh investments in hotels, resorts, spas, restaurants, airports,malls etc. It has also resulted in commencement of flight operation by several foreign anddomestic airlines in new routes.Tourism can play a crucial role in fostering economic development, particularly employmentgeneration. Travel and Tourism sector in India has emerged as one of the leading serviceindustry generating significant amount of revenues. Tourism industry has been one of the majorsources of foreign exchange earnings internationally as well.The sector has witnessed impressive growth post the economic liberalization policy embraced bythe Government in 1992. Increased business activities and proactive policy of the Government toshowcase India as an attractive destination resulted in a higher inflow of business and leisuretourists. Foreign Tourist Arrivals (FTAs) grew from 2.38 million in 2002 to 5.11 million in 2009.In addition domestic tourism is also gaining momentum. Encouraged by the spurt Governmenthas introduced niche tourism products like medical tourism, wellness tourism, adventure tourismand cruise tourism. This has created new business opportunities in transport and constructionsectors. India has witnessed a flow of fresh investments in setting up luxury & budget hotels,resorts, spa, restaurants, airports, malls and commencement of flight operations by severalforeign airlines/ domestic airlines in new routes.Tourism is a service-intensive industry focusing on the customer’s service, experiences not onlyduring their stay, but also prior and subsequent to it. Since most tourism products are booked andpaid for in advance, customers have to rely on the accuracy of accessible information. However,besides the information provided first-hand by tourism service providers, communicationtechnologies enable customers to share product reviews through respective websites. People withcommon interests already interact through the internet using web blogs, chats, review websites
and open communities focusing on special interest tourism or certain destinations. As Hollowaynoted (2004, p. 197-198)“Information and communication technology, as it is now known, hascome to play a key role in all elements of the marketing mix, and the new term recognizes theimportance of communication in the interface between a business and its customers. Electronic,or online‟ communications have become affordable and practicable for even the smallest SMEs,and no sector of the travel industry is unaffected by this revolution.”Performance of services sectorThe Services sector is particularly important for India for various reasons. services sector, whichmade rapid strides in growth in the Indian economy over the past few years, witnessed moderateslowdown in growth during 2008-09, owing to the contagion from the global economicdownturn. The growth in services sector has remained consistently higher than the overallgrowth in the economy except for two years. More importantly, as compared with rest of theeconomy, the services sector appears to have been less affected by the global financial crisis.Despite having no direct exposure to the troubled assets in the advanced economies, thefinancing, insurance, real estate and business services exhibited sluggish performance, mainly onaccount of indirect effect of the financial crisis. Financial services recorded steep decline mainlydue to significant correction in the capital market, following the international trends, heightenedeconomic uncertainties and market expectations of a sluggish performance by the corporates.The table No.: 01 states that the share of services in GDP is increasing relatively. This hasincreased from 58.7%in 2002-03 to 60.2% in 2004-05 & from 62.0 in 2006-07 to 63.0 in 2007-08.Trade, Hotel, Transport and Communication services share rise from 9.4% in 2002-03 to12.8% in 2006-07 ; but declined from 12.8% in 2006-07 to 12.4% in 2007-08 . This is theindirect effect of financial crisis. When we think about share in GDP it has increased but slowlyduring these years.
