The document provides an analysis of the tourism industry in India. Some key points: - Tourism accounts for 6% of India's exports and 30% of exports in services, and is the 2nd fastest growing tourism economy. - India is poised to lead tourism growth in South Asia with 8.9 million expected arrivals by 2020. - Domestic tourism is emerging as a major segment as discretionary spending increases in India. - Challenges include lack of infrastructure, human resources, service quality issues, inadequate marketing and promotion, taxation, security, and regulatory hurdles.

1. Tourism Industry
Industry Analysis
Abhishek Baranwal
Amit Kumar
Vishwakarma

2. Introduction
Tourism is travel for recreational,
leisure or business purposes. The
World Tourism Organization defines
tourists as people "traveling to and
staying in places outside their usual
environment for not more than one
consecutive year for leisure, business
and other purposes".

3. 1. Tourism brings in large amounts of income in
payment for goods and services available,
accounting for 30% of the world's exports of
services, and 6% of overall exports of goods and
services.
2. According to World Tourism Organization
estimates, India will lead in South Asia with 8.9
million arrivals by 2020.
3. India is poised to emerge as the 2nd fastest
growing (8.8%) tourism economy in the world over
2005-14 according to the World Travel & Tourism

4. Key
players

5. (Indian Tourism
Industry)

7. Porter’s Five Forces: Tourism Industry
Industry Rivalry : Highly Fragmented Industry
with Intense Rivalry
– Highly Fragmented Industry.
• Organized players would barely have 15-20% of the
marketplace
• Most of organized players are present in metros & mini-
metros
• Large disposable incomes in towns like Lucknow, Jaipur,
Coimbatore etc. serviced by family run unorganized players
– Industry rivalry is intense but not cut throat
• Rivalry Intense because of low switching costs, low levels
of product differentiation, perishability of products diversity
of rivals
• Rivalry is not cut throat since exit barriers are not high,
fixed costs are not high, market growth is good

8. Threat of Substitutes: Low Threat of Substitutes,
as travel moves up the list of household priorities
 Lot of Possible Substitutes , Threat of Substitution low
◦ India is witnessing a growth of discretionary spend as % of
income
 from 30% in 2005 to around 70% by 2025. Travel , being a
discretionary spend poised to gain.
◦ Travel has moved up the list of household spending
priorities
 Unlikely to be substituted by a durable purchase or investments
 Education & Recreation will occupy 9% share of wallet in 2025
as compared to 5% now.

9. Buyer Power: While buyers are fragmented, their
diminishing brand loyalty and ability to switch
(for most products) gives them reasonable
buying power
 Buyers are fragmented
◦ Diverse retail buyer and corporate buyer profiles
 Switching costs for buyers is not high as brand loyalty is
low/diminishing
 Credible threat of backward integration
◦ Buyers can directly buy from suppliers (hotels, airlines etc)
 Luxury segment is brand conscious to and willing to pay a
premium for great experience and service quality

10. Supplier Power: Supplier usually sell commodity
products . Concentration & ability to sell direct
gives power to suppliers like airlines. Other
suppliers are fragmented
 Forward integration by suppliers like airlines selling
direct
 Attempts by suppliers to sell packages and complex
itineraries not very successful
 While suppliers concentrated in some areas like
domestic airlines, there is widespread fragmentation in
hotels, tour operators, car rentals etc.
 There is no significant cost to switch suppliers and
products like airlines, car etc. are fairly commoditized
 Travel agency cannot typically buyout suppliers like
airlines

11. Barriers to Entry & Exit : While entry and exit
barriers are low, difficult to build scale because
of lack of ready distribution channels
◦ Government regulation of direct FDI in retail restricts entry of
foreign retailers
◦ There are low level of proprietary travel knowledge and
asset specificity. This makes it relatively easier for new
players to enter industry and does not provoke very
aggressive rivalry from existing players
◦ Low minimum efficient level allow entry of small startups,
however significant scale is necessary to negotiate profitable
deals
◦ Due to a fragmented market , travel agencies do not have
access to ready distribution channels
◦ Online channel is growing at a rapid rate but is primarily
selling air and rail

12. Implications of Analysis on Distribution
Implications of Porter Analysis for
Distribution
 While buyers are fragmented, their diminishing brand
loyalty and ability to switch (for most products) gives them
reasonable buying power
 Companies that thrive will not just meet travellers’
needs, but also please their tastes and sensibilities –
and do it for less
 Supplier usually sell commodity products . Most suppliers
are fragmented. Multi-linked channels and product
offerings continue to proliferate
 The explosion of product offerings and channels
continues to erode profit margins and fragment
markets

