AN

IN DEPTH STUDY
OF

“TOURISM INDUSTRY”

PRESENTED TO:
MR PRANAV YADAY – IV SEMESTER - 520429452

DISTANCE EDUCATION
SIKKIM MAINPAL UNIVERSITY.

5TH MILE, TADONG, GANGTOK - 737102

IN PARTIAL FULFILLMENT OF THE REQUIREMENTS

FOR THE ‘MANAGEMENT RESEARCH PROJECT’ COURSE IN THE

MASTER OF BUSINESS ADMINISTRATION PROGRAMME

 PREFACE

Today a stiff competition is seen in the economy, Now, the Present

scenario of the business world is quite different from the past. Ethics, Conflicts,
new ideologies, new ideologies, energy scarcities and crazy dogmas are just. The
few of the characteristics that make the present quite different from the past.

In order to cope up in the ever-changing environment, the knowledge of all

business worlds is a need today. M.B.A. programs and management institution
provide a global manager to this modern business world. But only knowledge is
not enough for the business But successful implementation of the know s the key
to success.

Hence in order to get acquainted with the practical knowledge each student
is required to implement the theoretical aspects of the subject in to the practical
life work.

After a lot of brain storming we decided tourism industry as a title of

project. We decided to work on this title.

We referred so many magazines, wed sites, books and newspapers for. The
study purpose. This project will be fruitful for us in the future also. We are
presenting this report, which comprise of secondary data and to out best
knowledge it is true and fair.
 ACKNOWLEDGEMENT

It would really difficult for me to complete the project without find co-
Operation of certain people. In other words are so many external who directly
help me in our project.

First of all we are grateful to Mr. Vaikanthan Sir who guided us regarding
the project contents and issues related to it. Further we are very grateful to Mr.
Rajesh Ganatra who provided their valuable guidance to us regarding the project.

We are also very grateful to out friends, who helped us and guided us
Regarding the sources of information related to particular industry We are also
very grateful to my concern (Divine Birds – Maninagar) staff especially librarian,
Who helped us and consider our convenience and give priority to us.

We are also very grateful to the librarian of AMA who guided us regarding
the sources of information.

EXECUTIVE SUMMARY
 Tourism Industry is one of the fastest growing industry in the world with
an average GDP of 11.6%. Changing lifestyle of the people because of a sudden
increase in their income levels accredited to the opening up of the economy and
Multinational Corporation has led to the steep growth of tourism industry in India.
Tourist’s attention is shifting from established destinations such as European
countries to emerging destination such as Asia-pacific countries. Travel barriers
have been broken and there is a flow of free trade. Tourism has become multiple
activates focused with the integration of shopping and recreation, entertainment
and education and culture and meeting/business center development.

India – a subcontinent sprawling several hundred kilometers, with

population over nine hundred million, is undoubtedly the largest democracy in
the world with a thousand year old civilization. The project provides an outlook
to the various reasons for India Being such a sought after tourist destination.

The Indian Tourism industry comprise government of India, tour operators,

tour agents, hotels Indian Tourism development corporation etc. further, the
project categorizes tourism industry as follows: Holiday tourism, Adventure
tourism, Pilgrimage tourism and Eco – tourism, etc.

In India there are many tourist destinations, which are not marketed
properly. So in this project we have conversed about the important of Marketing
Mix in the Indian Tourism Industry, which consist of Product Mix, Promotion
Mix, Price Mix, Place and people.

Tourism Industry is deeply affected by the social, technological,

economic factors. All these factors have been given their due credit in the
project. Economy being the bloodline of any country has been devoted a major
chunk in the study of these factors followed by social and technological factors.
Government policies provide a basic framework, which minds and controls every
industry. Therefore, it has to be studied so that not a single factor remains
untouched.

For the development of any industry the basic infrastructure facilities are
very important. Indian railway is the world’s largest network under a single
management. The railway is one of the facilities required for tourism besides
aviation, telecommunications and accommodation.

Tour operators and travel agents perform the role of a liaison and a catalyst
too in this industry without whom it is very difficult to operate.

Promotional activities play an important role in the development of any

activity. International road shows, conferences, tourism awareness programs,
sporting events, media kit, etc. have contributed a lot in promoting Indian tourism.
The project also gives a brief about the promotional measures.

As we know that tourism industry of India is growing at a very fast pace

so in this we have project also deals with the current scenario and the
challenges faced by the tourism industry of India.

The tourism industry is also affected by the ongoing war between USA
and Iraq. If this war continues for the longer time the tourist would not travel in
the European countries.

A few suggestions about development of tourism in India have been market

in the project such as planning, organizational structure, business process
reengineering, information systems, operations management, marketing strategy
formulation, environmental impact assessment and project management.
 Besides tourism industry as a whole a study has been made about Tourism
Corporation of Gujarat Limited. An overview of the organization and its policies
and above all an attempt has been made to perform a SWOT analysis for both the
industry at the macro level as well as for the origination at the end of the project
study.

RESEARCH OBJECTIVES

The objective behind our undertaking this project is:

• To have knowledge about the working of the industry in India.
• To provide an outlook both the people already in the industry as well as for
 any entrepreneur who wants to enter the industry.
• To have an in- depth knowledge about the working of the tourism industry
in India
• To identify the specific problems a tourism industry is facing.
• To study the impact of the tourism industry on the local economy and to
establish benchmarks for the industry to realize its full economic potentials.

SOURCES OF DATA COLLECTION

Secondary Data Collection

Secondary data will be obtained from sources like:

1. GCCI
2. Books
3. Websites
4. Magazines
5. Journals
6. Newspapers

CONTENT
SR. NO. PARTICULAR PAGE NO.
1. Definition to Tourism Industry 1
1.1 Tourism 1
1.2 Who is a Tourist 1
1.3 Definitions followed in Indian and across the world 3
1.4 International definitions 5
2. History of Tourism Industry 7
3. An Industry overview 12
3.1 Challenges faced by the Global Tourism Industry 13
4. Features of Tourism Industry 15
5. The Indian scenario 25
6. New Concepts in Tourism Industry 36
6.1 Eco Tourism 36
6.2 Heritage Tourism 37
6.3 Adventure Tourism 38
6.4 Buddhist Circuit and Pilgrimage Tourism 42.
7. Current Scenario of Tourism Industry 45
7.1 Potential Growth of Tourism 46
7.2 Purpose of Visit 49
8. Tourism Marketing 50
8.1 Users of Tourism Services 52
8.2 Market Segmentation for tourism 53
8.3 Designing a package tour 57
8.4 Destination 58
8.5 Management of Airport 58
8.6 Airlines 59
8.7 Rail and Road and Transportation 59
 8.8 Hotels 59
8.9 Resort Representatives 61
8.10 Hotels 61
9. SWOT Analysis 63
9.1 Strength 63
9.2 Weakness 64
9.3 Opportunities 65
9.4 Threats 66
10. Role of Support Industries 102
10.1 Airlines 102
10.2 Hotel 104
10.3 Railways 107
10.4 Road 110
10.5 Telecommunication 111
10.6 Travel Agent and Tour Operation 113
11. Budget Impact on Tourism 129
11.1 Impact on Hotels 130
11.2 Impact on Airlines 131
11.3 Impact on Railway Budget on Tourism 133
12. Challenges faced by Tourism Industry 136
12.1 Hurdles to Growth 136
12.2 Infrastructure 137
12.3 Tourist Facilitation and security 141
13. Impact of Was 142
14. Recommendations 146
15. Gujarat Tourism 152
15.1 Introduction 152
15.2 Infrastructure position 153
 15.3 Transport connections 154
15.4 Marketing 154
15.5 Major developments 155
15.6 Objectives 157
15.7 Proposed approach and strategy 158
15.8 Planning for tourism development 159
15.9 Human resource development 163
15.10 SWOT Analysis – Gujarat Tourism 164
15.11 Key Success Factors 165
Bibliography
Annexure

1. DEFINITIONS OF TOURISM INDUSTRY

1.1 Tourism
Tourism is the totality of the relationship and phenomenon arising from the
travel and stay of strangers, provided the stay does not imply the establishment
of permanent residence and is not concerned with the remunerated activities.

1.2 Who is Tourist?

Before we precede any further we need to define a tourist for our study.
The most suitable definition we came across is given by the United Nations. This
definition is generally followed by all the countries in compiling their tourist
statistics and is not based on motivation but on an economic concept.

"A Tourist is a temporary visitor to a country other than the one in which
he usually resides for any reason other than following an occupation remunerated
within the country visited." It is further elaborated that the temporary period
should not be less 24 hours. There is considerable cross border day traffic
amongst many groups of neighboring countries. Such visitors are defined as
Excursionists. On the above lines it has been argued that if pleasure and recreation
have become the main motivation of present day tourism then why should visitors
who whose main purpose is to conduct business, attend a conference or see
relatives and friends be considered as tourists ? The answer is that a visitor to a
conference or one who has come for a business purpose in his spare time also
behaves like a 'pleasure1 tourist. He goes on sightseeing and shopping trips, visits
clubs and bars, and so on. The determining factor is whether the visit is being
paid for in foreign currency or from within the country.

The above definition can be vastly different from what we generally

perceive. However, when the facts and the figure are calculated as to the number
of people visiting a country, the above definition is taken into consideration.

Which type of customer is a tourist?

No formal definition could be found but their exist a debate on the profile
of the tourist. One of the classifications given by Aderholt says that there are three
major types, they are -

Type 1 is your conventional beach holiday maker who seeks sun and sand,
shuns contact with the locals, and heads for organized package tours and club
vacations.

Type 2 combines sightseeing with some bathing in seas or lakes, is

reasonably curious but not overly interested in local culture, and also prefers
organized packages.

Type 3 is the 'alert, independent travelers' who is eager for new

impressions and experiences, as well as social and culture contacts. He or she
prefers small hotels typical of the host country's architecture and materials, and
arranges trips on an individual basis, not through charters or packages. These
travelers are also often richer, better educated and married. Now India has to
decide which type does it want to attract and thus structure its resources for the
same.

In general tourist are:

• Persons traveling for pleasure, health and domestic reason.
• Persons arriving in the course of sea cruise.
• Persons traveling for business purpose.
• Persons traveling for convention.

1.3 Definitions followed in India and across the world

International Visitor
An international visitor is any person visiting the country on a foreign passport
and the main purpose of visit is other than exercise of an activity remunerated
from within the country or establishment of residence in the country. This
definition covers two segments of visitors 'tourist and same day visitors'.

Foreign Tourist
A foreign tourist is a person visiting India on a foreign passport, staying atleast
24 hours in the country, the purpose of whose journey can be classified under on
of the following headings.
• Leisure
• Business, family, meeting.

1.4 International definitions

Forms of Tourism
• Domestic Tourism: Involves resident of a given country traveling only
within this country.
• Inbound Tourism: Involving non- resident traveling in the given country.
• Outbound tourism: Involving resident traveling in another country.
 Internal tourism, which comprises domestic tourism and inbound tourism.
 National tourism which comprises demonstration outbound tourism.
 International tourism, which consist of inbound tourism and outbound
tourism.

Basic Tourism units

All types of travelers engaged in tourism are described as visitors.
Therefore the term visitor represents the basic concept for the whole system of
tourism statistics.
Travelers
• Visitors
• Other travelers

Also tourist are overnight visitors while the rest are same day visitors.

International visitors
For statistical purpose the term international visitor describes any person
who travels to a country other than that in which he or she has usual residence but
outside his / her usual environment for a period not exceeding 12 months and
whose main purpose of visit is other than exercise of any activity remunerated
from within the country visited.

2. History of Tourism Industry

It is difficult for us to have command on the cyclic movement of fashions,
needs, requirements and the lifestyles. The law of nature, which forces us to
welcome a change, of course, influences the process of change. If we delay, the
seeds of dissatisfaction and monotony get a conductive nexus for their
germination and development. Hence to control or regulate the process, we allow
a change which influences our decision-making behavior and forces us to
welcome a change of place. It was against this background that the travelling was
transformed into a business and of late is an industry. The process of
transformation has witnessed number of ups and downs in almost all the areas.
Right from the very beginning of culture and civilization, we find the process of
change continuing, of course as a pilgrimage. There is no doubt in it that the
Roman Empire injected life, strength and the continuity to travelling and
therefore the credibility for the development of tourism industry ultimately goes
to them.
 The fall of Roman Empire resulted into downfall of tourism, at least till the
end of Middle East. The available facts reveal that Roman evinced interest in
visiting temples, shrines, festivals and baths for health and amusement. The
contours of Development underwent radical change atleast till the 15th century.
The trade and commerce along with religious activities gained the momentum but
till the beginning of industrial revolution, tourism continued to remain the matter
of pilgrimage. Of Course a number of developments took place between 15l and
18l centuries. Specially In the industrial world which raised the significance of
specialization or expertise for excelling competition. This motivated the elite of
the society to go abroad for enriching the knowledge, speeding up the learning
cycle developing the excellence and making possible cross fertilization of
thoughts and ideas. By the turn of 19lh century, we find multifaceted
development in transportation, communication and, technological
sophistication, which energized the process of industrial transformation. The
tourism started developing as a business and the professional Travel agents
started taking part in the process. With the beginning of the 20lh century the
process of invention and innovation stated gaining momentum which made ways
for the development of infrastructural facilities and further added new
dimensions in tourism business. No doubts, the World War I and World War II
obstructed the flow of development but the second half of the 20th century proved
to be golden age, since almost all the countries of the world started patronizing
tourism as an important economic activity.

Thomas cook was of the view that beauty is for the people. The opinion of
n Mr. Cook generated new dimension in the tourism business, which paved
copious avenues for development of tourism as an industry. We can't deny that
since the time immemorial travel has been first choice of masses , the qualitative
improvement in the process could take place with the participation and co-
operation of leading global organization , such as WORLD TOURIST
ORGANISATION, PACIFIC AREA TRAVEL ASSOCIATION,
INTERNATIONAL UNION OF OFFICIAL TRAVEL ORGANISATION or so
With the development of a broader concept, the essence of Tourism further
distilled and it was more holistic approach because in the general theory of
tourism, Walter Hunziker and Kurt Kraph (1942) considered it both a human As
well as economic activity. In 1974, Burkat and Medlik again brushed up this
approach since they viewed tourism as a composite phenomenon embracing a
whole range of different relationship between traveler's and the host population.
The fun and excitement, no doubt, gained the momentum with the holistic
approach. This New approach made possible development of traveling business
as an industry. The Policy planners as well as the environmentalists
pinpointed the side effects of manufacturing industries remained the only solution
to strike a balance between ecology and industry. The traveling business that was
transformed into an industry was found efficacious in delivering goods to
the socio-economic molecule and the multiplier effects could be extent. .Almost
all the countries started exploring new devices for generating foreign exchange
to fulfill their multi-dimension socio-economic requirements.

The intensity foreign exchange requirement was found at its peak and the
tourism appeared to all of them an important source to be tapped optimally.

In the face of succulent benefit, the developed, less developed and even the
Developing countries started assigning due weight age to the tourism industry in
their national development agenda. We agree with this view that with tremendous
Socio-economic potential, the tourism industry is considered to be an economic
bonanza which paves avenues for the Development of a number of allied
Industries, such as hotel, communication, banking transportation, trade and
commerce or so. In addition, we also consider tourism a potential source for
making possible world peace through mutual appreciation and international
understanding.

In the Indian perspective, we find Seventh Five Year Plan as watershed in

the Development of tourism industry. For the first time, the vast potential of
tourism as a foreign exchange earner and generator of employment opportunities
was recognized.

Several policy initiatives were taken to develop the tourism sector In the
development of tourism, the public sector has made a significant contribution. Of
late, the industry is equipped with a reasonable infrastructural base and is poised
for a self-sustained growth. The future growth of tourism is required to be
activated with the support of the private sector. The strategy for the development
of tourism is required to be designed on the basis of low-cost economy, higher
level productivity, efficiency in the use of infrastructure and sophisticated tourist
facilities.

In the Eighth Five Year Plan(1992-97), the special tourism areas have been
selected and in the Ninth Five Year Plan(( 1997-2002), we took forward the
energizing the process of development but the image problem is found
complicating the task of Professionals. In the business world, we need more
professional excellence to make an assault on the image problem and it is in this
context that we make a strong advocacy in favour of conceptualizing innovative
marketing with help of world class professionals. We have tremendous
opportunities and the professional excellence would make ways for capitalizing
on the same optimally.