Table no 1Performance of the service sector (growth in percentage) Sub-sector 2002- 2003- 2004-05 2005-06 2006-07 2007-08 2008-09 03 04A Trade, Hotels, 9.4 12.0 10.7 12.1 12.8 12.4 9.0 Transport and CommunicationB Financing, 8.0 5.6 8.7 11.4 13.8 11.7 7.8 insurance, realestate and business servicesC Community, 3.9 5.4 6.9 7.0 5.7 6.8 13.1 social and personal servicesD Construction 7.9 12.0 16.1 16.2 11.8 10.1 7.2 Shares of services 58.7 58.9 60.2 61.1 62.0 63.0 64.5 in GDP 18 16 14 12 10 A B 8 C 6 D 4 2 0 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09Source: Central Statistical Organization
Importance of TourismThe importance of Tourism, as an instrument of economic development and employmentgeneration, particularly in remote and backward areas, has been well recognized the world over.It is a large service industry globally in terms of gross revenue as well as foreign exchangeearnings. Tourism can play an important and effective role in achieving the growth with equityan objective which we have set for ourselves. Tourism has the potential to grow at a high rateand ensure consequential development of the infrastructure of the destinations. It has the capacityto capitalize on the countrys success in the services sector and provide sustainable models ofgrowth. Tourism sector stimulates other economic sectors like agriculture, horticulture, poultry,handicrafts, transport, construction, etc. through its backward and forward linkages and cross-sectoral synergies. Expenditure on tourism induces a chain of transactions requiring supply ofgoods and services from the related sectors. The consumption demand, emanating from touristexpenditure also induces more employment and generates a multiplier effect on the economy.Tourism in India has come into its own as a brand India Tourism. The creation of niche tourismproducts like heliport tourism, medical tourism, wellness tourism, adventure tourism, cruisetourism and caravan tourism has served to widen the net of this sector.World Tourism Statistics and RankingsAccording to the World Tourism Organization, international tourist arrivals reached 903 millionin 2007, up 6.6 per cent on 2006. Earnings reached a record US$ 856 billion, increasing in realterms by 5.6 per cent over 2006. Receipts from international passenger transport (i.e. visitorexports) were estimated at US$ 165 billion, bringing the total international tourism receipts toover US$ 1 trillion, corresponding to almost US$ 3 billion a day.While back in 1950, the top 15 destinations absorbed 98 per cent of all international touristarrivals, in 1970 the proportion was 75 per cent, and this fell to 57 per cent in 2007, reflecting theemergence of new destinations, many of them in developing countries.
Total volume of cross-border tourist travelIn 2011, there were 983 million international tourist arrivals, with a growth of 4.6% as comparedto 2010. [Citation needed] In 2012 this rose to more than 1 billion international arrivals.Most-visited countries by international tourist arrivalsThe World Tourism Organization reports the following ten countries as the most visited in termsof the number of international travelers. In 2011, Turkey overtook the United Kingdom tobecome the sixth most visited country.Table no 2Rank Country International International Change 2010 tourist tourist to 2011(%) Arrivals(2011) Arrivals(2010)1 France 79.5 million 77.1Million +3.02 United States 62.3 million 59.8Million +4.23 China 57.6 million 55.7Million +3.44 Spain 56.7 million 52.7Million +7.65 Italy 46.1 million 43.6Million +5.76 Turkey 33.3 million 27.0Million +8.77 United Kingdom 29.2 million 28.3Million +3.28 Germany 28.4 million 26.9Million +5.59 Malaysia 24.7 million 24.6Million +0.610 Mexico 23.4 million 23.3Million +0.5International tourism receiptsInternational tourism receipts grew to US$1.03 trillion (€740 billion) in 2011, corresponding toan increase in real terms of 3.8% from 2010. The World Tourism Organization reports thefollowing countries as the top ten tourism earners for the year 2011, with the United States by farthe top earner.
Rank Country International tourism receipts (2011)1 United States $116.3 billion2 Spain $59.9 billion3 France $53.8 billion4 China $48.5 billion5 Italy $43.0 billion6 Germany $38.8 billion7 United Kingdom $35.9 billion8 Australia $31.4 billion9 Macao $27.8 billion10 Hong Kong $27.2 billionInternational tourism expenditureThe World Tourism Organization reports the following countries as the top ten biggest spenderson international tourism for the year 2011.Rank Country International tourism expenditure (2011)1 Germany $84.3 billion
2 United States $79.1 billion3 China $72.6 billion4 United Kingdom $50.6 billion5 France $41.7 billion6 Canada $33.0 billion7 Russia $32.5 billion8 Italy $28.7 billion9 Japan $27.2 billion10 Australia $26.9 billionForeign Tourist Arrivals in IndiaThere has been a remarkable growth, in the recent years, in foreign tourist arrivals to India due tothe various efforts made by the Ministry, including promoting India through the Incredible Indiacampaign in overseas markets. Incredible India is a multi-pronged promotional campaignlaunched by the Ministry in order to position the country as a preferred tourist destination for thetravelers the world over. Indias performance in tourism sector has been quite impressive. Duringthe period 2002 to 2009, India witnessed an increase in the Foreign Tourist Arrivals (FTAs) from2.38 million to 5.11 million. Due to global slowdown, terrorist activities, H1N1 influenzapandemic, etc., growth rate in FTAs during 2009 fell by 3.3 per cent. Tourism sector witnessed abad year all over the world. The decline in growth rate in FTAs observed in India was lower thanthat observed for world (4.3%).
