As the New Year rolls out. Express Travelworld spoke to the leading industry associations to get their insights on what lies ahead for India’s tourism sector
The year ahead
We are not sure what is in store for us in the coming year. With demonetisation of Rs 1000 and Rs 500 rupee notes replacing it with new Rs 2000 and Rs 500 coupled with Budget 2017-18 and the GST (Goods and Service Tax) for tourism sector, it is a wait and watch situation as to what lays ahead. We have to keep our fingers crossed and hopefully there will be a smooth transition in our economy leading to optimism in travel trade industry as well.
Major challenges
Online Travel Agents (OTAs) will continue to impact the business of conventional travel agents/ tour operators. This topic is discussed in each and every travel trade forum and we have to find a viable solution through negotiations with hoteliers who deal with OTAs on account of bulk business the latter give to hoteliers thereby giving special rates and discounts.
Strategic solutions
Knowing well that online business is here to stay we have to find a way out for the survival of travel agents to improve their business. Hopefully with concerted efforts by the fraternity with hoteliers there can be some viable solution to the problem in the coming year.
Domestic tourism will continue to grow at the same pace but inability to provide sufficient cash by banks through ATMs and over the counter will definitely affect tourist movement, specially pilgrim tourists, who mainly depend on cash transactions.
Association of Domestic Tour Operators of India (ADTOI) has recently launched its new chapter in Rajasthan. Mahinder Singh, director, K K Holidays and Travels will be heading the chapter which consists of 22 members.
– PP Khanna, President, Association of Domestic Tour Operators of India (ADTOI)
(As told to Saloni Bhatia)
The year ahead
The upcoming year looks very exciting as there is an overall positive growth in adventure tourism industry in the country, whether it is inbound tourism or the domestic market.
Major challenges
Mushrooming of travel agents and tour operators who are not trained and have no clue about this specific field of tourism is a risk. Therefore, the industry requires a lot of self control to stop these agents and to see that it has experienced manpower. The government also needs to ensure that these negative trends are restricted. Another challenge is to have a control over the large number of agencies who are in the business. We have over 1600 plus travel agents who are promoting such tours around the country and they need be brought into the mainstream for better coordination and skill development to ensure that they follow basic minimum standards of the industry.
Strategic solutions
The strategy we should adopt is to ensure that all state governments accept the basic minimum standards which has been made by ATOAI and also accepted by the ministry of tourism. Unfortunately, though some of the states have accepted the document, others are still debating among themselves as to what to do. The dynamic document is being further worked on with the help of central and state governments. If they accept it as an official document, it would greatly promote the business.
The ministry of tourism has created a National Task Force (NTF) on adventure tourism at the request of our association and its main objective is to help promote adventure tourism activities in coordination with the states who are actively promoting it. We do hope that the NTF will play a very crucial role in the growth of adventure tourism in the country.
– Swadesh Kumar, President, Adventure Tour Operators Association of India (ATOAI)
(As told to Saloni Bhatia)
The year ahead
As always, this year would bring new challenges for the aviation industry in India. While greater opportunities are being provided through the government’s push for regional/ remote connectivity, infrastructural constraints would remain a big challenge. This would be most true when the initial demand for regional connectivity is going to emanate from major metros. We hope the government will quickly work to give equitable share of slots to business and general aviation industry for facilitating regional connectivity flights from metros.
Major challenges
A major challenge for our industry is the need for consolidation. Small aircraft operate in regions where demand is still uncertain. There are far too many aircraft types which are being used for the purpose. Aircraft management companies can help reduce establishment cost and optimise use of the scarce trained man power. We do hope this concept takes off quickly in India and market driven consolidation of the industry happens during the coming years.
Strategic solutions
With regard to infrastructural constraints, we need to plan business and general aviation airports within 50 to 150 km from existing metro airports and provide them with quick road and rail
connectivity. Government should consider rationalising the existing import duty structure since no domestic production of passenger aircraft is envisaged during the next 10 years. This will facilitate import of greater number of aircraft to meet the expected growth inregional and remote connectivity, as envisaged in the NCAP 2016.