3. An Industry Overview
 Tourism is one of the world's fastest growing industries at present and
holds the status of the world's No.l industry. There is currently an estimated 500
million international travelers worldwide. The figure is expected to rise to 660
million by the end of the year 2002 Ad. The tourism industry as a whole is
presently estimated to earn over US$3.5 trillion world wide creating a job every
one of those direct jobs creating another 11 indirect ones. Spending on tourism
amounts to 5%-10% of total consumer spending in a year, worldwide.

India's share of the total market is a 0.51%. Nevertheless, tourism has the
distinction of being the third largest export industry after gems and jewellery and
readymade garments in India. The significance of tourism in terms of
employment generation Is rising too. In 1996-97,direct employment in the sector
was estimated at about seven to 9.1 million people, accounting for around 2.4%
of the total labor force. Tourism has now come to occupy a strategic position and
in the near future will be a real money-spinner.

3.1 Challenges faced by the Global Tourism Industry

At present the global tourism industry faces the following issues and
challenges :
• There is increasing competition from developing countries within the
Asian region such as to gain a market share of the tourist industry. At the
same time, well - known industry players such as Thailand, Hong Kong
and Singapore are launching aggressive promotions to attract tourists
particularly from Europe.
• As the won, yen, baht and rupiah suffered the regional currency crisis, there
will be a decline in tourist arrivals from South Korea, Japan, Thailand and
Indonesia.
• Tour operators face financial constraints due "to the slowdown in tourist
arrivals and tight credit situation. Feedback from the industry indicated that
85 per cent of tour bookings for September to December 2002 were
postponed or cancelled. At the same time, there is a decline in outbound
travel. The earnings among tourism related companies are forecasted to
drop sharply by about 30 per cent to 40 per cent for the fiscal year 2003-
04. Small- sized travel agents that concentrate purely on ticketing and
outbound travel are facing cash flow and capitalization problems.
• Low tour booking continue to be recorded for the first quarter of 2002
because of the uncertainty that the haze might recur.
• Foreign tourists are concerned about their personal safety when traveling
in the region.
• The hotel industry is facing an oversupply of hotel rooms particularly in
the Klang VALLY. In 2002, the number of hotels had increased to 1,365
and over Exceeded the target of 1,340 hotels by the year 2004.
• There is a tendency for taxi operators to overcharge foreign tourists.
• Past experience in promotions indicated a direct correlation between
expenditure on promotions and tourist arrivals. So it is necessary to focus
more on increasing promotion expenditure so as to increase tourist
internationally.

4. Features of Tourism Industry

For making the marketing decision effective, it is pertinent that the tourist
Professionals are well aware of the silent features of the tourism product. This
would help them in many ways.

1. Tourism Product is highly perishable.

Perishability is an important factor that influences the decision-making
behavior of the tourist professionals. The product is used just when it is offered
and therefore, if it remains unused, the chance lost, the business is lost .If the
tourist don't visit a particular place, if the seats in hotels, aircraft remains vacant
the Business is lost .This makes the product highly perishable and make it
essential that the tourist professionals make the best possible efforts to promote
the services in such a fashion that opportunities never remain untapped.

2. The tourism is a service product

We find services the only product used and sold in the tourism industry
This makes it essential that the tourist Professionals assign due weight age to
Creative marketing strategies which are found proactive. This level of judgment
And knowledge possessed by the individuals and related to tourism reflect on the
satisfaction derived by the tourists after visiting a place. In this context, the
marketers need to, are high performers, personally committed, imaginative and
so. This helps them in capitalizing on the opportunities optimally.

3. Intangibility complicates the task of marketers

We are well aware of the fact that tourism is a multi-segment industry in
which the transportation and accommodation services constitute a place of
outstanding significance .The tourist Professionals find it difficult to persuade the
users by displaying the seats in the aircraft and the bedrooms in the hotels. The
users first use and then come to know about the quality.

4. The services are for pleasure

It is right to mention that the tourism services are used by the tourist to
enjoy. By Visiting tourist resorts, spots, sites, beaches, they get pleasure. We also
find the services instrumental in enriching the knowledge bank of tourists or the
crazy persons use the services to taste the flavor of adventure, This makes it
significant that the tourist organizations make the centers attractive by adding
additional Attractions.
5. Users are supposed to visit the centre
For availing the services of the tourism industry, it is pertinent that the
users visit the physically. The users are supposed to come all the way to the spot.
This necessitates setting of Product features in a right way.

6. Adequate infrastructural facilities for the tourism product

No doubt that almost all the industries need infrastructural support, but the
tourism industry can't exist if hotels, transportation services are found non-
existent. Thus we find infrastructural facilities essential to improve the quality of
services. Efficient transportation facilities, hygienic hotel accommodation,
sophisticated communication services are some of the key infrastructural
facilities add attractions to the tourism services.

7. The users are a heterogeneous group of people

It is important to mention that the tourism users come from different
regions, income groups, sections, age groups, genders, professions or so. This
makes it essential that the are families with the different groups of people using
the services.

8. Foreign Exchange Earner

Travel & Tourism has emerged as the largest export industry in the world
and India has share in this prosperity. Its foreign exchange earning from tourism
went up from Rs. 32 crores in 1974-75 to Rs. 11000 crores in 1997 at current
prices. Travel & Tourism is the third largest foreign exchange earner in the
country next to Germs & Jewellery and Textile and Garments. If one were to
ignore its negligible import content, tourism would rank even higher than the
other two in terms of net foreign exchange earnings.
9. Employment Generation
Foreign exchange earnings, apart, the Travel & Tourism sector's potential
for Employment generation is immense both in terms of numbers and cost
Effectiveness. Travel & Tourism provided direct employment to 8.5 million
people, accounting for 2.4% of the labour force, in 2000-01.The figure went up
to 9.1 million in 2001-02.Indirect employment was of the order of 21.4 million.
Compared to agriculture, which generates 44.7 jobs per million rupees of
Investment, tourism notches up 44.7 jobs for the same investment.

5. Tourism In Asia
Over the last decade, the Asia region has been the fastest growing tourism
region in the world. Tourism is one of the most important sectors in a large
number of Asian countries. Increase in economic growth, disposable income and
leisure time, political stability, and aggressive tourism campaigns, among other
factors; have fueled the significant growth of tourism. It reviews the growth and
development of the tourism industry in the Asian region. The future outlook is
bright for the tourism sector, and the region is expected to maintain a high rate of
growth well into the next century.
5.1 Tourism Growth Factors
A Number of factors are responsible for the rapid growth a development of
the tourism industry in the Asian region. These include the strong economic
growth, increase in income breakdown of political, barriers, easing of travel
restrictions, liberalization of air transport, and focused marketing campaigns.
These factors are expected to accelerate the growth of tourism over the next
decade.

5.2 Economic Growth

The rapid growth for the tourism industry is a reflection of the region's
booming and diversified economies. Economic growth has ranged between an
average of 6% to 9% in the last decade, in contract to 3% to 4% growth achieved
by the rest of the world. Only the industrialized countries of Australia, Japan, and
New Zealand show a lower rate of growth than the rest of the region. China,
which has achieved double-digit growth over the last 5 years, is poised to become
one of the world's largest economies and surpass Japan in the next decade. The
region is expected to maintain its growth at a rate between 6% to 8% over the
next decade (IMF 2001) Strong economic growth in Asia is attributed to a focus
on market reforms, export oriented industries, stable currencies, diversification
of the economy, and massive injection of foreign capital. Billions of dollars and
being poured into the tourism infrastructure to accommodate a burgeoning Asian
tourism industry. This has intensified trade, investment, and travel within the
region and with the rest of the world. Asian governments have also sought to
avoid extremes of inflation and unemployment, and are keeping budget deficits
small or running surpluses. It is no wonder that the region has attracted much
attention from the rest of the world regarding its success. The opening up of
Indochina, Myanmar, and China to tourism, and given the increasing number of
companies setting up bases and new businesses in the region the volume of
business travel will rise. This will provide ample marketing opportunities for
travel-related business.

5.3 Increase in Income and Leisure Time

As a result of strong economic growth, disposable incomes have soared in
Asian countries and along with it, the propensity to travel. Leisure consciousness
has been enhanced with travel no longer seen as a luxury. In fact, it is now seen
as an affordable commodity to be enjoyed by all who choose to engage in a variety
of leisurely pursuits. Some Asians may see travel as a status symbol, while others
see it as relief from the pressures of work. The introduction of a 5-day workweek
in China will provide Chinese residents with more leisure time that will likely be
devoted to travel. A number of Asian countries have recorded significant growth
in real per capita income over the last year with Singapore (7.3%) Thailand
(6.8%), China (10.3%), 5. Korea (6.7%), and Indonesia (7.1%), Showing the
highest growth (IMF 2001). Rising incomes have created a middle class of
.sophisticated and affluent Asians who are better educated, have more disposable
income, and who appreciate the value of leisure.
Although price conscious, they still demand high qualify products. Since
Asians are more likely to travel in groups and families, more travel products and
services, such as tour packages that incorporate activities, must be designed to
cater to their needs. His may include travel to exotic places, soft-adventure travel,
cruises, and sports related tours, amount others. Disposable incomes will continue
to rise, and thus fuel the demand for leisured travel. The trend among
Asian countries is towards more frequent regional holidays to various
destinations and resorts within the region.

5.4 Liberalization of Air Transport

Traditionally, Asian countries have safeguarded their national flag carriers
to protect them from foreign competition. However, the situation is changing as
governments realize that such restrictive policies are counterproductive to
tourism. Singapore and Taiwan have already signed open skies agreements with
the United states and similar agreements are expected between the U.S. and
Malaysia, S. Korea and New Zealand. Liberalization of air transport will only
serve to enhance trade and tourism growth in the region. It will to lead to more
multilateral open skies agreement between countries.
In other parts of the region, Thailand and Middle-East are showing more tourism
growth as a result of liberalized internal aviation policies. Indonesia, the
Philippines and south Korea have followed suit with similar aviation policies.
Indonesia's limited open skies policy invites foreign airlines to fly to new
international destinations and participate in code sharing agreements with
Indonesian airlines.
5.5 Future Outlook
The Asian region will still maintain its status as the fastest growing region
in the world and most forecasts point to the region's healthy long-terms prospects.
The WTO'S (1996) forecast reveals the region emerging as the world's number
two region behind Europe in 2010 with 229 million international arrivals,
growing at an annual rate of 7.6%. The rapid growth of tourism will create new
marketing opportunities in the cruse line industry, timesharing, meetings market,
while China has the potential to be the next major visitor generating market.
Major events that have boost the status of the region include the Cummonwealth
Games in Malaysia in 1998 and soccer's World Cup in Korea and Japan in 2002.
Forecasts by the World Travel and tourism Council (1995) for the Asian region
reveal that by the year 2005, travel and tourism will generate US$1.9 trillion in
gross output, and account for 11.6% of GDP. Further, the industry will create and
additional 105 million new and indirect jobs. To support this growth, US%553
billion in capital investments will be needed for the infrastructure and
superstructure.
Strong Economic growth will continue to increase disposable incomes and
stimulate the desire to travel. This will increase the demand for air travel, which
is expected to grow at an annual rate of 8.6% till 2000 and 7.1% from 2000 to
2010. By 2010 the Asian region will control half of the world's total passenger
traffic. Japan will dominate the traffic with over 90 million passengers, followed
by Hong Kong China, and Singapore. The fastest growing travel markets by 2004
wil be Vietnam, China, Taiwan, Indonesia, and Thailand (Air Transport Action
Group 1995). To accommodate the demand for air travel, airlines in the region
will take delivery of more than US$100 billion worth of aircraft. As of March
1996, Asian airlines had firm orders and options for a total of 575 aircraft (Muqbil
1996). New airports are opening In Hong Kong, Korea, and Malaysia, while
expansions in Singapore and Indonesia will help to alleviate capacity and
congestion problems. Billions of dollars will be spent in capital investments to
meet the increasing demands of a burgeoning tourism and hotel industry. Joint
promotions and alliances between NTOS and the private sector, will create a
stronger collective tourism product that will increase arrivals and enhance
tourism growth Finally, the recent devaluation of the regional currencies will also
have major implications for the tourism industry In the region. Inbound travel
will increase, as visitors will be attracted by the higher purchasing power in
countries where currencies have been devalued. More specifically, visitor
expenditures will increase as a result of a higher length of stay and attractive
prices. In the short term, devaluation may have some negative impact on
outbound travel and operating costs, but the long-term benefits will outweigh the
costs.

6. The Indian Scenario

India has continued to remain infatuated by the manufacturing industry.
This infatuation has perhaps, been caused by the Industrial Revolution having
virtually bypassed India before independence (1780-1947). It was only natural
that we want to catch up on the opportunities that have been denied to us. The
emphasis on setting up manufacturing industries in the post independence area
was natural. Nehru called such factories and dams the new temples of India. As
any economy matures, in the process of development, it makes a transition from
agriculture to manufacturing and from manufacturing to services. In different
stages of economic growth, the relative importance of these sectors changes in
terms of employing people and their relative contribution to GDP. Within the
Asia-Pacific region the Indian sub-continent is well poised to take advantage of
the boom in the tourism sector.
The tourism industry is undergoing a sea change with the revolutions in
communication and information technology. Everybody inn the tourism industry
will have to change and rediscover its place in newly defined value chain. The
role and the service offerings will undergo a big change in the present cyber
world. The 21st century is the century of tourism magic - the most potent weapon
of name, fame and reward. Therefore, inn the new millennium, most of the
countries including Indian are spending millions of dollars for the revamping of
the existing facilities or the creation of new ones.
India is a vast country with a history that goes back 5000 years. Its vast
geographical diversity, rich culture & heritage, fairs & festivals, snow capped
mountains, a vast coastline, monumental attractions that span the entire country
and the gaps in the infrastructure, offer tremendous potential for tourism. India, a
low cost destination, continues to exert its mesmerizing pull not only on the world
tourist, but the travel bug has also bitten the Indian tourist. India's share in world
tourism, which is a meager 0.2% as of date, is expected to touch 1-2% by the year
2005. As per the Hospitality and Toursim industry projections the rise in foreign
tourists to India are expected to touch 5 million and the domestic tourists are
projected to touch 90 million by the year 2001.
Tourism is also one of the biggest employment generating industries in
India, with a capacity to absorb an additional investment to the tune of $ 10
billion. According to PATA (Pacific Asia-Travel) Tourism directly or indirectly
drives more than 10% of the worlds' employment today.
Significant policy initiatives, such as welcoming of private sector, foreign
and NRI investments, setting up to The Tourism Finance Corporation of India
(TFCI renders financial assistance & caters to a variety of investors needs) and
Investment facilitation cell (Acts as a nodal Agency that interacts between the
investor, the state governments, the premier financial bodies & the relevant
ministries) have been take by the government.