Foregin Tourist Arrivals (FTAs) in India, 1997-2012Year FAs in India(in millions) Percentage change over previous year1997 2.37 3.81998 2.36 -0.71999 2.48 5.22000 2.65 6.72001 2.54 -4.22002 2.38 -6.22003 2.73 14.32004 3.46 26.82005 3.92 13.32006 4.45 13.52007 5.08 14.32008 5.28 4.02009 5.17 -2.22010 5.78 11.82011(p) 6.29 8.92012( Jan –June )(p) 3.24 7.4@(p) Provisional, @ Growth rate over Jan – June, 2011.Source: (i) Bureau of immigration, govt. India, for 1997-2010 (ii) Ministry of Tourism, govt. of India, for 2011 & 2012
Foreign Exchange Earnings (FEE) (in US$ Million) from tourism in India, 1997-2012# Advance Estimates, @ Growth Rate over Jan – June, 2011Source: i) Reserve Bank Of India, for 1997 to 2009ii) Ministry of Tourism, Govt. of India, for 2010, 2011 & 2012
Tourism has become a popular global leisure activity. In 2011, there were over 983 millioninternational tourist arrivals worldwide, representing a growth of 4.6% when compared to 940million in 2010. International tourism receipts (the travel item of the balance of payments) grewto US$1.03 trillion (€740 billion) in 2011, corresponding to an increase in real terms of 3.8%from 2010. In 2011, international travel demand continued to recover from the losses resultingfrom the late-2000s recession, where tourism suffered a strong slowdown from the second half of2008 through the end of 2009. After a 5% increase in the first half of 2008, growth ininternational tourist arrivals moved into negative territory in the second half of 2008, and endedup only 2% for the year, compared to a 7% increase in 2007. The negative trend intensifiedduring 2009, exacerbated in some countries due to the outbreak of theH1N1 influenza virus,resulting in a worldwide decline of 4.2% in 2009 to 880 million international tourists’ arrivals,and a 5.7% decline in international tourism receipts.
ConclusionTourism is a dynamic and growing worldwide industry, People with different abilities and olderpersons are now becoming a growing group of consumers of travel, sports and other leisure-oriented products and services. In order to develop tourism in India in a systematic manner, thepotential of this group should be tapped properly. Tourism development can be a major engine ofeconomic growth and through it unemployment and poverty eradication is possible in sustainablemanner.It is a service-intensive industry that is dependent on the quality of customer’s serviceexperiences and their consequent assessments of satisfaction or dissatisfaction. From a demandperspective, the new tourist is increasingly well informed, more quality sensitive, and morewilling to quickly react towards shifts in the tourism market following postings on tourism ratingwebsites. Hence, the perceived service product quality emerges as the crucial factor in the pre-purchase phase of tourism products From a supply perspective, the constant and effectiveimprovement of service quality provides an opportunity in particular for the small- and medium-sized structured tourism industry to compete with larger competitors. The adoption of a so-called„service orientation‟ by tourism businesses has thus become of increasing interest in recentyears as a crucial factor in the enhancement of profit, growth, customer satisfaction, customerloyalty, and satisfaction. However, destinations generally consist of multiple services oftenreferred to as service packages or bundles, which render service orientation more difficult toperform.