There is an urgent need of digitalisation for all aviation approvals and transactions. We are already lagging behind the target date for operationalising e-GCA project at DGCA. There is a need to find immediate solution to existing bottlenecks in this project as manual movements of files in DGCA cause unacceptable delays and discourage new players.
– Gp. Capt. Rajesh Kumar Bali (retd), Business Aircraft Operators Association (BAOA)
(As told to Sudipta Dev)
The year ahead
As the president of Ecotourism Society of India, I feel we need to be more active through our activities and presence. Since this year is International Year of Sustainable Development, India needs to move miles ahead in the sector. India is lagging behind in sustainable development than countries like Germany and France. Since India has been a sustainable civilisation from the beginning, it becomes all the more important to think on the lines of protecting the environment.
Major challenges
Sustainability does not seem to be a pressing need as exemption from taxes for the industry. We need to get this across and look at sustainable and responsible tourism very seriously through all the stake holders, which includes the local communities and the government as well. The local state governments and stakeholders need to realise that the the travel to eco sensitive areas need to be controlled with the number of flights and buses.
Strategic solutions
The association needs to firstly become the eco and responsible tourism society of India in order to promote sustainable tourism. We will be opening state chapters and involve local stakeholders to raise awareness about the issues. There will be regular programmes to educate people. Community participation is important and regular workshops will be held under the leadership of ESOI to promote eco and responsible tourism in the country. We will create sustainable model products for all the stake holders to emulate and also work with the media to broadcast what we talk, do and feel.
A master plan and execution can majorly affect the industry to pay attention to sustainable tourism. Thankfully the younger generation is more aware and self conscious about these issues and I am hopeful they would work for the betterment of the environment.
– Steve Borgia, President, Ecotourism Society of India (ESOI)
(As told to Saloni Bhatia)
The year ahead
The new year seems to be mixed up again as initially the foreign tourists will take time to get the required confidence to travel to India post demonetisation. Firstly, India was not being promoted internationally for almost three years. Fortunately, the ministry of tourism has finalised the media plan for next year and have already started promoting India in the international market. We hope that this media campaign will start showing results by the last quarter of 2017 onwards. Secondly, the GST (Goods and Service Tax) roll out which is very much a certainty holds its own challenges that will definitely have adverse impact on the tourism sector, initially. Overall, we hope 2017 will be slightly better than 2016.
Major challenges
International competition is growing as new destinations are aggressively campaigning with much better offers that has an impact on inbound to India. Since there were no international promotions done by India over the last three years, there is no staff at the overseas India tourism office. This matched with the GST roll out are all indicators that the service sector will be severely hit. But the government does not seem to be worried about the services sector. The whole focus is on the manufacturing sector which we see as a problem for the services sector this year.
Strategic solutions
The government should have policies to support tourism, which is unfortunately, the most taxed sector in India. Contrary to the policy of the government to not export any taxes, India exports 25 per cent tax on the tourism sector. This is one of the major reasons why tourists favour other destinations than India. If the government rolls out GST, it will support tourism and we will be able to see immediate results and growth.
Despite all efforts put in by the private sector over the year, the growth in international tourism has never been beyond four-six per cent per annum (from tourist generating countries). The proper analysis of the situation shows that nothing else can give a boost to the tourism sector other than the collective approach by various ministries of the Government of India, along with the private
sector.
– Sarab Jit Singh, Vice Chairman, Federation of Association of India Tourism and Hospitality (FAITH)
(As told to Saloni Bhatia)
The year ahead
Inbound to India has been very static and has shown very marginal increase towards the last quarter due to demonetisation. But with the e-visa streamlined to double entry and advance visa application period extended to 120 days, there is high hope for next year. All this would augur well for sustainable growth in 2017, minimum upto 15 per cent. Due to the ministry of tourism’s increased efforts in marketing and global campaigns, India is now visible in the international market. It has developed a favourable confidence for India’s holiday destinations. The government has also shifted focus on liberal aviation policy, development of infrastructure and extended services that would ease travel in the country.
Major challenges
Some of the major challenges today is of airport facilitation, bio metric facilities and seat capacity. There is going to be increase in traffic from markets like South Korea, China, Japan, Vietnam, Indonesia, etc, for which we’ll need budget accommodations in Tier II and Tier III cities, cleanliness, security, marketing, language guides, highway facilities and trained manpower. Taxation structure
toward tourism and limited use of technology, social media for tourism operations, liberal charter policy to boost volume of tourists, etc, are also bottleneck areas for sustainable growth of tourism.