The Package
To an international tourist what does India offer? In this segment we see
the attractiveness of India as a tourist destination. India is one of the oldest young
countries. It is a 50 years young democracy but it has seen the rise and fall of
civilizations since time immemorial. India has the ruins of the Indus Valley
Civilization at Mohenjodaro and Harapa, which speak of the early settlement of
man. Through time, various cultures have thrived on this land and have left some
mark behind to say they were here. Some of the examples are the Taj-Mahal a
dream in marble, the sun temple at Konark, the Hava Mahal at Jaipur, the Lake
Palace at Udaipur, the Ajanta & Ellora caves, the list is unending. India is not all
about past, there are brilliant examples of modern architecture like the Louts
Temple at Delhi. Nature has also endowed this land abundantly. It is one of the
few countries, which has such a varied topography. From the beaches in Kerala
in the south to' the snow capped mountains of Himalayas I the north, the golden
desert in the west to the mangroves in the east there area a few natural sites, which
a visitor will not find here. India also forms a link between the East and the West.
This has visitor will find here. India also forms a link between the East and the
West. This has provided it with a foreign flavour. A perfect example of this is
Goa where the
Portuguese fragrance is still there in the air. Therefore, what we have here
is what a tourist wants, but the statistics show differently. India has only 0.51%
of the international tourist traffic coming in. The non tourist countries like
Malaysia and Indonesia get much more tourists than India Further, we see what
is the status of tourism in India.
India's amazing diversity offers you everything you could ever want in a
holiday. From the moment that you set foot in India to be greeted by graceful
name namaste, a gesture that denotes both welcome and respect, you are on the
way to one of the most rewarding experiences of your life. Bounded by the
majestic Himalayan ranges in the north and edged by a spectacular coast line
surrounded by three seas, India is a vivid kaleidoscope of landscapes, magnificent
historical sites and royal cities, golden beaches, misty mountain retreats, colorful
people, rich cultures and festivities.
 At any part of the year India can offer a dazzling array of destinations and
experiences. In summer, when the subcontinent is sizzling there are spectacular
retreats amidst the heady beauty of the Himalayas or the lush heights of the
Western Ghats with cool trekking trails, tall peaks to conquer or stretches of white
water for the adventure seekers.
In the cool of an Indian winter, cities come alive with cultural feasts of
music and dance. Then balmy weather is an ideal time for one to go century
hopping in romantic cities studded with medieval forts and places.
One can taste the delights of the Indian monsoon anywhere in the country-
on a camel safari in the Rajasthan desert when nature comes alive and the
peacocks dance; along the west coast where the relentless slanting rain paints
the countryside in brilliant greens or even trekking amidst the start grandeur of
mountain valleys lying in the rain shadow of the Himalayas. Experience exotic
India - live like a maharaja in the rich ambiance of royal forts and places that are
now heritage hotels; luxuriate in the serene beauty of a coral island with its
turquoise lagoon; participate in the exuberance of a village fair or a colorful
festival; day dream on a house boat drifting down the palm -fringed backwaters;
delight in the grace of a dancer or shop till you drop - buying exquisite silks,
carved figurines, brass and silver ware, marble inlaid with semi-precious stones,
finely crafted jewelry, miniature paintings, carpets ....at unbelievable prices.
India, always warm and inviting, is a place of infinite variety - one that favors
tourists with different facet of its fascination every time they come on a visit.
The subcontinent of India lies in south Asian, between Pakistan, China and
Nepal. To the north it is bordered by the world's highest mountain chain, where
foothill valleys cover the northernmost of the country's 26 states. Further south,
plateaus; tropical rain forests and sandy deserts are bordered by palm-fringed
beaches.
Side by side with the country's staggering topographical variations is its
cultural diversity, the result of the coexistence of a number of religions as well as
local tradition. Thus, the towering temples of south India, easily identifiable by
their ornately sculptured surface, are associated with a great many crafts and
performing arts of the region.
In the desert of Kutch, Gujarat, on the other hand, a scattering of Villages
pit themselves against the awesome forces of nature, resulting in Spartan
lifestyles made vibrant by a profusion of jewelry and ornamental embroidery used
to adorn apparel and household linen. In the extreme north is the high altitude
desert of Ladakh. Local culture is visibly shaped by the faith - Buddhism - as well
as by the harsh terrain. Yet another facet of Indian culture is observed in the
colorful tribal lifestyles of the northeastern states of Nagaland, Mizoram, Tripura
and Manipur with their folk culture.
In the central Indian states of Orissa and Madhya Pradesh tribal village life
has resulted in a variety of artistically executed handicrafts. India's mountains
provide heli skiing, river running, mountaineering and trekking. Its beaches
provide lazy sunbathing as well as wind surfing and snorkeling, and its jungles
provide shooting wildlife-with a camera. India's history goes back to 3,200 BC
when Hinduism was first founded. Buddhism, Jainism, Sikhism, Judaism,
Zoroastrianism, Christianity and Islam all exist within the country today. As a
consequence of India's size, the history of the country has seldom been the same
for two adjoining territories, and its great natural wealth has lured a succession of
traders and foreign influences to it, each having left their imprint in the country,
however faint or localized. Thus, Chinese fishing nets in Kerala are a throwback
to that country's ancient maritime trade, while in the north; terra-cotta figurines
of the centuries BC bear distinctly Greek traces.

Modern India is home alike to the tribal with his anachronistic lifestyle and
to the sophisticated urban jetsetter. It is a land where temple elephants exist
amicably with the microchip. Its ancient monuments are the backdrops for the
world's largest democracy where atomic energy is generated and industrial
development has brought the country within the world's top ten nations. Today,
fishermen along the country's coastline fashion simple fishing boasts in a
centuries old tradition while, a few miles away. Motor vehicles glide off conveyor
belts in state-of-the art factories.

The rate of success in the tourism industry is sizably influenced by the

instrumentality of supporting industries, such a hotel, transportation,
communication, banking or so. The developed countries and to be more specific
the leading tourist generating countries of the world, such as USA, UK Germany,
France, Australia, Spain, Singapore, Cyprus have assigned due weight age to the
principles of modern marketing in managing the tourism industry. In the Indian
perspective we find tourism at the bottom of our development agenda, which has
been standing a a barrier while energizing the process of qualitative or
quantitative improvements. It is against this background that we need a basic
change in the national development policy for tourism.
Of course, it was in the early 1950s that the Government of India decided
to promote tourism industry but in had no clear objectives in was necessary to
reorient the marketing projects and rationalize the locations of the tourist offices
abroad keeping in view the market conditions and potentials. In order to cater to
the needs of professionally sound manpower for tourism marketing, the Indian
Institute of tourism and Travel Management was developed as model instate.

In view of the above, it is right to mention that diversification of tourism

from the traditional sight seeing to the more rapidly growing holiday tourism
market within the framework of the country's milieu is need of the hour. The
policy planners, the tourist organizations, the domestic and global agencies are
required to realize gravity of the situation to capitalize on the opportunities
optimally. This requires a basic change in the product development strategy visa-
versa the innovative promotional efforts to project a positive image.
 The beginning of the decade 1990s opened new areas for the development
of tourism in the Indian perspective. This necessitated development of
infrastructure facilities like transportation, communication, accommodation or
so. In addition, this also required use of sophisticated information technologies
by the tourist generating organizations so as to improve the quality of service at
deferent points. In addition to the planning and development of tourism products,
the promotional strategies thus require due attention of professionals.

The creativity in messages, campaigns and appeals, which probably could

not get due weighted to the behavioral profile of users. We can't deny the fact that
till now the tourist organizations have devalued the instrumentality of behavioral
studies and therefore were supposed to do it on a priority basis. The emerging
trends in the business environment make it essential that world class professional
excellence is essential that world class professional excellence is essential
without which all our efforts are to be ineffective.
Tourism industry of India is today is being a part of interest for many
national and international organizations. Today this industry presenting the
business opportunity of a lifetime for anyone interested in investing in India's
'Tourism Infrastructure'. India has more then 300 million domestic and foreign
tourists. The graph of this industry will surely increase in coming years as the
liberalization of the economy permeates deeper and deeper.
Opportunities abound in the traditional tourism related areas and in novel
exciting fields from the setting up of international class star hotels, motels, wary-
side amenities, heritage hotels and restaurants. To the setting up of golf curses,
amusement parks, adventure and water sport complexes, aerial ropeways, cruises,
domestic airports and more. Recognizing that the logistics of identifying locations
for the type of investments you are interested in making is difficult and time-
consuming; the Department of Tourism of the Government of India in
consultation with the various State Government has worked out a plan of potential
projects. The departments of tourism of Government also help investors and
facilitate them in getting project clearances and permits for this industry.

7. New Concepts in Tourism Industry

The new concepts developed by the government to expand activities under
the tourism industry area:

7.1 Eco tourism

Eco tourism is defined as responsible travel to natural areas and sustains
the well being of local people. It is further an amalgamation of interests arising
out of environmental, economic and social concerns. Tourism has become one of
the largest global activities and a way of paying for nature conservation and
increasing the value of land. The flow of dollars can flow back into conservation
and make it pay for itself. Today conservationists, economists and tourists alike
have awakened to the realization that you can't save nature at the expense of local
people. They are the traditional and time honored custodians of the land and are
most likely to lose from conservation and should be convinced that they are the
beneficiaries and partners in conservation rather than enemies of it.
Government and non-government agencies are waking up to the need to
work closely issued guidelines under which all tourism project in hills and forests
have to get environmental clearance. A recent example of such close monitoring
is the ban on construction activity within 500 meters of high tide line on the
coasts.
The WTO in its projections for the year 2000 estimates that around 1000
million people will be involved in global tourism. The number is likely to
increase, India's share in the traffic will be environmentally conscious as past
trends indicate. It is this increasing trend in the number of tourists that the World
Travel and Tourism Council is concerned about and has issued guidelines
focusing on being sensitive to conservation aspects, protecting threatened areas,
species and species aesthetics, conserving energy and reducing and recycling
waste.
Eco - tourism is a complex and multi disciplinary phenomenon. There are
many facets that have to be addressed if it is to be successful for those involved
i.e. the consumers, managers, native people and suppliers. Detailed and
systematic inventories of the eco-tourists attraction of a country should be
elaborated by keeping in mind that these inventories are different from those of a
scientific nature as they reflect certain liveliness and vibrant attractiveness
missing from an unemotional and impersonal list of scientific nature.

7.2 Heritage tourism

This is a new kind of tourism that has come up in recent times. The
concepts of Heritage tourism came up to aid & facilitate the curious guests
attempts to get to know India's great traditions. It was realized that the historic
homes could be maintained only with their appropriate reuse. The large Palaces
of Maharajas set the trend by becoming five star hotels. The main charm is the
individual attention & personalized services. The ambience is perfectly reflected
through sepia photographs & family memorabilia. Families in residence for
countries now welcome you to their homes as guests. The homes are modernized
to meet the needs of today's international traveler, with adjoining bathrooms,
running hot & cold water, modern plumbing, even perhaps a swimming pool.
This kind of tourism was developed mostly for the international tourist who
wanted to get the feel of traditional India.

7.3 Adventure tourism and Holiday tourism

India's vast geographical diversity provides a vast potential for adventure
tourism. All tastes are catered to and there is something for everyone. From the
gentlest to the fast placed, for the beginners to the experts. Besides this the prices
here are lower as compared to international standards.
Travel agents and tour operators very often specialize in certain fields,
offering package deals for groups as well as individuals. Mountaineering,
trekking and rock climbing, ballooning and hang gliding, camel treks and desert
safaris, white water rafting and river exploration are some of the exciting
possibilities. Apart from this there are sports like skiing, scuba diving and
underwater coral viewing, angling, wild life and bird watching, golf, tennis,
badminton, plol, swimming and motor rallies amongst other sports.
For the tourist in search of sun, sea and surf, there are beach resorts on the
western and eastern coasts.

Mountaineering
Scaling the Himalayan Peaks - the greatest adventure of all. The mighty
mountains stretching across the northern borders of India have hundreds of peaks,
many yet unsealed and inviting the intrepid mountaineer. The states of Jammu
and Kashmir, Himachal Pradesh, Uttar Pradesh and Sikkim offer bases for
mountaineering expeditions.
There are agents who can make all the arrangements for groups or
individuals including food, porters, camping equipment, etc. The best season for
mountaineering is from May to October and six months notices are required to
book a peak.

Trekking
The spectacular Himalayas are the abode of snow and evoke unmatched
feelings of reverence and excitement and offer wonderful bevy of trekking routes.
Peninsular India offers natural beauty of another kind for trekking. The Western
Ghats, the Aravalli Hills, the Saputara range and the Nilgiri mountains have a rich
heritage of flora and fauna, each with a special lure of its own. Treks can be taken
along the remote areas or the route pilgrims have trekked year to remote shrines
in the mountains.
The season for trekking is April to June and September to November with
regional variations. No system of permits exists in India but trekkers should not
enter any restricted areas.

• Rock Climbing
Especially Popular in the foothills of the Himalayas wherever there are
rocks and hills, stiff climbs and sheer mountainsides - rock climbing is a popular
sport.

• Ballooning
In its infancy this sport is available only In Delhi. The Ballon Club of India
at Delhi's Safdarjung Airports is the Airport is the takeoff point and has its
headquarters within the complex.

• Hang Gliding
Recently introduced in Indian Hang Gliding is available at Pune, Devlali,
Mumbai, New Delhi, Chandigarh, Shimla and Bangalore. Kangra and Kasauli are
developed as major hang-gliding centre.

• Camel Treks and Desert Safaris

The great Indian That Desert provides the scene for exploring the old desert
routes on camel back or for the less intrepid in camel carts. Jeep tours can be
taken over remote desert tracks that are rarely taken by tourists. Jodhpur,
Jaisalmer and Bikaner are the starting points for such tours with stops at villages’
en rote.
Winter Water Rafting and River Running
The mighty Indian rivers tumble and crash through the mountains to form
white water rapids and terraced cascades. This is a paradise for the white water
sportsmen. Ladakh and Zanskar valley in Kashmir, Lahul valley, the Garhwal
Hills and Sikkim are some popular areas. The Indus, Zanskar, Ganges, Ravi,
Beas, Chenab and Teesta are rivers with both rough and clam waters for both
beginners and experts. These rivers and excellent for canoeing and kayaking.

Winter Sports
Gulmarg in Kashmir is India's most popular and developed ski resort with
most modern equipment. There is an institute of skiing and mountaineering,
which offers training courses. The Gulmarg -Khilanmarg route is a great
experience for ski mountaineering enthusiasts. Kufri also offers skiing. Along the
Rohtang pass, skiing is possible in summer also. Shimla offers ice-skating, figure
skating and speed skating.

Motor Rallies
Through out the year many rallies are held whose dates can be obtained
from the nearest tourist office. The Himalayan car rally attracts international
participation and goes through the mountains of Himachal Pradesh and Uttar
Pradesh.

Beach Resorts
The extensive coastline of India has excellent virgin beaches unspoilt as
yet by man. The best-developed beach resorts are at Gla, Kovalam and
Mahabalipuram. Excellent water sport facilities are available at these three
centers. There are other resorts in smaller cities along the coast of India.

Wildlife Tourism
 The Indian subcontinent provides vast variations in geography and climate,
which results in diversity in habitats and wildlife. The Himalayas offer a wide
spectrum of landscapes and wildlife. Tropical forests in its eastern extremity
contrast with pine and coniferous woodlands of western Himalayas. Natural cover
varies with altitudes and these evergreen forests are bounded with high alpine
meadows nearer the snowline and temperate forests of short stout trees in the
lower elevations. In the foothills are the deciduous trees, with shrubs, bamboos,
fern and grass. The northern plains, the course of holy rivers, the great Thar
Desert and the Sundarbans, the marshy swamplands, the volcanic rock of the
deccan plateau all provide fascinating habitats that sustain over 350 species of
mammals, 2100 kinds of birds-local and migratory, nearly 350 species of reptile
and countless insects. Indian currently has around 80 national parks and 441
sanctuaries dotted around the country. While some are inaccessible others have
excellent facilities for the visitors. The thrill of spotting herds of wild elephants,
deer, a rhino or even a tiger in its natural environment is very difficult to match.