13. Distribution Strategy Imperative
 Strategic Imperative : To serve this
segment, Travel Agencies must drive out
costs and build efficiencies
◦ Build on products that fit well with core competencies and
create customer delight
◦ To out source low-cost, off-the-shelf packages for
frequent destinations
◦ Improving technology and sharing routine functions with
other players
◦ Leveraging data to increase accuracy, build volume or
purchase bulk inventory at discount

14. PEST
Analysis
Political




Economical
 Foreign Exchange Rate
 Elasticity of Demand
 Efficiency of Economy
 Business Cycle

15. Social
 Different languages, cultures, traditions, cuisines
 Respect & entertaiment of guests embedded in
culture itself
Technological
 Increasing role of web & internet
 Facilitates Online Booking
 Efficiency of Economy
 Providing customers with easy payment facility
via online and use of credit cards and wi-fi facility
on the go, easy recharge of mobile phones etc.

16. United Kingdom
Newsletter

19. Quick Facts

21. Top Countries (Revenue from Tourism)
International tourism
Ran UNWTO
Country receipts
k Region (2011)
North
1 United States $116.3 billion
America
2 Spain Europe $59.9 billion
3 France Europe $53.8 billion
4 China Asia $48.5 billion
5 Italy Europe $43.0 billion
6 Germany Europe $38.8 billion
7 United Kingdom Europe $35.9 billion
8 Australia Oceania $31.4 billion
9 Macao (China) Asia $27.8 billion
Hong
10 Asia $27.2 billion

22. Top countries in international tourist
Rank Country UNWTO arrivals
I’national I’national Change
Region tourist Arrival tourist Arrival 2010
(2011) (2010) to2011
1 France Europe 79.5 million 77.1 million +3.0%
2 United North 62.3 million 59.8 million +4.2%
States America
3 China Asia 57.6 million 55.7 million +3.4%
4 Spain Europe 56.7 million 52.7 million +7.6%
5 Italy Europe 46.1 million 43.6 million +5.7%
6 Turkey Europe 29.3 million 27.0 million +8.7%
7 United Europe 29.2 million 28.3 million +3.2%
Kingdom
8 Germany Europe 28.4 million 26.9 million +5.5%
9 Malaysia Asia 24.7 million 24.6 million +0.6%
10 Mexico North 23.4 million 23.3 million +0.5%
America

24. International tourism expenditure
Rank Country UNWTO Region International
tourism
expenditure
(2011)
1 Germany Europe $84.3
billion
2 United States North America $79.1
billion
3 China Asia $72.6
billion
4 United Kingdom Europe $50.6
billion
5 France Europe $41.7
billion

25. Most-visited cities by international
tourist arrivals
Rank City Country Internationa
l Visitors
(mn)
1 Paris France (EU) 15.6
2 London United Kingdom 15.2
(EU)
3 Antalya Turkey 10.5
4 New York USA 10.3
City
5 Singapore Singapore 9.2
6 Kuala Indonesia 9.0
Lumpur
7 Hong Kong Hong Kong 8.7
8 Dubai UAE 8.1
9 Istanbul Turkey 8.1
10 Bangkok Thailand 7.2

29.  About 5.92% of the country’s GDP comes from tourism
and it provides employment to over 9.24% of the
country’s workforce.
 For every INR 1 million of investment, the number of
jobs created is as follows:
• Industry – 18
• Agriculture – 45
• Travel & Tourism – 78
100 percent FDI in developing tourism infrastructure
in India: According to a WTTC report, India’s travel and
tourism industry will directly contribute INR 3,345 billion
(USD 61 billion) to
the GDP by 2019, allowing 100% foreign direct
investment in hotel infrastructure development. This will
prove to be a major growth driver for the industry.

30. Comparative tax rates between India and
neighboring countries

33. Emerging new products in Tourism
1. Golf tourism
2. Education Tourism
3. Domestic Tourism
4. Luxury Trains
5. Wedding
6. Eco-Tourism
7. Tea Tourism
8. Sports Tourism
9. Medical Tourism

34. Challenge
s
1. Lack of proper infrastructure
2. Human resources
3. Service levels
4. Lack of adequate marketing and
promotion
5. Taxation
6. Security
7. Regulatory issues

35. Strategies
•Product development-
Customised services
Specific location oriented packages.
Low cost packages.
•Web and E-commerce
Rising users of internet
•Establish, attract and facilitate sporting,
recreational, cultural and other major events