Strategic solutions
Some of the strategic solutions are streamlining for e-visas to more countries, regional air connectivity, development of highways through major tourist destinations, regular skill development programmes to ensure availability of skilled guides, cleanliness drive, safety of tourists, promotional material in overseas offices, FAM tours with respective delegates, increasing road shows in new markets like Latin America, Africa, South East Asia countries, Eastern European countries/ Baltic Region and regular markets like USA, UK, Germany, France, Australia, etc, aggressive global marketing, providing tax incentives, constantly improving the brand image among other things.
Media should be supportive of our efforts and provide the requisite support to promote tourism in the country.
– Pronab Sarkar, President, Indian Association of Tour Operators (IATO)
(As told to Saloni Bhatia)
The year ahead
Although outbound tourism will be on the rise, there will be a slight slowdown due to market conditions on account of demonetisation, stock market impact and real estate. Taxes will be the other factor that is going to impact the market. On the other hand tourism boards of other countries are also pumping funds into India to promote their products. As there is huge inventory available, airlines will also come forward to woo passengers. Passengers will be looking for new destinations and activities. Online and offline agencies will continue doing well for passengers who want personalised service and the younger generation who wish to experiment on their own.
Major challenges
GST regime, when it unfolds, will determine the impact of thousands of tour operators of the country and their families and people they employ. In case GST is imposed on services of another country, tour operators in India will become expensive by the percentage of GST imposed as online portals or hotels overseas will attract direct bookings and this will create huge unemployment in this sector. Offline agency staff will have to keep themselves updated with every information a passenger wants to compete with online agencies.
Strategic solutions
The only way out is if government bodies and the ministry include outbound tour operators in the dialogue and understand the reality. To update the agency staff, training will become vital and need of the hour. Tourism boards will work closely with associations and their members.
Personalised service will be the factor which will keep the passengers loyal to an agency. Tour operators will have to go beyond just the hotel and air tickets to planning experiences for their passengers. Specialised knowledge of a particular destination will be handy.
– Guldeep Singh Sahni, President, Outbound Tour Operators Association of India (OTOAI)
(As told to Saloni Bhatia)
The year ahead
It will be a tougher year than the previous ones. There are several reasons.
The demonetisation is a healthy trend towards a stronger economy for India. However, it will have its own toll, particularly since tourism is not as important a priority in business leaders investing to bring in reforms to encounter the changed scenario. The second reason comes from the fact that a number of international airlines are announcing their “promo fares”. This is reflective of their hurriedness to capture the market.
The progressive percentage of growth, as perceived in the past by many, will be a certain happening since the number of travellers is on the rise. This does confirm that there will be an increase in the number of travellers but when this gets set off against the reduced numbers, this growth may turn out to be very limited or stagnant during 2017.
The industry’s good health is measured by volumes as well as the success levels of stake-holders. In view of the perceived threat of dropping numbers, the competition may turn fierce with volumes ticking without profits.
Major challenges
- Reducing profits – The curve continues to slide down, which is a wrong happening.
- Our competition with our principals. This is a curse on us. Our principals have invested heavily on technology and personnel and thus would like to have their own connect with the end consumer, who should actually be serviced by us. This results in competition with the principal, which is a rare challenge.
- Fierce competition between our principals is taking a toll on the agencies.
- The growing market share of online portals and online shopping has challenged several middle size agencies.
We are bogged down with too many procedures. Important time of our limited staff is getting drained by more routine work and fulfillment of procedures. We have lost adequate time in service tax matters, assessing taxes, filing returns and paying a huge amount to consultants, when the profits are limited. It is unfortunate that we go through these cumbersome procedures which kills our creative time.
Strategic solutions
Firstly, there is a need for the principals and agencies to formulate their unique approaches and not create disparities in marketing products and ending up as lose-lose players. Teaming up to offer quality service can help both and reduce chaos. The model of pricing must be reviewed and if required, revamped. The current dynamic pricing model is not very effective and consistent in planning growth.