Buddhist circuit and Pilgrimage tourism

Pilgrimage tourism is a major segment that contributes to the growth of
employment and local economic development. The National Action Plan
announced in the parliament in 1991 recognized pilgrimage tourism for the first
time in the country. Temples and tourism go hand in hand and with the increase
in the number of temples the tourism industry also grew. Today more than 50%
of the 9.2 million domestic tourists travel to visit various places of worship
starting from the Ganges to Rameshwaram and Vaishnodevi to Valankinil In
1998 more than 95 Lakh people assembled at the Kumbh Mela, the largest and
the last of its kind in the 20th century. Another standing example is Tirupati in
the South. It is also an example of the best temple management in the country. It
has devised methods by which every devotee pays for the service they get. The
government recently identified 17 places of pilgrimage for developing them for
tourism purpose. Indian also has started attracting tourists from south east Asia
where Buddhism has large following. Sarnath played host to a world Buddhist
meet in October 1998. The meet attracted thousands of participants, especially
from South East Asian Plans are also effort to make this and annual event. The
East and North East represent the Buddhist Circuit. These concepts are expected
to generate a growth rate of nearly 20 in Indian tourism.
The country has embarked on the right path. Upgrading existing infrastructural
facilities and adding new ones should definitely help tourism industry to tap the
enormous existing potential.
Though the tourism sector is the second largest foreign exchange-earner
for the country, in continues to be largely ignored by the Government. The
parliamentary standing committee on transport and tourism had recently pointed
our that although during April-December 1999, the estimated foreign exchange
earning was Rs. 8,817.91 crores, for the last three financial years, the Plan outlay
for tourism has been more or less equal to the cost of one fighter plane.
Impossible, to judge a company by its web site. Therefore, other (no legal)
measures must also be taken to boost customer confidence in online shopping.
The U. K. Government is trying to promote the ideas of 'e-hallmarks'" which will
guarantee that its users are legitimate traders offering assurances on security of
payments and communication and giving information on goods, prices and a
return policy. A new body –trust UK- will be set up to accredit c-commerce codes
and there are plans to market the e-ballmark internationally however many
business organization opposes the idea, wanting instead to rely on self-regulation
without government intervention.
Poor example, ABTA aims to clamp down on internet sales by creating
regulations for online travel transactions. It plans to publish a single revised code
of conduct for agents and operators in May 2000, with a new section on internet
sales. It will require members to have a secure payment system if using the
internet to take booking, and to observe the same ABTA rules as for other types
of advertising.

8. Current Scenario of Tourism Industry

Today, the world economy is transiting towards services. The global export
of services is rising faster than the export of goods .India is unfortunately still
pursuing manufacturing. With the enormous lead that the west has in
manufacturing, it is virtually impossible for India to catch up .Today, with large
number of less expensive, educated and skilled workers , India's comparative
advantage lies in services, not in manufacturing. India can grab the opportunity
and curve a niche for herself by directly leapfrogging to services. Unfortunately
India has not realized the potential of the service sector, as yet.
The Tourism industry's foreign exchange earning in India are around $3.2
billion. Tourism is the highest foreign exchange earner if we consider the fact that
net value addition in Gems and Jewellery is less than 30 percent where as, in
tourism it is more than 90 per cent. It also has one of the best employment
multipliers when compared with any other industry. Tourism also generates
maximum job opportunities, as it provides direct employment to 9.1 million
people and indirect employment to another 12.4 million. But, these statistics do
not appear so impressive when viewed in the global perspective and compared
with that of other countries shows in the graph below.
Tourism has been a neglected sector in India. Though it was recognized as
a priority Sector in the Seventh Five Year Plan but hardly anything was done to
promote this industry. Recently, the BJP

* government has even dropped it from the national agenda. It is true that India
has yet to reach the prosperity level where leisure activity can be included in the
priority sector but, if solving the country's unemployment and foreign exchange
Problem are on the top of the national agenda, the potential of this industry cannot
be neglected.
8.1 Potential for Growth of Tourism
Although India is in the lowest ebb in international tourism (onlyO.34% of
global tourist traffic), there are several distinguishing features that would help in
achieving its goal. Some of these are given below.

• The rate of growth in tourist traffic to India has been greater than the global
average.
• The average duration of stay of foreign tourist in India is one of the highest
in the world .On an average, it exceeds 27 days in the case of non-package
tourist and is 14 days
• In the case of package tourist.
• The major share of the international visitors emanates from West , Europe
and North America,
• The tourist on package tours spend nearly 65 percent of their expenditure
on shopping.
• There is high degree of seasonality in the foreign tourist traffic.
• The hotels and tourist related industry has been declared as a "High
Priority" for Development.

The confederation of Indian Industry (CII) expressed concern over the high
taxes levied on the Indian tourism industry and poor access to tourism destination.
This, according to the press release, is stifling growth in the sector.
CII points out that the World Travel and Tourism Council has observed that "tax
paid by Tourist in India is the highest in the world. Indian hotels charge about
40% taxes compared to other Asian countries where it varies between 3% and
6%. Such high taxation renders the tourism sector as a whole uncompetitive.
Further, there is considerable disparity between state level taxes, especially on
food and beverages. In fact, the sales tax on imported beverages varies widely,
e.g.63% in Karnataka to 28.75% in West Bengal.

India's tourist industry currently services about 2.38 million visitors (1999,
including nonresident Indian visiting relatives) every year. In 19994 estimated
gross export Earnings from tourism stood as US$1.5 billion (some 15% higher
than in 1992-93), but by 1999 the level had been raised to US $3.2 bin. It is
expected that the volume would double in the next ten years- but only assuring
that the government manages to get the Right incentives into place.
At present it remains to be seen how far this can be accomplished.
Although Prime Minister Atal Behari Vajpayee is visibly retreating from his
public opposition to the "Cultural Impression" of US-backed tourism and leisure
providers, foreigners are specifically excluded from investing in cultural
industries. And in any case the Government has not yet created the basis for
widespread foreign confidence in his Economic or political management.

The 2000 budget shows no clear determination to clean up the country's

indifferent and inefficient transport system: both India Airlines and the national
rail network are widely considered too poor in quality to be use for tourism
purposes.

Key Trends 1990 1996 1997 1998 1999 200 2005 2010
Total Foreign 1721 2254 2391 2359 2384 2856 3570 4462
Visits (000)
Total Tourism 1513 2980 3153 2152 3152 3510 5102 7015
Revenues ($ mn)
Total Tourism 45 432 457 483 511 540 702 912
Spending
Abroad ($ mn)
Source
Cambridge International Forecasts, based on WTO and industry
estimates

8.2 Purpose of Visit.

Tourist arrivals to India according to the purpose of visit in 2001.

Nationality Total Holiday Business Conferences Study

Tourists and Sight-
seeing
UK 300696 91.7 7.3 0.2 0.1
USA 176482 93.2 3.8 0.2 0.3
Sri Lanka 89009 94.8 0.8 0.1 0.1
Germany 85352 85.7 13.2 0.3 0.1
France 73088 82.6 14.5 0.31 0.1
Japan 63398 95.8 3.5 0.0 0.1
Canada 56441 96.4 1.5 0.1 0.3
CLS 56387 81.3 17.3 0.1 1.1
Singapore 44157 62.8 25.6 0.0 0.5
Italy 46510 91.7 7.7 0.0 0.2
Others 573496 71.9 1.6 2.3 0.4
 Total 1562016 96.6 2.8 0.1 0.2

Source
Tourist Arrivals in India – highlights, dept. of tourism, govt. of India 2001

9. TOURSIM MARKETING
A clear perception of tourism marketing requires a brief analysis of
marketing. We are well aware of the fact that there have been fundamental
changes in the traditional concept of marketing which has been influenced by the
multidimensional changes in the business environment. A transformation in the
attitudes, lifestyles and expectations is the result of a number of developments.
Professionalism paves the ways for expectations which opens doors for quality
generation vis-à-vis competition. Almost all the organizations producing goods
or generate services have no option but to assign an overriding priority to quality
Gradation that requires innovations. This necessitates change in the concept
marketing, which determines its functional boundaries. We find satisfaction of
users the focal point around which all the functional areas of marketing cluster.
While clarifying the perception of tourism marketing, it is essential that we assign
due weightage to the three important considerations, the first generations of fits
by the tourist organization second world class services to the tourists rich help In
satisfying them and the third positive contributions of tourist organizations to the
process of social transformation and ecological balance.
We consider marketing a human activity that direct the flow goods and
services from producer to consumer or users. Kolter finds marketing a social and
managerial process by which individuals and groups obtain what my need and
want through creating and exchanging products and value with others In view of
the above, the following points emerge regarding tourism marketing:

Tourism marketing is process of creating a product or providing a service.

Tourism marketing comprises fact finding, data gathering, analyzing (marketing
research), communication to inform and promote (Promotion), ensuring and
facilitating sales, selection of marketing planning (distribution), Coordination,
Control and evaluation (marketing planning and auditing), developing
Professionally sound personnel(people).
• Tourism marketing is an integral effort to satisfy tourists and more so, it is
a Device to transform the potential tourists into the actual tourist.
• Tourism marketing is the safest way to generate demand, expand market
and Increase the Market share.
• Tourism marketing is a managerial process to promote business activity
directed at satisfying the needs id wants through exchange processes. The
American Marketing Association defines marketing as the performance of
business

9.1 Users of Tourism Services

We find difficult categories of users availing the services of tourist
organization. We find classification of different categories which would help the
tourism Professionals in studying and identifying the level of their expectations
vis-à-vis their behavioral profile.

General : Students, Executives, Artists, Politicians, Cine Artists

Sex : Men / Women
Region : Rural, Urban
Education : Literate, Illiterate
Status : Rich / Poor
Profession : Executives, Academics, Artists and Sportsmen
Occupation : While Collar (Clerical), Blue Collar(Manual)
Non Users : Personas not interested in using the services are known
as non-users. They lack willingness, desire and ability and therefore, the level of
income ore even the availability of leisure hour is not to influence them.

Potential users: We also call them prospects or the prospective users. They have
willingness but the marketing resources have not been used optimally for
influencing their impulse. They bear the efficacy and the marketing professionals
are supposed to capitalize on their potentials by using creative promotional
measures.

Actual users : Persons already using the services generated by the tourist
organizations are known as actual users.

Occasional users : Users availing the services occasionally but nor forming the
habit to travel are known as occasional users.

Habitual uses : Users forming a habit and availing the services regularly are
known as habitual users.

9.2 Market Segmentation for Tourism

The behavioral scientist feels that appeal, strategy and tact vary from
segment to segment in a natural way necessities a change in strategic decisions.
The modern marketing theory prefers the formulation of marketing policies and
strategies for the each market segment which an organization plan to solicit. It is
natural that different segments react in a different way. Segmentation makes
possible tailoring of products and marketing programmes uniquely suitable for
each sub-segment. A market is not only an aggregate demand for a product but
the sum of demands of different market segments. For getting a positive response
in the market, it is pertinent that the marketer's of the tourist professionals are
well aware of the different market segments. It is against this background that we
need to study market segmentation for tourist services.
 At the outset, it is essential that the tourist organizations select a suitable
base for segmenting the market. The selection of base has a for reaching impact
on studying the target market. Though there are a number of bases for
segmentation, we find lifestyle an important base since the traveling decisions are
fantastically influenced by the changing lifestyles. The emerging trends in the
level of income, the availability of leisure hour of course influence the process
but the main thing is the lifestyle. This is supported by the logic that if we earn
more, we spend more.
We prefer to utilize our leisure time for gaining pleasure or for enriching
the knowledge bank. This necessitates an in-depth study of like style for making
segmentation proactive. The living styles of Americans and Indian can't be
identical, the decision making of both of them are to be different. The American
prefer to travel and therefore they assign due weightage to the traveling decisions
while scheduling or ordering their engagements. The Indians avoid traveling
albeit we find them earning more or sufficient leisure time or holidays in their
hands. This makes it clear that for segmenting market, we find this variable
constituting a place of outstanding significance.
The aforesaid facts make it clear that for getting a positive response, the
segmentation of tourism market needs an intensive care. The tailoring of products
with the expectations of tourist or a fair synchronization of tourist's
expectations and potentials of the tourist organization would hardly be possible
unless we segment the market in a right fashion. The opinion leaders prompt the
whole drama of marketing where the word-of-mouth promoters play an
incremental role. The process of segmentation simplifies the task of marketers.
Tour operations, the transport operators the travel agents, the tourist guides, e
hotels find it easier to make the marketing decisions. They even with the minor
intelligence and diligence are found successful in identifying the market the
potential tourists. It is right to mention that the needs and requirements well as
the levels of expectations can't be uniform.
 The segmentation benefits tourist organization in different ways. An
optimal marketing plan, a balanced development of marketing resources,
true gauging of the level of expectations, formulation of creative strategies for
getting a positive response make it clear the tourist organizations assign
due weightage to segmentation. They are supposed to select a suitable
base for segmentation out of numerous bases like day base, purpose base,
demand base, geographical base, Psychological base, demography base,
socioeconomic base, sex base, age base or so.
These bases help professionals in studying and understanding the changing
behavioral profile of users. The market segmentation bases make it clear that
geographic, demographic, psychographic and socio-economic aspects can't be
underestimated to have clear picture of the tourism users.

1. Holiday as a Base - Mass Market, Popular Market

2. Demand as base - Primary, Secondary opportunity
3. Geography as a base - Cities, Provinces, Regions, Countries
4. Psychography as a base - Lifestyle, Personality Motive, Product,
Knowledge.
5. Demography as a base - Age, Sex, Occupation, Class, Religion.
6. Socio-economic of base - Rich, Poor, Rural, Urban, Literate, Illiterate
7. Purpose as a base - Business Travel, Cultural Tourism, Common Interest
8. Age as base - Kids, Teens, Youths, Young, Married, Single.
The holiday base focuses or attention on the fact that long-distance tours
require availability of more leisure hours. The holiday market is classified in
terms of demand. The different categories are, the mass market, the popular
market and the individual holiday market. The mass market involves largest
number of- vacationists who generally travel in long groups. They prefer all-
inclusive tours. The users belong to the conservative group in which we find
skilled and semi-skilled workers, blue-collar employees as the potential users.
The users are generally class one and class two groups, pensioners and retired
people. The individual holiday market involves "social group-A7 like corporate
chairman and senior executives. We find an apparent change in the behavioral
profile of different categories in the holiday base. Another base is purpose in
which we find business travel market, cultural tourism market, common interest
tourism market and conference and convention.
The demand base classifies markets into primary tourism market,
secondary tourism and opportunity tourism. The geographic base includes
lifestyle, personality, motives, product and knowledge. The demography base
covers age, sex occupation, class and religion. The socioeconomic base makes
classification like rich, poor, rural, urban, literate and illiterate. The age-base
classifies markets for kids, teens, youths, young married and old people market.
The aforesaid small segments simplify the task of tourist professionals. They
know about the changing needs and requirements of different segments and
innovate their strategic decisions accordingly. The development of marketing
resources in tune with the changing levels of expectations make the ways for the
stimulation of demand and simplify the task or marketers. It is in this context that
we need to segment the market for the different allied industries helping the
tourism industry in many ways.

9.3 Designing a Package Tour

In the process of formulating a sound product strategy, there are a number
of factors to be given due attention. The designing of a package tour occupies a
place of outstanding significance. For the profitable marketing of tourism
services, it is pertinent that the different components of product are managed in a
right fashion. This gravitates our attention on the offering of a package holiday
product which necessitates management of the following factors.

9.4 Destination
 The development of destination or tourist sites has a far-reaching impact
on attracting the tourists. It is essential that destination or the tourist sites are
easily accessible. This necessitates safe, fast and reliable transportation facilities
hither and thither the tourist sites. To be more specific for promoting world
tourism or attracting the foreign tourists, it is essential that the flying time is made
proportionate. The site should be clean, the beaches should be sandy, sun-shine
should be certain, the entertainment facilities at the site should be of quality the
site should be safe to walk about, the local people should be friendly, the tour
operator, the travel guides and others should have competence of speaking
English and other regional languages. These facilities at the destination would
add attractions.

9.5 Management of Airport

While managing the tourism product, the airports are required to be
managed carefully. The airport should be local and convenient. The arrangement
for car parking should be safe and adequate. It should not be congested but it
should be spacious. In addition, the shopping facilities should be duty free. The
airport should be clean and the vehicles should be available so that tourist doesn't
face any trouble. Besides, the security arrangement should be tight to protect the
passengers and their valuables. The aesthetic management occupies a place of
significance in the very context.

9.6 Airlines
The flights should maintain the time schedule otherwise a dislocation may
invite multifaceted problems, not only to the tourists but even to the airport
authorities. The services should be reliable, good and polite. The sophisticated
modern aircrafts of new generation should be included in the fleet to attract the
tourists. The safety record should also be up to mark to remove the fear psychosis
or psycho-fobia.
9.7 Road and Rail Transportation
For the tourists preferring to travel by buses of railways, it is significant
that the stations are well managed. The booking and reservation counters should
be managed scientifically. The enquiry should be controlled by efficient and well
behaved staff. The safety arrangement should be adequate to counter the law and
order signposts should be positioned at right places to help the travelling
passengers.

