Tapping the tourism potential

According to a UNWTO report, domestic tourism across the globe in 2018 was over six times bigger, ie, nine billion trips, mostly in Asia and pacific, compared to inbound tourism which had just 1.4 billion arrivals. Interestingly, India has a feather in its cap as it tops the list of world’s largest domestic tourism markets, followed by China, the US, Japan, Brazil, France and Spain among others. Nevertheless, the US steals the show with five domestic tourist trips per capita, followed by Australia, Spain, the Republic of Korea and France with 3-4 domestic trips per capita; this points towards the substantial domestic expenditure on tourism in these countries — an area where India still lags behind. The curve of domestic tourism in India has been erratic; it was fluctuating between five per cent to 25 per cent for almost three decades from 1991 to 2019, though the absolute number of visits increased from 6,66,70,303 in 1991 to 2,32,19,82,663 in 2019. Factors that hinder the stability and growth of the tourism sector, perhaps, need to be examined in detail.

India is a fascinating tourist destination for its breath-taking natural beauty and the rich sociocultural diversity. But unfortunately, the vast majority of Indians are yet to see and enjoy these treasures fully. The crowded tourist destinations speak volumes for the bubbling enthusiasm among domestic tourists. Though chiefly a recreational pursuit, tourism has tremendous significance for national integration. Long-distance travel and visits to tourist places educate people towards better understanding of the diversity of Indian society and culture, and help to clear up deep-rooted prejudices. Encouraging and supporting domestic tourism is extremely important, for it will play a catalyst in inculcating unity among people as Indians notwithstanding different languages, cultures, food habits and religious practices.

Tourism is a growing sector with direct impact on the economy. The challenges, however, are plenty as the market is as regulated as is unregulated. Despite growth in demand, consumers have limited choice as it is more of a seller’s market than of buyers. Travel and stay are expensive in India vis-à-vis South East Asian or South Asian countries like Thailand, Cambodia and Sri Lanka, as one pays 30 per cent tax in India while it is only around 10 per cent in these countries. In spite of various schemes like Incredible India, Swadesh Darshan, PRASHAD etc., the sector still lacks the required scale of infrastructure. As per official data, in the year 2020, there were only 29 approved hotels of one star and two-star category with 879 rooms; and 524 three-star hotels with 16,743 rooms across the country — which are affordable for people from middle-income classes. At the same time, there are 771 hotels of four-star, five-star and deluxe category with a total 60,635 rooms catering to high-end consumers. Evidently, the middle-class market is yet to be fully tapped. Officially, it was stated that there is a need for more hotels with 2,00,000 additional rooms. Connectivity to destinations is an issue, as roads and transport facilities are not commensurate with the flow of tourists. Long traffic jams are commonplace in hill stations on weekends. There are less than a thousand registered tour operators but only around 140 of them are actively engaged in business, and exploitation of consumers through low quality products and packages by unregistered operators is ubiquitous.

When the direct contribution of the tourism sector to GDP was over USD 98 billion in 2018 (around 6.8 per cent) in India, in 2020, domestic tourism spending by people alone had contributed to 89 per cent of total revenue from tourism. Besides, hundreds of B2B firms, MSMEs, hotels, transport services, and laborers depend on domestic tourism, which provides around 35 million jobs. However, in 2017 when the domestic expenditure on tourism in India was USD 186 billion, the government spending in the tourism sector was only about USD 2.61 billion, leaving much to be desired. The pandemic proved to be a disaster for the industry — causing a decline in visits by 73.7 per cent, a loss of 14 million jobs, 41 per cent loss of wage income and 124 per cent loss of non-wage incomes (small and large businesses ). But little is done to help rejuvenate the sector. The Union Budget 2022-23 merely allocates Rs 2,400 crore. Though it is celebrated for being 18.42 per cent higher than that of 2021-22, allocation to tourism in India, in comparison with countries like Singapore, Iceland, Jordan and Malta which spend around 9 per cent, and Seychelles and Dominican Republic which spend 22 per cent and 21.8 per cent, respectively, is pittance.

Many nations are pushing domestic tourism through financial incentives and marketing promotion. Greece allocated USD 36 million to subsidise holidays (half of 4-night stay) providing 2,50,000 social tourism coupons for citizens of low-income category for six months. The Republic of Korea issued one million discount coupons each worth USD 30-40 to be used in accommodations across the country between July and October. Italy introduced holiday bonuses for families with a contribution up to USD 600 for stays in hotels, campsites, holiday villages, farmhouses and bed & breakfasts. Denmark launched a scheme of 53 free ferry journeys to promote domestic tourism while Iceland, Slovenia, Serbia and Poland have introduced free vouchers for families on stay. Malaysia allocated USD 113 million worth travel discount vouchers, complemented with personal tax relief up to USD 227 whereas Thailand, in addition to subsidizing accommodation at 40 per cent discount for five nights, has also extended the benefit to food, and domestic air travel. Turkey has slashed down the VAT rate on domestic flights from 18 per cent to one per cent for three months. Mexico, New Zealand and Costa Rica have introduced ‘long weekends’ (extra holidays) to boost domestic tourism. Perhaps, India too can follow suit, at least in selected destinations for special categories of beneficiaries such as low-income groups or tourists from rural areas. The existing schemes with too many conditions are not truly tourist friendly. For example, ‘Dekho Apna Desh’ mandates 15 trips in one year in order to qualify for reimbursement of entire expenditure, a stipulation impractical enough to motivate one. Domestic tourism is a great social cause and, as such, we need direct subsidies, vouchers, concessions and discounts like those doled out in the above countries. Such steps will never be unjustified even if they mean generous outflows from the kitty.

Finally, in India, domestic tourism is mostly concentrated in five states — Tamil Nadu with the highest percentage of visitors (24 per cent and 140.65 million), Uttar Pradesh (14 per cent and 86.12 million), Karnataka (12 per cent and 77.45 million ), Andhra Pradesh (11 per cent and 70.83 million), and Telangana (7 per cent and 40 million). The remaining 30 per cent of tourists are distributed across other states. A skewed picture of this nature doesn’t augur well for the future. The Center and states need to work in tandem towards an equitable and balanced growth of the domestic sector. In addition to Central schemes, states, instead of working in silos by chasing the market, should focus more on interstate cooperation with mutually attractive packages and products. Innovative marketing strategies, even if they mean privatisation, are required in order to utilize the vast underutilized infrastructure in many states. Extending support to start-up businesses in domestic tourism will be rewarding as it is a promising sector with huge demand but insufficient supply. States should prioritize maintenance of law-and-order as it is a pre-condition for growth of domestic tourism. Strengthening the domestic sector will, in the long run, divert outbound tourism to inbound tourism. In view of the growing importance of the sector a revisiting of the approach and strategy is necessary.

The writer is a former Addl. Chief Secretary of Chhattisgarh. Views expressed are personal

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