View from the top: A fast growing industry with diminishing returns leading to stake-holders diversifying into other industries.
– Sunil Kumar, President, Travel Agents’ Association of India (TAAI)
(As told to Mohit Rathod)
The year ahead
The new year looks promising for India’s tourism sector. While the inbound tourism has grown at an average rate of 10 per cent last year, the new year looks equally promising with the Union Cabinet expanding the scope of e-tourist visa to medical tourism and business trips. India is a major source of outbound market and the sector will continue to grow this year. Demonetisation will not have an impact on outbound travel, be it short haul destinations like Thailand or long haul like Europe. The Indian economy has been buoyant in spite of global economic slowdown which has been one of the key factors for outbound travel growth.
Major challenges
One of the challenges for offline travel agents has been how to look for new business opportunities and face the stiff competition from predatory pricing strategy of the OTAs. The expertise of offline travel agents is unmatched and extends to travel consultancy. At TAFI, we are committed to educate our members to adapt to new business realities and technology. Another challenge or rather opportunity is how to reach the tertiary markets. The smaller Indian towns have the potential where the outbound market needs to be tapped.
Strategic solutions
Technology is the reality of today and offline travel consultants should not ignore this fact. Contrary to the myth that adopting technology is expensive, it is a cost effective method which can benefit everybody. At the same time social media has opened new opportunities for us but only the right content can help us reach out to the new age travellers. TAFI will soon launch an online marketplace for the members which will help us generate an additional revenue system.
The Indian government’s demonetisation strategy for a cashless economy is a good move. The finance minister, Arun Jaitley announcing the government’s decision to reduce tax liability by up to 30 per cent for small businesses augurs good for small travel agents as well.
– Praveen Chugh, President, Travel Agents Federation of India (TAFI)
(As told to Saloni Bhatia)
The year ahead
India is all set to become the third largest aviation market by 2020 and the largest by 2030, with its current market size estimated to run into trillions of rupees. The government’s kick-start of the regional air connectivity scheme (RCS) with around 22 under-served cities set to figure on India’s aviation map from January 2017, will definitely boost the ticketing segment.
To supplement the objective of promoting the travel and tourism sector, the government must resolve the ongoing issues and provide a streamlined tax model in the final GST law. Travel and tourism being a foreign exchange earner needs to be classified as an export service. We are hopeful that the government will put this sector in the lowest slab and under no circumstances should it be more than five per cent. This will result in uniformity of taxes. Also, the scope of service tax applicability on airline ticketing should be enhanced to all passengers travelling from/ to India, irrespective of where the ticket issuance takes place. The new civil aviation policy and the Aerospace and Aviation Sector Skill Council supported by National Skill Development Corporation set up to provide quality training accreditation, will enhance professionalism and give a facelift to our airline reservation to customer service as well as airport and aircraft handling, through which, one can expect better professional services of an international standard.
Major challenges
Disunity among associations is the real tragedy in India. Since November 2008, accredited travel agents in India have been reeling under various actions taken by airlines like the denial of commission, the illegal implementation of the Ticketing Authority Process (TAP) through APJC India and the Weekly Payment System (WPS). The illogical decision taken by the APJC India in the Agency Remittance policy, restricting payments through Deutsche Bank that has only 17 branches in nine states of India, should be abolished. The government must look at national banks like SBI having more than 18,000 branches.
Strategic solutions
The APJC India is yet to be formatted as per the IATA Passenger Agency Conference Appendix “F” Guidelines of 2014, as its present policies are neither influenced by considerations for the Indian economy nor the travel agents’ welfare or aspirations, but solely by some vested interests. We need dedicated and committed representatives in APJC.
A new revenue model, Indian Travel-Agents Own Portal (i-Top) will be launched shortly. The first portal of its kind in the history of the aviation world, created solely for the agents, by the agents. i-Top will allow a member to function as an individual agent using his own BSP capping, IATA validation and BSP reporting and payment systems and also enjoy the benefits of a consolidator with the collective productivity of all the members bringing it an equal share of the incentive, regardless of the individual turnover.
– Biji Eapen, President, IATA Agents Association of India (IAAI)
(As told to Mohit Rathod)