9.8 Hotels
For managing the hotel services, it is essential that we are also careful to
the hotel accommodation facilities. It is pertinent that hotels are easily accessible
to the tourist sites or beaches or shops. The hotel personnel trustworthy and
competent enough to speak English and other regional languages. They are
supposed to be friendly. The management of facilities at hotels need due care.
Though the standard of services, amenities and facilities depend upon the grade
of hotels still it is essential that hotels offer the promised services to the users.
The gap between the services-promised and service-offered should be - bridge
over. The hotels should be well maintained, the decor should be attractive;
possibly a fair mix of eastern and western culture, the atmosphere should be calm
and quiet; specially at the night time, public rooms should be adequate in number,
the swimming pool should be neat and clean where inflow and outflow of water
should be scientific to protect the danger of water contamination or pollution.
There should be bar with good range of drinks.
The bedrooms should be spacious in which balcony facilities should be
made available. The childcare services should also be made available.
Particularly at the beach resorts, the sea view should be possible with all rooms,
in-room telephonic services should be available, in, and room-TV should be
provided. There should be adequate cupboard space. The hangers should be
attractive and artistic, toilets should be neat and clean and well equipped with
east and west provisions. The lighting and ventilation arrangements should be
adequate. The intensity of light at different points should be given due weightage.
While managing hotels, the restaurants and cafeterias also need due care.
The restaurants and cafeterias should be well managed. The food and drinks
should have taste-orientation. The varieties of meals and drinks should be
available. The seating arrangements should be comfortable, the meal should be
flexible and the hotel personnel should be polite and friendly.
9.9 Resort Representatives
Regarding representatives of resort, they should be-knowledgeable
friendly, accessible and competent.

9.10 Miscellaneous
In addition, the fellow travelers should be like-minded. The main thing is
to make the tour pleasant and memorable. If the tourist have companionable
fellow travelers, the journey would of course remain memorable.
The aforesaid facts make it clear that being an amalgam of a number of
industries and services, the tourism industry is known as a multi-segment industry
in which the designing of a package which proves its instrumentality as a
motivational force is found a bit difficult and challenging. It requires professional
excellence so that we are in a position to assess the changing levels of
expectations of the guests/tourists and all the required amenities and facilities are
made available to help tourists to go to the destination, to enjoy and to come back
safely. The tour operators and transport operators bear the responsibility of
formulating a package tour and therefore they should have world class
professional excellence to know and understand their changing needs and
requirements.
The services are related to a number of industries managed by others and
therefore, the tour operators and transport operators managing the affairs should
make it sure that whatever the promises they have made on behalf of hotels,
airways,' railways, roadways are not to be distorted. This is likely to project the
image of tour operators and therefore a gap between the services-promised and
services-offered would make the task difficult. It is against this background that
designing of a package tour occupies a place of outstanding significance and all
the allied industries making the package are required to be careful that they are
not inviting degeneration.

10. SWOT Analysis

Strengths
• India's geographical location. A culmination of deserts, forests, mountains
and beaches.
• Diversity of culture i.e. a blend of various civilization and their traditions.
• A wealth of archeological sites and historical monuments.
• A very wide variety of hotels is present in the country that can fulfill the
demand for
• The accommodation of tourists.
• There are international players in the market such as Holiday Inn and
Oberoi. Thus, the needs of the international tourist’s travelers are seen to,
while they are on a visit to India.
• Manpower costs in the Indian hotel industry is one of the lowest in the
world. This provides better value for money to the tourists. .
• India offers a readymade tourist destination with the resources it has. Thus
the magnet to pull customers already exists.
• Airline is the most preferred mode of transportation by the foreign tourists
as the convenience provided by the airlines is higher. Thus, the saving in
time that this mode of transport offers is immense to the international
tourists.
• India has one of the largest road networks in the world. The country's total
road length was 30,15,299 km in 1994-95. Thus connectivity to the tourist
destination is quiet high.

Weakness
• Lack of adequate infrastructure.
• A xenophobic attitude among certain sections of people.
• No proper marketing of India's tourism abroad. Foreigners still think of
India as a land of snake charmers.
• High tax structure in the industry makes the industry worse off than its
international equivalent. In India the expenditure tax, luxury tax and sales
tax inflate the hotel bill by over 30%. Effective tax in the South East Asian
countries works out to only 4-5%. So this directly affects the spending of
tourists.
• Only 58,000 hotel rooms are available in India today, which is less than the
Bangkok total hotel capacity. So accommodation facilities are quiet less.
• The services currently offered by the hotels in India are only limited value
added services. It is not comparable to the existing world standards. This
is the reason why international tourists prefers other Asian countries than
India.
• Inefficiency of the domestic airlines- there are number of instances of flight
being cancelled or delayed. Secondly frequent strikes by the pilots and
maintenance problems are a major cause of concern. This is one of the
reasons that make a tourist disheartened.
• Travel agents are most affected by the taxes that are part of the industry so
at last tourists are the sufferers.

Opportunities
• Allowing entry of more multinational companies into the country giving
 us a global perspective.
• Growth of domestic tourism.
• Demand between the national and the inbound tourists can be easily
managed due to difference in the period of holidays. For international
tourists the peak season for arrival is between September to March when
the climatic conditions are suitable where as the national tourist waits for
school holidays, generally the summer months.

• Develop a well- studied master plan for tourism in the country, which
should make it easier for investors as well as the authorities.
• Support and encourage private sector to invest in facilities.
• Fight pollution and littering by law.
• Adopt strict measure for civil hygiene and cleanliness.
• Provides essential basic facilities like toilets and resting facilities
throughout tourism routes.
• Have an effective international marketing agency to promote
India as a destination.
• Invest on PR measure abroad mobilizing the media to a greater extent.
• Project people, culture, lifestyle, food festivals etc to offer the human
element appeal than the natural beauty of the land for long lasting result.
There are other naturally beautiful places in the world, but it is the people
that make a place unique.
• The development of tourist resorts, such as hotels on mountains or hill tops,
should be low density and low rise to retain the cool temperature as main
attraction of these locations.
• The relevant authorities must ensure that security measures are enforced at
all time.
Threats
• Economic conditions and political turmoil in the country is affecting
tourism.
• Aggressive strategies adopted by other countries like Australia, Singapore
and Malaysia in promoting tourism are also posing as a serious threat to
our country.
• Changing trends in the west demand similar changes in India, which here
are difficult to implement due to high project costs.
• Pollution is a major menace to the industry, which has to be tackled by the
government through legislation. Garbage, Plastic, sound pollution near
tourist centres and all such discrepancies need immediate action from the
government otherwise it will pose a major threat for tourism industry in
India.
• Foreign tourists are concerned about their personal safety when traveling
in the Asian region because of terrorist attacks and the tension between
Indo- Pak.
• Moreover the war between U.S.A. and Iraq has stopped the international
tourists to travel abroad.

11. PEST Analysis

The Indian tourism industry has seen rapid growth in the last few years.
Before any kind of analysis is undertaken, it is important to find out what are the
main environmental influences that have lead to this growth and how the extent
to which the changes are occurring. This is important because the change in these
factors can have significant effect on the way the industry performs.
These environmental influences can be analyzed by using the PEST
Analysis. The PEST Analysis within its parameters indicates the importance of
the political, environmental, social and the technological changes on the industry.
a) Political / Legal Political
The political factors are the main force of the industry. The Indian tourism
industry is built on the backbone of Government support and the industry cannot
sustain itself without it. The various archaeological sites and the places of
historical importance, the roads and the railways are all in the hands of the
Government. All the support services like the hotel industry, the airlines industry
and the tourist operators to name some are heavily dependent on the support and
the cooperation of the Government. The major reason as to why the tourist visits
India is for the vast and rich heritage that our country has .That is under the control
of the Government through the Archaeological Survey of India. Any policy
change that comes into force can have dramatic effect on the way the industry
players perform. For example, the Government charges high rates of taxes on the
luxury and the star category hotels and this has always been a cause of
disagreement between. The hotel association and has been getting many
incentives and many has been getting the government .There are many areas
where the growth of tourism has not been rapid or has been dramatic fall because
the political environment has been conductive. Examples are the North East for
the former and Kashmir for the later. The neglect of the Government in
Developing the North East leads to a situation where there is practically no
tourism in the seven.

Similarly, the political turmoil in the state of Kashmir has seen the virtual
decimation of the flourishing tourism industry. The "Heaven on Earth" is A
virtual hell for the industry. There has been a major change in the policies of the
Government as regard to the industry. The hotel industry has been getting many
incentives and many State Government are encouraging the growth of major
hotels in their states. After years of tight control over airport infrastructure,
Government has finally taken the decision to privatize the airport. Cobwebs
and even rats were the frequenters in the arrival lounge at a major international
airport of India . It is the only way to improve their condition.
Tourism has been a Neglected sector in India .Though it was recognized
As a priority sector in the Seventh Five Year Plan but hardly anything was done
to promote this industry. Recently, the BJP Government has even dropped it from
the National agenda. It is true that India has yet to reach the prosperity level where
leisure activity can be included in the Priority Sector but, if solving the country's
unemployment and foreign Exchange problem are on the top of the National
agenda. The potential of this industry cannot be neglected.

The Ministry of Tourism, Government of India is the nodal agency for The
formation of national policies and programmes and for the coordination of
activities of various central and state government agencies and the private sector
for the development of Tourism .However, all the environmental regulation are
enforced by the Ministry of Environment and Forests. The national Tourism
policy envisages a very big role for all the stakeholders in the decision making
process. They are involved in the development of tourism and have contributed
substantially is sustainable Tourism in the country.
The National Policy on Tourism lays emphasis on sustainable development
of tourism. In addition, the Government has brought out a comprehensive Eco
Tourism Policy and Guidelines .All issues relevant to sustainable tourism are
covered in the policy and guidelines.
The Eco tourism policy and guidelines will ensure regulated growth of eco
tourism and nature-based tourism with its positive impact of environment
protection and community development.

There are established procedure stipulated by the Ministry of Environment

and Forest for project clearance and monitoring. There are deterrent in these
strategies to check, control or penalize damaging environmental practices on the
part of business and visitors.
 There are several Acts and laws, which ensure sustainable tourism. These
are the Wild life Protection Act 1972, the Environment(Protection) Act 1986, and
Prevention of Cruelty to Animals 1986.These do not set aside any specific area
for tourism, but such areas have to be identified by the State Government and
obtain the required approvals/relaxations. Eco-tourism policies and Guidelines
have been formulated by the Government in consultation with the industry and
are being implemented on a voluntary basis. The environment regulations are
mandatory. All the Players of the tourism industry including consumers have
hailed these codes and have shown sensitiveness to the environment.
India, with the GDP approaching $1 trillion has been put by the
International Monetary fund as one of the five biggest markets of the world. The
sense of urgency that the Indian investment climate has developed has translated
into the kind of economic indicators & figures that have kindled interest and
brought in results from even the most conservative investors, here are tremendous
opportunities for Companies participating in the tourism sector of the economy.
The hotel and tourism related industry has been declared as high priority
industry for foreign investment .it is now eligible for approval of direct
investment up to 51 % of foreign equity. Non-Resident Indian Investment Is
allowed up to 100%.
In recognition of the relationship between suppliers/users of technology
And with a view to improve technology, the government has allowed automatic
approval of foreign technology agreements in the tourism • industry subject to
certain conditions. In the past liberalization period the Department of Tourism
has cleared as many as 2964 foreign investment Proposals, from August'91to
February'95.

Norms for Automatic Approval of Foreign Direct Investment

Application for automatic approval of Foreign Equity Investment up to
51% in the hotel & tourism related industry have to be made in the prescribed
form FC (R.B.I.) "Hotels" would include restaurant, beach resort and other tourist
complexes providing accommodation and/or catering and food facilities to
tourists. The term" Tourist-related industry" would include among others the
following:
1. Travel agencies, tour operating agencies and tourist transport
operating agencies.
2. Units providing facilities for cultural adventure and wildlife
experience to tourist.
3. Surface, air and water transport facility for tourists;

Incentives for Investment

1. 3%interest subsidy to hotel project in 1 to 3 star categories onloans
sanctioned by approved financial institutions provided the projects are
outside the metre cities of Delhi, Mumbai, Kolkata and Madras.
2. 5% interest subsidies to hotels constructed in travel circuits and
destinations identified for intensive development as well as for heritage
category of hotels.
3. Capital subsidy of Rs.5 lakhs or 10% of the cost, whichever is less, for
development of any monuments/structure over 75 years old into a Heritage
Hotel.
4. Hotels, travel agents, tour operators, and other organization connected with
tourist trade are now covered under Liberalized Exchange Rate
Management System. Authorized dealers are now allowed to release
foreign exchange without the prior approval of Department of Tourism.
5. Facility to open and operate Exchange Earners Foreign Currency Account
extended to hotel & tourism related industry.25% of inward remittance in
foreign exchange can be credited to this account and utilized for specific
purposes.
6. Customs duty on specified items has been reduced for project imports,
provided the goods imported are required for initial setting up of the hotel
or for substantial expansion of the hotel.

7. Concessional rate of duty for import of equipment for adventure sports.

8. Priority consideration for approved projects in allotment of construction
materials like, cement steel etc and for telephone telex, and LPG
connections.

Proposed Incentives in the offing

1. A capital subsidy of Rs.25 lakhs or 25% of the total project cost whichever
is lower, for special project like heritage hotels and certain Locations like
mega projects.
2. Exemption of expenditure tax on heritage hotels.
3. Extending income tax deduction on 25% of profits to hotels constructed
beyond 31st March 1995 % making this deduction applicable to
restaurants, air taxi operators and other tourism related industries.
4. Removing distinction between plant and machinery and furniture & fixture
for depreciation allowance.
5. Interest subsidy up to 10% for capital-intensive projects with long gestation
like hotels & restaurant, airport development and air services.
6. A 15% interest subsidy for development of water transportation in mega
project area.
7. Export house status and benefits to tourism establishments earning foreign
exchange.
8. Duty free import of tourist transport vehicles, specified adventure sports
equipment by travel agents and tour operators and of specified equipment
for tourism related amusement parks, health & science tourism.
9. Removal of hotels from tax deduction at source by companies paying rent
of Rs. 120000.

Investment vis-à-vis govt. policy

Investment opportunities are varied, from leisure activities like water
sports centers, amusement parks, health farms to hotels, beach resorts and air
links, train circuits and ropeways.
The state government has declared its policy of promoting tourism, and
more particularly of encouraging private investment in this sector. The main
points of this policy are:
a. Welcoming of private investment in creating tourist facilities as well as
related infrastructure.
b. Encouraging the transfer of technology in tourism related industry.
c. Flexibility in policy on joint ventures, participation, and terms for Build,
Operate and Own or Transfer models.

The legal environment is also a major determinant for the industry .The
laws that govern industry are not the same in all the parts of the country. Laws
like the urban Land Ceiling Act limit the amount of land any organization can
hold and this severally limits the growth of hotel rooms in many areas of the
country. Many of the Laws that are in effect are old and archaic ,and not geared
to meet The challenges of the 21st century..

b) Economics
The tourism industry not unlike the other industries grows with the increase
in the spending of the people. The more the people spend the More the industry
grows. The spending power of the power of the people has been increasing in the
country and all over the world. Since we are concentrating on the international
tourists, the large increase in the spending power in most developed countries has
left a large amount of idle cash in their hands. This has lead to the tourism boom
the world over and India has been no exception.

There have been more people coming into the country with more cash than
ever before. This has lead to an increase in the demand for better hotels. People
who previously used to come to the country on a shoestring Budget and used to
hunt around for the cheapest accommodation now Can afford to go for luxury
hotels. This has lead to an increase in the number of hotels in the country.
However, an increase in the spending does not only limit itself to accommodation.
The increase in the spending is also evident in the number of people traveling by
air. Even The number domestic tourist traveling by air-has dramatically gone up.
To-day the world economy is transiting towards services. The global export of
services is rising faster than the export of goods. India is Unfortunately still
pursuing manufacturing with the enormous lead that the west has in
manufacturing, it is virtually impossible for India to catch up. To day, with large
number or less expensive, educated and skilled workers, India comparative
advantage lies in services, not in manufacturing. India can grab the opportunity
and curve aniche for herself by directly leapfrogging to services.
Unfortunately India has not realized the potential of the service sector, as
yet. The tourism industry's foreign earnings in India are around$3.2 billion,
tourism is the highest foreign exchange earner if we consider the fact that net
value addition in Gems, and Jewellery is less than 30% where as, in tourism it is
more than 90%.

Economic Environment
The Indian economy has grown rapidly over the past decade, with the real
GDP growth averaging some 6% annually, in part due to the continued structural
reform, including trade liberalization. Social indicators, such as poverty and
infant mortality have also improved during the last ten years. In order to achieve
further significant reduction in poverty. India is currently targeting higher real
GDP growth of between 7% and 9% (compared with 5.4% expected for 2001/02):
to meet this goal. It will be important, as stressed by the Authorities, to continue,
and even accelerate, the reform process and increase competition in the economy.
The Government estimates that annual export growth of almost 12% is required
in order to raise India share of world trade from its present level of 0.67% to a
target of 1% by 2007.

India's foreign direct investment (FDI) policy has been liberalized since its
previous review. Investment is not only allowed in a greater number of sectors
but a larger number of sectors than before are eligible for automatic investment
procedures, involving registration with the Reserve Bank; permission from the
government is still required for investment in some sectors, while foreign
investment is not permitted in a few sensitive sectors. Despite, liberalization,
India's record in attracting investment remains disappointing, with FDI
accounting for some 1% of GDP; and there appears to be no significant
improvement in FDI inflows since the last Review, suggesting perhaps that the
policy and infrastructure environment are still constraints.

Some current economic projections are as under:

• G.D.P. growth rate projection for 2003- 2004 is 7%.
• G.D.P. growth rate projection for 10th 5- year plan is 8%.
• Government considers Rs. 671009 crore for 10th 5- year plan.

YEAR G.D.P.
1994-1995 7.00
 1995-1996 7.30
1996-1997 7.50
1997-1998 5.00
1998-1999 6.80
1999-2000 6.40
2000-2001 5.80
2001-2002 5.00
2002-203 4.70

Source: “INDIAN ECONOMY” Rudar Dutt & K.P.M. Sudharam

GROSS DOMESTIC PRODUCT;

For any country G.D.P. has great impact on the economy. G.D.P. show
how the economy of that country is growing up. So, it is very crucial factor for
any industry especially to tea industry.
Though the constitution proclaims India to be a socialist country, it is in
truth a mixed economy with a strong and influential private sector. Public sector
undertakings controlled by the state are involved in many industries though the
need for disinvestments is being increasingly felt. India has a planned economy.
It is largely an agrarian economy. Rice, wheat, oilseed, cotton, jute, tea, coffee,
rubber, sugarcane and potatoes are the bulk of the produce. Livestock include
cattle, water buffalo, sheep, goats and poultry. Coastal communities and those
who live on riverbanks are often dependent on fishing for livelihood.
The major foreign exchange earner for India is textile, followed by
Information Technology. With Indian IT professionals making it big in the United
States and Indian IT companies proving to be among the best in the crop, there is
new international interest in Indian professionals. Precious and semi-precious
stones, leather products, engineering goods and chemicals are also exported.
Major trading partners include US, UK, Germany, Hong Kong, Japan and
the UAE. Major industries include steel, chemicals, food processing, steel,
transportation equipment, cement, mining, petroleum and machinery. Around
25% of the population lives below the poverty line. GDP: $2.664 trillion
(purchasing power parity) Per Capita income: $2600 (purchasing power parity)

C) Social and Culture

Tourism was always looked upon as something that always leads to the
destruction of the social fabric of a place. The more the amount of outside people
coming into a place, the more the risk of that place loosing Its identity. Prime
example is Goa. From the late 60's to the early 80's When the Hippy culture was
at its heights, Goa was a heaven for them. Here they came in the thousand and
changed the whole culture of the state. This had a ripple effect on the country.
People became cautious Especially of the international tourists. Whenever a
certain place became Famous, the example of Goa was cited to discourage the
inflow of International tourists.
Although the above my sound may discouraging , the scene is fast
Changing. Those places that have .been able to strike a balance between their own
culture and the demands of the international tourist have profited handsomely.
The example that come to mind are Kerala and Rajasthan, as discussed ahead in
the report. People are now adopting themselves to the fact that tourism pays and
it can be a major source of Income for them. Even people themselves have started
traveling. In addition, tourism as a form of recreation has really caught on. People
are willing to travel to a place that is out of way and exotic. When previously
traveling on a holiday meant going to a hill stations and beach, now people are
willing to go in for adventure tourism as well as visit places that cannot be really
be called hospitable. Now places like Leh and Lakswadeep are mentioned in the
same breath as Goa or Kashmir.

Demographic factors:
 "An individual is a core unit society " a group with similar needs create a
market for particular product. It means people or population is the most important
factor. The marketer must have to keep watech on the population size & growth
rate; education level; regional characteristics and house hold patterns.

1. Population
As Indian population growth is around 2 % 2.5% per year it provides a
good consumer base for the market player. So, as far as the future for consumers
are concerned those companies have good opportunity for future business.

Income level
As Indian level of income will increase the level of expenditure would also
be increased. And level of income increase would result in the change of life style
of people and they will shift from unbranded to branded tea.

Literacy Rate
Indian literacy rate is around 52% for the year 2001-02. It seems to be
comparatively low than countries like U.S.A. and Japan where that rate is around
90 to 95%. This factor has direct relation with the health consciousness of
particular country. As this rate in India is steadily growing up it would lead to
increase in the use of branded tea consciousness. So, it provides a very good
opportunity for the companies.

4. Life style
The shifting of customer from traditional base to materialism would lead
to change in the mindset of consumers and this is needed in tea industry. To
change the mindset of rural customers would be a huge threat for the those market
player because in rural areas most of the people purchase the unbranded & low
quality tea.
5. Population Growth
As mentioned earlier the growing population leads increase in needs and
want; which mean growing demand of all necessities and other products. World's
population is around 7.3 billions at the end of 1999 and the Indian population
crossed the 1000 million mark; It is 14% of world's total population.59% of total
labor work is engaged in agriculture activities. 18% in industry and 25% are in
service industry. 43% of the total population constitutes the labor force.

6. Education Group
The population in any society falls into five - education group.
1. Illiteracy.
2. High school drop out,
3. High school degree.
4. College degree.
5. Professional degree.
In India adult literacy rate is 5.1%.64% of total male population and 42%
of the female population is literate. Consumer awareness:
Tea is very useful for the health for the following way but most of the
customers are not aware about it so the organization has to increase the awareness
about tea in customer's mind.

KEY STATISTICS - DEMOGRAPHY PROFILE:

Area 3.287 Sq. Kms.
Population (Est Jan 1’99) 1000 mm people – over that
Population growth rate (current) `2% approximately
 Population (Rural / Urban) Urban 30%, Rural 70%
Life expectancy (years) Male – 62, Female – 63
Popular Languages Hindi, English
Religion Hindu 82%, Muslim 12%, Christians
2%, Sikhs 2% Jains 1%, others 1%
Literacy Rs. 671009.
GDP Sectoral share (FY97E) Primary (Agriculture etc.) 28.7%
Secondary (Industry etc.) 29.5%
Tertiary (Services etc.) 41.8%
GDP growth rate (2002 – 2003) 5 – 5.5%
Per capita income Rs. 13462, US$375
Exchange rate US $ 1 = Rs. 48.50.

India has much diversity in groups. Each group has distinct taste
preference, benefits and values. This distinctiveness affects their choice of
product and Behaviour as well as consumption behavior.
So marketer has to understand their culture and social diversity and respond
by way of designing their product. So social and culture evaluation helps the
marketer to target and positioned its products, and advertising in various members
for various masses.
• Religion
• Language
• Food
• Culture & Crafts
• Education
The fabric of Indian society is woven with myriad threads. The result is
multi-textured, many layered and though this diversity has fuelled some
dissension, it continues to be India's strength. India is predominantly Hindu and
it also has the world's largest population of Muslims. Sikhs, Buddhists, Jains,
Christians (Roman Catholic, Protestant and Syrian Christian), Jews and
Zoroastrians people this great land. There is phenomenal ethnic diversity too.
While the people of the north are mainly Indo-Aryan, in the south they are mostly
Dravidian. The tribal population in the northeast is of Tibeto-Burmese extract,
while the 'adivasis' of Madhya Pradesh and Gujarat are probably proto Australoid.
Language varies almost every ten miles and India's billion-strong population has
a total of 1535 recognized dialects.

One of the most marked things about Indian society is the great diversity.
This applies to religion, ethnicity and language as much as to the economic
situation. The yawning gap between the rich and the poor is bridged by a large
middle class of small businessmen, professionals, bureaucrats etc.

Most Indians actively practice their religion, and despite the creeping
westernization, most of India is socially orthodox. That means that caste
distinctions have not been forgotten, man-woman interaction may be frowned
upon, and the public display of affection is strictly no-no. The cow is sacred and
'all ye who forget that-be doomed'. The left hand, which is an indispensable tool
for Indian ablutions, is considered impure and isn't used in passing things around.

On the whole the Indians are a warm welcoming people. The guest is next
only to God and crooks and touts notwithstanding, and curious looks and probing
questions notwithstanding, you'll find that they are great hosts. Their
idiosyncrasies just make it all the more interesting; be patient and you will learn
to love the complete package.

Religion
India probably has the most religious diversity in any country. It's the
birthplace of Hinduism, Buddhism, Sikhism and Jainism. It's among the few
places to have a resident Zoroastrian population. The Syrian Christian Church is
well established in Kerala; the Basilica of Bom Jesus in Goa, old churches in
Calcutta and Delhi, synagogues in Kerala, temples from the tiny to the
tremendous, 'stupas', 'gompas' and the Bodhi tree, the Ajmer Sharif and Kaliya
Sharif in Bombay, all reflect the amazing multiplicity of religious practice in
India. Tribal people in the northeast, Madhya Pradesh and Gujarat practice forms
of nature worship. Secularism is enshrined in the Constitution.

Language
The national language of India is Hindi, which in one form or another is
spoken all over the north. In the Deccan (south India), the languages are
completely different. The states were formed on the basis of language so each has
its own. On the whole though, dialects, accents, idioms and linguistic flourishes
change every few miles. There are 18 official languages but over a thousand
recognized dialects. English is widely spoken.

Food
From DC to Dakota, Warwick to what-have-you, Indian spices are letting
off steam everywhere in the whole wide world. And you come to India and
realize......hey, there's nothing authentic about it! Every kitchen, every man,
woman, cook, chef does it different.

A meal in the north would typically constitute chapattis or rice with dal
(lentil curry) and a dish of vegetables or meat. Pappads (wafers fried or toasted
to a crisp), yoghurt and pickle are usual accompaniments. The chapatti
is a round flat unleavened bread of which you tear bits to scoop the curry.
Variations of the chapatti are paratha, poorie, bhatoora, and Tandoori naans.
Idli, dosa, vada, sambar, uppama! In the south, too, a meal centers on a base of
rice, or as in the South -Indian case, semolina preparation. The idli is a steamed
rice cake and the crisp salty pancake often stuffed with potatoes is the dosa. Eaten
alongside is the South-Indian dal -"sambhar", sour, hot, souped -up with
vegetables. The Brahmins are vegetarian, but the rest consume sour-hot fish,
mutton, and chicken with gusto. In Kerala seafood is simmered in coconut milk
and delicately Flavoured with curry leaves. Most Indians eat three meals, each
one full-fledged.

Savoury snacks like pakoras pep the evening cuppa. Anything coated in
batter (of chickpea, flour et al) and deep-fried will pass for pakora. Also, readily
available on the roadside are snacks like bhel puri (spiced up puffed rice) and
paapri chaat (wafers and boiled potato doused in curd and sauces). Vegetarians
will feel like they've come home, especially in the south. But no matter where
you are, in a plush restaurant or a roadside 'dhaba', in Kunnur or Kullu, you can
be sure of sumptuous vegetarian meals.

All along the coast and extensively in the northeast fish is consumed almost
as a staple. Both fresh water and sea fish are popular. Indians love their sweets.
There is great regional variety and among the most popular types is the Bengali
"mishti". There's also a huge variety in drinks. Besides 'chai' (tea) and coffee,
sweetened/salty churned yoghurt called lassi, the ubiquitous 'neemboo-pani' or
lemon-water, fruit juice in tetra packs and aerated drinks are readily available in
India. IMFL expands into Indian made Foreign Liquor and spans the entire range
from beer to whiskey. Some examples of local brews are 'chaang' in Arunachal,
toddy in the South and Goa's famous 'feni'.
Culture & Crafts
Music.
Much of India's classical music is devotional and a lot of that, devoted to
the flute playing god, Krishna. The North Indian Hindustani and South Indian
Carnatic streams are distinct and both have a complex 'raga' framework. Ghazals
in Urdu reflect on life and are light on the ear. Every region has a distinctive folk
tradition too. Instruments that would typically accompany Indian music are the
stringed veena, sitar, and the Indian drum: tabla or mridangam in the south.

Dance:
The legacy of dance in India is tremendous. On temple walls, on an urban
stage, in impromptu bursts by a mellow evening fire, men and women twinkle
their toes in expression of joy. The classical dances of India are numerous.
Characterized by stylized movements and elaborate costumes, these dances
communicate age-old tales of love, longing and rage. Kathakali of Kerala,
Bharatnatyam of Tamil Nadu, Kuchipudi of Andhra Pradesh, Manipuri and
Odissi from Orissa are the prominent dance forms in this country that sways to
an altogether novel beat. The robust bhangra of Punjabi men, the graceful
whirling of Rajasthani women, the gentle sway of northeastern dancers, vigorous
tribal dances, every comer has developed its own unique form.

Theatre:
There is a robust theatrical tradition. The Yakshagana, nautanki and
puppetry are ancient folk forms that live on till date. This tribe of wandering
performers is on the decline but there still are occasional performances on the
rudimentary stages of the rural areas. Rustic and coarse the flavour might be, but
the techniques are surprisingly sophisticated. There is a growing body of
contemporary work both in English and in the vernacular.
Art:
The earliest specimens of Indian painting are the ones on the walls of the
Ajanta Caves dating back to 2nd century BC. The typical 'figures in profile' art of
India came to be when the Jain manuscripts were being illustrated. The Mughals
had a huge impact on Indian art. The miniature, which had been only on palm
leaves in the northeast, came into prominence. The influence of Persian art
brought placid garden scenes, illustrations from myths, legends and history into
Indian art.
Later schools include the Bengal School of Tagore and the Company
School of European influence. More recently the opulent paintings of Raja Ravi
Varma, the paintings of M.F. Hussain, Jamini Roy and Ganesh Pyne among
others rule the art scene.

Crafts:
Word craft, handicrafts, architecture and sculpture all contribute to this rich
and varied domain. Indian literature, both in English and in the vernacular, is ever
more popular around the world. Handicrafts are as varied as the country itself.
The Mughal and colonial structures and the temple architecture across the length
and breadth of the country are testaments to the lands exciting past. Sculptures
adorn temple walls, stupas, street junctions and ancient caves. The oldest schools
are the Gandhara and the Mathura.

Movies:
The Hindi movie industry is the most prolific in the world. Based in
Bombay, hence Hollywood, this spool-spitting machine takes on the onerous
responsibility of fuelling India's prime passion. There is sheer joy in the easy
stereotypes of muscle-flexing machismo, leering villainy and leading ladies of
Hindi filmdom, but not all Hindi films are a simmering brew of action, romance,
and song and dance. There is a parallel stream of "art" cinema though it's not
nearly half as popular as the "commercial" stream.
Giving competition to the Hollywood masala film is the equally spicy south
Indian fare. Regional cinema is fairly popular in its local context and with serious
cinemagoers.
Cricket!
Oh for the love of a six-er! India grinds to a halt when the country's eleven
don their colours. In cricket-crazy Calcutta, old folk gather to trash the 'new
fangled' limited-overs format; in front of a million TV sets, four million pray for
victory (often knowing they're praying for a miracle!) tirelessly. It's a mad-mad-
mad world and in India cricket stars adorn the doors of innumerable cupboards.
Hockey, football and now the ATP tour too have a decent following.

Education
59.5% of India is literate: 70.2% males and 48.3% females. Kerala is the
model state as far as education levels are concerned boasting figures of almost
99% literacy. Higher education in India has a formidable reputation. Whether in
engineering or medicine, business management or social science education, India
universities are at par with the best in the world.

D. Technological
Technology although does not seem to be a major influence at the first
glance, still' it plays a major part in the promotion of a place. Better
communication facilities are one of the first prerequisites for growth in the inflow
of tourists. This has been made possible with technology. Better technologies in
the field of communication with cheaper costs have seen many remote and
inaccessible areas of the country get connected to the rest of the world. This
connectivity has made these places visible to the world. Better communication
means access to media. And that is very important if any place wants to be on the
world tourist map. Similarly better transportation facilities have lead to a dramatic
increase in the number of tourists visiting any particular place. The presence of
an airport and the availability of frequent flights are a great convenience to any
traveler.

FIVE FORCE ANALYSIS

Professor Michel porter of Harvard Business School has convincingly
demonstrated the state of competition in an Industry Is a composite of five
competitive forces which are as under.
1) The rivalry among competing sellers.
2) The potential entry of new competitor.
3) Competitive pressures from substitute products.
4) Supplier- seller collaboration and bargaining.
5) Seller-buyer collaboration and bargaining.
We have analysis here the five force competition in context with Tourism
industry analysis of the five force of competition, are as under relating to Tourism
Industry.

The Rivalry among Competing Sellers.

The strongest of the five competitive forces is usually the jockeying for
position and buyer favour that goes on among rival sellers of Tourism Industry.
In the tourism industry cross country rivalry is centered on price Competition &
promotional scheme. Rivalry among competitors is very high in case of tourism
industry Due to the following reason.
Reasons For High Rivalry.

1. Number of competitors increases:

There is increasing competition from developing countries within the
Asian region such as to gain a market share of the Tourism India. At the same
time well known and Singapore are launching aggressive promotion to attract
tourist particularly from Europe.

2. Growing Demand:
In a rapidly expanding tourism market, there tends to be enough business
for everybody to grow. Tourism is one of the world's fastest growing industries
at present and hold the status of the world's on 1 Industries There is currently can
estimated 400 million International travelers world wide. The figure is expected
to rise to 660 million by the end of the year 2002. The tourism Industries as a
whole is presently estimated to earn over us % 3.5 million world wide creating a
job every 2.4 second with every one of there direct job creating another indicate
ones. Spending on tourism Amounts to 5% - 10% of total consumer spending in
a year world wide.

Industries share of the total market is a pittance at 0.5% Neverthless,

tourism has the distinction of being the third largest export Industry after gems
and jewellery and rady made garments in India.

3 Low Switching cost:

The lower the cost of switching the easier it is for the rival seller to raid
another seller, customers. In case of Tourism industry, switching cost is very low.
Generally all competitors marketing their respective brand with same price and
promotional schemes which makes competition tougher and tougher.
4. Standardize service:
 Tourism is base on standardize service generally the process of producing
tourism is nearly same. But service differentiation is there so such condition
increases the Rivalry among competing sellers.
5. Price cuts and competitive weapons:
As number of competitors Increases all marketer force to reduce their price
and have the increase promotional activities. Major players and new entrants
marketing their respective brands with low price and doing promotion to
increases the usage.

ENTRY BARRIERS:
1. Huge Investment:
If the company wants to launch at National level them its requires the huge
Investment so it is not easy for new companies to come in sector. So the entry is
not so easy for new companies. High Amount at capital is required to produce
qualitative product. The cost of other Infrastructure facilities is also to be
considered by new entrants so, capital requirement is also one of the entry
barriers.
2. Economics of Scale:
Economies of sale are the main barriers to entry in tourism Industry bases
they force potential competitors either to enter on large scale or to accept cost
advantage. If new entrant enters with large scale it may not capture the market in
proportion of supply. If new entrant accept cost disadvantage it may not survive
in tough competition.

3. Cost and Resource disadvantages:

Existing firms may have cost and resources advantages not available to
potential entrants. These advantages can include partnerships with the best and
cheapest suppliers of services.
4. Learning and Experience Curve Effects:
 When lower unit costs are partly or mostly a results of experience in
producing the product and other learning curve benefits new entrants face a
potentially significant cost disadvantage competing against existing firms with
more accumulated know how.

5. Regulatory Policies:
Government agencies are limit or ever bar entry by requiring licenses and
permits stringent government mandate safety regulations and environmental
pollution standards are entry barrier because they raise entry costs.

Competitive Pressures From Substitute Products.

Tourism Industry given entertainment to the tourist and also provide some.
Knowledge of that place as per that we can says, media, Hollywood, and all type
of entertainment industry are the substitute of the tourism industry. But we can't
say that they are close substitute of industry. Because they are different thing than
tourism.
Thus, tourism industries has no problem for the close substitute because
they are not other product or service which is use as substitute of tourism so the
tourism industry is being fearless from the substitute.

Supplier Seller Collaboration and Bargaining:

Whether supplier seller relationship represents a strong or weak
competitive force depends on whether supplier can exercise sufficient bargaining
power to influence the terms and condition of supply and the extent of supplier.
Seller collaboration in the tourism industry.

Supplier are likewise relegated to a weak bargaining position whenever

there are good substitutes for the item they provide and buyers find it neither
costly nor difficult to switch their purchases to the suppliers of alternative items.
Suppliers also tend to have less leverage to bargaining over price and other terms
of sale when the company they are supplying is a major customer.

Seller - Buyer Collaboration and Bargaining

An industry's customers constantly look for reduced prices, improved
product quality and added services and thus can affect competition within an
industry. Buyers play individual suppliers against one another in their efforts to
obtain these and other concessions. This is certain the case with some large
retailers in their dealings with many of their suppliers.

Reasons:
1. Large number of buyers
The numbers of buyers are large so it require mass promotional schemes
and consumers are located in different geographic areas having different culture.
They may not generate sufficient bargaining power collectively.

2. Importance of the Service:

Tourism is very necessary for its regular customer, it decrease the
bargaining power of the buyer.

13. ROLE OF SUPPORT INDUSTRIES

13.1 Airlines
Airports are the primary infrastructure facility that a country has to offer to
the international tourism. It would surprising to note that renowned tourists
destinations like Jaipur and Goa do not have an international airport. Foreign
quests, who constitute more than 60% of the tourists destined for these cities,
currently have to travel via Mumbai, unless they are ready to charter a flight. This
makes things cumbersome and time consuming, thus discouraging many time
conscious tourists from visiting these places. Similar is the case of cities like
Agra, Udaipur and Varanasi where foreign tourists account for approximately
50% of the total tourist arrival.
A Close Linkage in another four years it is assumed that the number of
International travelers arriving into India would be 5 million. The question posed
before the ministers, business delegation and individual promoters by overseas
travel operators is 'how reliable and stable is the domestic network of air services
and how easy is the seat availability on flights to India from the existing and
potential markets.
An international business traveler plan his or her itinerary well in advance
and would like to be assured that there would not be any last minute changes. As
many as 97% of the foreign visitors travel by air making civil aviation a prime
influence on the course of tourism growth. This makes both these sectors far too
interdependent.
The liberalization of civil aviation policies in India marked by licensing of
private airlines to operate on routes served for 40 years by the state owned carriers
was prompted by the demands of tourism. According to the World Tourism
Organization of which India is the member, travel and tourism account for 12%
of consumer spending with air travel about a quarter of this expenditure. Despite
the synergies, there can be conflicts between aviation and tourism policies as for
instance over the question of protection of a national airline in the context of
growing tourist traffic. The keenness shown by air carriers of several countries to
operator flights to India or to increase frequencies for their existing services only
heightens the potential of the India market. Tourism - related civil aviation
development is not limited to licensing of operators for serving short - haul routes.
Airport development, up gradation and expansion of services, replacements and
renewals are part of infrastructure requirements.
The economic objectives of tourism policies involve the growth of national
incomes, employment, foreign exchange earnings, regional development and
government tax revenues. In each of these aspects the civil aviation sector has a
pivotal role. Precise evaluation of the economic benefits from increased tourism
arising from the adoption of more liberal aviation policies will be possible if the
database is strengthened. Doubtlessly there is a need to increase international seat
capacity to India. The largest of 5 million is far too modest for a country with
wondrous tourism product and capacity expansion will have to be provided for.
Air India has been planning to induce new generation medium capacity long-
range aircraft into its existing fleet.
At the same time, principal domestic carrier, the Indian Airlines has several
incentives for visitors from overseas. On discounted dollar fares the traveler can
journey to any part of the country by IA's fleet or aircraft. No less than 25% of
the seats on all domestic services are reserved for foreign tourists.
Airport and airspace congestion, passenger facilitation, environmental
issues and constraints of resources are problems affecting the tourism and
aviation sector. There are likely to aggravate as increased leisure time and
disposable income increase of the people the world over. Air transport has
contributed most to business travel and to conference tourism as well.

13.2 Hotel Industry

Hotels form one of the most important support service that affect the arrival
of tourist to a country. The major players in the industry are Indian Hotels
Company Ltd (IHCL) operating under the Taj brand, the Oberoi, Oriental Hotels,
Hotel Leela Venture and the Ashoka chain of hotels, owned and operated by the
Indian Tourism Development Corporation (ITDC). The British made the
plantation of a western concept in the eastern environment initially. The Taj
Mahal Hotel built by Jameshedji Nauroji Tata in Bombay in 1903 is the only
exception since till dawn of the independence by and large almost all the hotels
in India were owned and managed by British or Swiss. The hotel industry
particularly in the Indian perspective has often considered marketing as a
tantamount of selling. It is the high time that the private and public sector realizes
the relevance of economic hotels for burgeoning Middle Class. In addition it is
also important that the big hotel chains think about hotel accommodation facilities
albeit for the low - income group of the Indian society. This is essential because
the urban population is increasing fast. We find a profitable opportunity there
which focuses on development of new economic hotels.
There are around 1000 classified hotels and the total room availability is
pegged at 60,000 rooms. Hotels are classified into six categories according to the
star rating assigned by the Department of Tourism. These range from one star to
five star deluxe depending upon size and amenities. About 30% of the rooms fall
under the 5- star or 5- star deluxe categories.
The hotel should provide facilities like reception, cash and information
counter attended by well qualified, trained and experienced personal, conferences
in the form of one or more conference rooms/banquet halls and private dinning
rooms. There should be a recognized travel counter, money changing and safe
deposit facilities, luggage room and medicines on the premises. The hotel should
offer both International and Indian Cuisine and the food and beverage service
should be highest standers. The hotel staff should be well qualified and should be
able to understand and speak English. There should be provision of laundry and
dry cleaning.
With a view to maintaining standards and enforcing control, the
Department of Tourism Ministry of Tourism and Civil Aviation,
Government of India has developed a system of categorizing the available
accommodation as per certain criteria. Accordingly, the hotels are either
approved or unapproved.

The approved hotels are found of international standard and normally the
foreign tourists prefer to stay in that category of hotels. This is due to the fact that
the approved hotels have the stamp of official recognition. Approval in itself
simplifies the task of promotion. The hotels professionals bear the responsibility
of identifying the emerging segments.
Of late we a new trend even in India condition because women have been
found staying in hotels or eating in hotel restaurants. There are women executives
and women going on holidays in all age group; albeit without accommodating
men. A number of married women have been found taking an extra holiday on
their own. Middle- aged, divorce or single women have also been found staying
in hotels. It is against this background that we find women segment emerging as
an important segment for the hotel business.
It is natural that we find a difference in the industry in the intensity of
both the categorizes of tourists.
1) Domestic Tourists: In the group of domestic tourists, the different
categorizes are pilgrims visiting the sacred places, students on educational
tours, officials on deputations, political representatives, film stars on
location shooting. Knowledge seekers on developing their credentials,
sportsmen playing national games. The domestic 'tourists stay in hotels
with a different motive. We find a change in the level of domestic users.
Generally the domestic customers pay less attention on value and more on
price. A majority of the domestic tourists are found price sensitive and
therefore the hoteliers are supposed to make pricing decisions
motivational.

2) Foreign tourists: In the group of foreign tourists, we find political

representatives on peace mission, trade representatives on business
promotion, educationists, sportsmen, culture representatives, film stars,
pilgrims, etc. These categorizes of foreign tourists visit hotel with diverse
aims and objectives. They normally prefer to stay in the classified hotels
where the services are found standardized. We also find cases where
foreigners stay even in the unclassified hotels. To be more specific the
 existing world wide economic depression has made even the foreign
tourists sensitive to price and this makes it significant that policy makers
and the senior executives assign due weightage to this new development.

13.3 Railways
Railway was established in 1853 and is now the 150 year of existence. The
railway is the nation's lifeline and prime carrier of men and material. It is the
world's largest network under single management with a travel route of 62500
kms. 7000 stations and provides employment to 1.8 million people.

Rail Tourism
To develop rail tourism the Indian Railways have come up with various
methods and innovative ways to promote travel by rail. They are:
 Launching of eight new exclusive luxury tourist trains on the Palace on
heels pattern to operate on popular tourist circuits.
 Hotel infrastructure at 100 railway stations in places of tourist interest.
 Discover India Indrail passes for use from half-a-day to 90 days.
 Network of GSAs around the world.
 Superfast inter-city Rajdhanis and day return Shatabdi trains.
 Rail holiday package tours.

Super Luxury Tourist Trains.

The Indian railway has identified the launching of eight super luxury trains
designed like 5- star hotels on wheels. Operating on a 7-night itinerary traveling
between 2000 to 3000 kms each and covering 7 major destinations having the
theme of traveling by night and sightseeing by day These trains will be fully air-
conditioned with 14 saloons, 2 dining cars, a Lounge-cum-bar, a baggage car, a
staff car and 2 power cars.
Discover India through Indrail Pass.
To explore the splendors of India, the railways have designed the Indrail
pass. Passes can be purchased by foreign nationals and nonresident Indians in US
dollars, pound sterling and other convertible foreign, currency in cash, travelers
cheque and credit cards!) These passes are sold by GSAs (General Sales Agents)
abroad. In India they are sold at the International Tourist Bureau at New Delhi
railway station and 20 other major railway stations.

C International Tourism Bureau

The International Tourism Bureau deals with foreign tourists intending to
Travel by rail in India. It provides assistance to foreign tourists and NRIs Related
to bookings, reservations, itinerary planning and other inquiries through its
tourism guides and staff conversant with foreign languages.) Indrail passes are
issued to foreign tourists enabling them to travel as they like from any station to
the destination of their choice to any point by rail within the period of validity of
the passes.
The ITB arranges accommodation in retiring rooms and Rail Yatra Nowise
as also bedrolls in trains on demand.
Information can also be obtained from Agra, Ahmedabad, Aurangabad,
Bangalore, Mumbai, Kolkata, Gorakhpur, Jaipur, Jodhpur, Jaisalmer, Chennai,
Puttaparthi, Rameshwaram, Secundrabad, Trivandrum, Vadodara, Vasco-da-
Gama, Vijaywada and Varanasi.
100- hotel Project
Indian railways have formulated a mega project to set up 100 railway hotel)
at stations of tourist importance to provide the infrastructure inputs needed. For
implementing the tourism action plan of the

government to attract 5 million tourist by 2000 A.D. this scheme has a potential
of adding 10000 hotel rooms in the organized sector in the country, attracting an
investment pf Rs. 10000 crores on infrastructure development and generating
direct employment for 30000 people and indirect for twice the number of people
in related activities. This scheme has been planned in the joint sector with
organization in the private and public sectors.
Railways to set up Catering and Tourism Corporation
As part of its promotional campaign of tourism the government has
proposed to set up the Railway Catering and Tourism Corporation (IRCTC)r\The
corporation is expected to provide necessary control and direction to the catering
services on train as well as stations.
13.4 Road
Airports being a weak links in Indian tourism, tourists are forced to use
Roads. More than80% of the tourists has to use road network but the deplorable
road conditions in India do not make the traveling easier. The major factor that
hampers the development of road sector is the government control over all the
road properties. Internationally, all the major cities within the country are
connected with six lane highways. But in India, even the four metros are not well
connected. Thus, the basic infrastructure to support the tourism industry is
missing.
A developed country possesses excellent roads since this opens for them
new vistas of development. Contrary to it in a backward country, the road Present
a very gloomy picture. The roads strengthen our infrastructural Base and so
become instrumental in activating the process of development. As compared to
other forms of transport, the road transport is found cheaper of course in the
Indian perspective, the Indian Railways have been offering economic services to
the users which are found cheaper than the road transport. The operational cost
of railways, steam-ship or airplanes. Railways or steamship or airplane can be
used by anyone even without making a direct payment. This clarifies the
significance of road transport in today's perspective.
Selective up gradation of road making equipments and construction
Practices can achieve high standards of road quality demanded by the modern
generation of road vehicles .It is found that large programmes of road
construction have an adverse effect on the environment or ecosystem. Prevention
of ribbon development, provision of wide-side amenities, landscaping and
drainage and the landslide areas need an intensive care. Maintenance through
normal repairs, periodic renewals and rehabilitations divert a close attention. The
thrust towards the modernization of the road sector requires adequate backup in
the form computerizing, introduction of Management Information System and
planning and monitoring agencies. The national Highways gravitate a close
attention because NH though only two percent of length of the total road system,
they carry one-third of the total road traffic.

13.5 Telecommunications
From the plan old telephone services to multimedia, the telecom
revolution, in its rapid pace, has enveloped the tourism sector as any other
economic activity. The use of hands free tools gifted by the telecom industry has
grown phenomenally in the tourism sector to the extent that any establishment
that fails to be one up loses to its competitors. Even the plain old telephone has
its uses in marketing as shown in the London survey of eleven airways using the
instrument for special service. The Survey ranked British Airways number one in
this facilitation/A caller could get not only all information about flights,
connections and seat Availability but also a whole lot of information useful to the
traveler like Car rentals, hotel bookings, theatre shows and museum timings The
survey ranked Air India the last of the eleven-a call to its service got a taped
message directing that the query be addressed another number.
(High incidence of internet access is illustrative of another instance of the
Great impact telecommunications) .The greatly publicized information super-
highway is accessible anyone with time, interest and curiosity. With curiosity.
With customers becoming ever more demanding hospitality services too offer a
range of services by internet. Travel agents and airline offices are increasingly
linked by the electronic information distribution system like Galileo, Abacus,
Sitar, etc.
The electronic card door keys have become common in major hotels in all
big cities. Besides, all executive suites have facilities to dispatch and Receive fax
messages ensuring complete privacy. Another travel aid is the satellite phone.
Pioneered by the London based International Mobile Satellite Organization-
Immersed, these instruments are to be installed on Long distance express and mail
trains of Indian Railways. This follows the success of satellite telephones were
experimentally fitted to two Rajdhani Express trains in 1995.This has become so
popular that it has been decided to equip all the eleven Rajdhani trains with
satellite phones as well as any new train that enters the service. Hospitality
services are not the only beneficiaries of these aids but also at times the cause of
their creation. Since there has been telecom revolution today tourism's growth is
greatly conditioned by the web and the net.

13.6 Travel agents and tour operators Travel Agent

A travel industry is found to be uncoordinated people trying to achieve a
coordinated result. A travel agent is one who acts on behalf of a principal, i.e. the
original provider of the tourism services, such as Hotel Company, airline, tour
operator a shipping company. A travel agency is also called a manufacturing of
tourist product, i.e. an inclusive of packaged tour.

Tour operator
A tour operator is one who buys the individual elements in the travel
product on his own account and combines them in such a way that he is selling
the package of travel, the tour to his clients. A tour operator bears the
responsibility of delivering the services.)He creates his own packages by buying
or reserving necessary supply elements and often retails through travel agents,
their own offices or by direct mail via booking form in brochure or by direct
enquiries from consumers.
Travel agents and tour operators form the backbone of the industry. They
play an important role in promoting the country as a tourist destination. An
example, City Cross Travels Private Limited, Mumbai is promoting tourism in
Jammu and Kashmir despite the violence that place some times ago. Similarly
other travel agencies are also trying to project a peaceful picture of India abroad.
The travel agencies provide package that lure the foreign tourists towards our
country. These packaged tours extract the best out of places and gives a foreign
tourist a feel of the rich cultural diversity of our country.
This business is competitive. The success depends on the prices, which
have to be the lowest since holidays have become a standardized product. This is
particularly true in case of a large number of holiday makers seeking the three
S's- sun, sea and sand. A particular destination for e.g. In the case of beach holiday
is not so important for the customer to as its Price if it gives hi value for his
money. If he finds that it is overpriced he Substitutes for another destination,
which offers the same product for lower price.
As regards to this it, also coupled with increasing competition from
domestic competitors, it becomes very essential for the travel operator to market
itself.

Free for a price:

With profit margins coming down package tour companies have to ladle
out unbelievable offers to attract tourists that these freebies are laden with hidden
costs is different thing.
Market leader SOTC virtually triggered off a war of freebies when it
advertised its offer of free air tickets on its tours to Europe and U.S. Other travel
biggies like Thomas Cook and Cox & Kings immediately whipped up almost
identical offers. Sharply increasing competition has ensured lower margins which
are down from20% three years ago to a mere 5% now, forcing companies to come
up with newer marketing gimmicks evry season.
To overcome the costs, many companies avoid expensive-but interesting
cities like Paris, Rome and London, heading instead for cheaper alternatives like
Brussels. Besides the best sightseeing is usually kept optional and tourist end up
footing the bill. The selection of cheaper hotels outside the city and fewer meals
further help cut these costs on tours.

Travel now, pay later

In the past couple of years holidays have been increasingly packaged like
any other consumer durable. The most effective of these is the travel now and pay
later scheme. For example today an 8 day tour in Europe from Kuoni can cost 24
quoted monthly installments (EMI'S) of Rs. 2195 while and 8 days trip to
Thailand will set you back by 18 EMI'S of Rs. 1690 each. Thanks to this, travel
majors have seen their business grow.
The major segment targeted here comprises of the families with annual
income of Rs. 51 Lakh. Also, as our report discusses there is a high voltage action
in the tour business with plant of possible mergers in the pipeline. That will mean
better economies in operations and lower prices.

The desi touch

The emphasis by travel majors is to project a much localized identity and
rather than sing about their foreign affiliation, to actually invest in a local identity.
So we have Thomas cook using Taisa Vasool in its advertisements and Cox &
Kings promoting a 'Bharat Dekho' and 'Duniya Dekho' with Raj Travels in any
case biting into diverse makets including those of their foreign competitors
promoting an absolute local flavor and attention to local taste buds. The 'Bharat
Dekho' and 'Duniya Dekho1 are therefore all set to become brands in their own
right with huge amounts of money being pumped in to establish them a brand
names. Presently Cox & Kings and Thomas Cook may well face the problem of
the Phoren Tag and strongly phone for the 'Paisa Vasool' and Duniya Dekho' to
buy them out.

Service - the key to sustenance

It appears to be the unanimous feed back from most travel agents that
nothing will beat the service factor, aptly aided by technology of course. It will
definitely read the motto of toe Olympics in travel to...faster, higher.... Better!
Now, more than ever service will be the key component. Battle will need to be
fought or lost at the front desk. No more does the consumer have time for queues
to get a patient hearing. He will need a smile and a laugh and much more, a
veritable dream he can go home with. Destination travel, as the average Indian is
waking up to is all about the experience. We sell him a dream and we will need
to fulfill every aspect of his dream to discover the repeat customer. The
experience at the front desk is where the battles between big and small will be
fought, and won or lost, and therein lies our new horizon a new frontier - our great
opportunity.

14. Tourism Finance Corporation of India

14.1 Incorporation and Commencement of business
TFCI was incorporated on 2711 January, 1989 as a public limited company
under the Companies Act 1956. It became operational on lsi February, 1989 on
the receipt of Certificate of Commencement of business from the Registrar of
Companies.

14.2 Share Capital

The authorized share capital of TFCI is Rs. 100 crores of which the initial
paid-up capital was Rs. 50 Crores. TFCI came out with a public issue of equity
share capital of Rs. 17 Crores at a premium of Rs. 20 per share. This issue was
oversubscribed by 10 times. TFCI has over one lakhs shareholders.

14.3 Business of the Company

TFCI provides financial assistance to enterprises for setting up and
development of tourism related activities, facilities and services including hotels,
restaurants, holiday resorts, motels, highway facilities, amusement parks and
complexes for entertainment,. education and sports, safari parks, ropeway,
cultural center, convention halls, all forms of transport industry, air taxis travel
and tour operating agencies, tourist emporia, sports facilities, etc. TFCI also
formulates guidelines and policies related to financing of such projects i.e. it plays
a developmental role the overall policies of the government.

14.4 Types of Financial Assistance for Tourism Projects

TFCI provides financial assistance of new, expansion, diversification,
modernization projects in tourism industry and other related activities in the
following forms:
a. Rupee Loans
b. Underwriting of public issue of shares/debentures and direct
subscription of such securities.
c. Guarantee for deferred payments and credits raised in India
& abroad.
d. Merchant Banking and Advisory Services.
TFCI is operating similar lines as IDBI, IFCI and ICICI, TFCI has been
included as a member in the consortium of projects of all India public financial
and investment institutions under Project Financing Participation Scheme
(PFPS). It has also been declared a public financial institution under section 4A
of the companies act 1956 vide notification number S.O. 7. (E) Dated 3rd January,
1990 issued by the Ministry of Industry, Department of Company Affairs, TFCI
provides financial assistance for projects in tourism industry where the total
project cost is over 3 crores, in consortium with other financial institutions like
IFCI, ICICI, and IDBI. Regarding projects with capital cost between Rs. 1 Crore
and Rs. 3 Crores, TF1C Finances the gap after taking into account financial
assistance available from the State level institutions. Rate of interest charged by
TFCI is equivalent to the other financial institutions. Heritage hotels are given
interest subsidy at the rate of 5%

14.5 Norms of Assistance

A flexible view is taken in to account with regards to the norms for
financial assistance regarding promoter's contribution, debt-equity ratio,
moratorium period and repayment period depending upon the merits and
circumstances in each case. The general norms are as under:

A Promoters' contribution :
The normal promoters' contribution for new product is 30% Relaxations is
allowed in respect of large projects involving capital cost exceeding Rs. 100
crores.

B Debt Equity Ratio :

The general norm sis 1.5:1 marginal relaxation depending upon the nature
of the project and its capacity to service loans and the share capital.

C Moratorium period and Repayment:

 This depends upon period of completion of the project and stabilization of
operations as well as the cash flow generation estimated to be available for debt-
servicing purposes. Currency loan would be for 8-12 years including the
moratorium period. With respect to transport sector, restaurants and similar
projects the repayment period would be within 5 years.

D Land Cost:
TFCI has been adopting a norm of 10-15 percent of the project cost of land
whichever is lower, in respect of land for hotel projects, subject to the capacity of
the project to service the investment including cost of land. In exceptional cases
a relaxation beyond 15% might be considered base on the merits and
circumstances of the case.

E Operations of TFCI:
TFCI has received an overwhelming response from the tourism industry.
The cumulative sanction of assistance by TFCI in the last 6 years ending 31st
March, 1995 amounted to Rs. 755 Crores for 246 projects including projects
promoted by entrepreneurs entering tourism industry for the first time.
Cumulative addition in hotel rooms as a direct result of assistance by TFCI
amounted to 15246 rooms and the total investment amounted to Rs. 2425 Crores.
TFCI has also assisted in non-conventional projects like amusement parks, sports
facilities, car rental, taxis, ferries, ropeways, airport facilitation centre, training
institutes for hotel personnel, etc.

14.6 Technological Environment

Technology related issue is already incorporated in the eco-tourism and
Environment Policies of the Government.
Hotels and other tourist establishments follow the guidelines framed by the
Ministry of Tourism. Information is disseminated through brochures, computer
media, and workshops for tour operators, travel agents and other concerned
parties.
Mapping and inventorying of natural resources and ecosystem
characteristics in tourist areas is an ongoing activity of the Government. Potential
users of information have to approach the concerned agencies. Information is also
available on the internet.
The Ministry of Tourism, Government of India is the nodal agency for the
formulation of national policies and programmes and for the coordination of
activities of various central and state government agencies and the private sector
for development of Tourism. However, all the environmental regulations are
enforced by the Ministry of Environment and Forests.
The National Tourism Policy envisages a very big role for all the
stakeholders in the decision making process. They are involved in the
development of tourism and have contributed substantially I sustainable tourism
in the country.

The National Policy on Tourism lays emphasis on sustainable development of

tourism. In addition, the Government has brought out a comprehensive Eco

Tourism policy and Guidelines. All issues relevant to sustainable tourism are
covered in the policy and guidelines. The Eco tourism policy and guidelines will
ensure regulated growth of eco tourism and nature-based tourism with its positive
impacts of environment protection and community development.

There are established procedures stipulated by the Ministry of

Environment and Forests for project clearance and monitoring. There are
deterrents in these strategies to check, control or penalize damaging
environmental practices on the part of businesses and visitors.
 There are several Acts and laws, which ensure sustainable tourism. These
are the wild life protection Act 1972, the Environment (Protection) Act 1986
and Prevention of Cruelty to Animals Act 1986. These do not set aside any
specific an area for tourism, but such areas have to be identified by the state
Governments and obtain the required approvals / relaxations.

Eco Tourism Policies and Guidelines have been formulated by the

Government in consultation with is industry and are being implemented on
a voluntary basis. The environment regulations are mandatory. All the players of
the tourism industry including consumers have hailed these codes and have
shown sensitiveness to the environment.
India, with GDP approaching $ 1 trillion has been put by the International
Monetary Fund as one of the five biggest markets of the world. The sense of
urgency that the Indian investment climate has developed has translated into kind
of economic indicators & figures that have kindled interest and brought in results
from even the most conservative investors. There are tremendous opportunities
for Companies participating in the tourism sector of the economy.
The Hotel and Tourism related industry has been declared as a high priority
industry for foreign investment. It is now eligible for approval of direct
investment up to 51% of foreign equity. Non-Resident Indian Investment is
allowed up to 100%.
In recognition of the relationship between suppliers/users of technology
and with a view to improve technology, the government has allowed automatic
approval of foreign technology agreements in the tourism industry subject to
certain conditions. In the post liberalization period the department of Tourism has
cleared as many as 2964 foreign investment proposals, from August '91 to
February '95.

14.7 Norms for Automatic Approval of Foreign Direct Investment

 Applications for automatic approval of Foreign Equity Investment up to
51% in the hotel & tourism related industry have to be made in the prescribed
form FC (RBI). "Hotels" would include restaurants, beach resorts and other
tourist complexes providing accommodation and /or catering and food facilities
to tourists. The term "Tourism-related Industry" would include among others the
following:
1. Travel agencies, tour operating agencies and tourist transport operation
agencies.
2. Units providing facilities for cultural, adventure and wildlife experience to
tourists.
3. Surface, air and water transport facilities for tourists;

14.8 Incentives for investment

1. 3% interest subsidy to hotel projects in 1 to 3 star categories on loans
sanctioned by approved financial institutions provided the projects are
outside the metro cities of Delhi, Mumbai, Kolkata and Madras.
2. 5% interest subsidy to hotels constructed in travel circuits and destinations
identified for intensive development, as well as for heritage category of
hotels.
3. Capital subsidy of Rs. 5 Lakhs or 10% of the cost, whichever is less, for
development of any monument/structure over 75 years old into a Heritage
Hotel.
4. Hotels, travel agents, tour operators, and other organizations connected
with tourist trade are now covered under Liberalized Exchange Rate
Management System. Authorized dealers are now allowed to release
foreign exchange without the prior approval of Department of Tourism.
5. Facility to open and operate Exchange Earners Foreign Currency Account
extended to hotel & tourism related industry. 25% of inward remittances
in foreign exchange can be credited to this account and utilized for
 specified purposes.
6. Customs duty on specified items has been reduced for project imports,
provided the goods imported are required for initial setting up of the hotel
or for substantial expansion of the hotel.
7. Concessional rate of duty for import of equipment for Adventure sports.
8. Priority consideration for approved projects in allotment of construction
materials like cement, steel etc and for telephone, telex, and LPG
connections.

Proposed incentives in the offing

1. A capital subsidy of Rs. 25 Lakh or 25% of the total project cost, whichever
is lower, for special projects like heritage hotels and certain locations like
mega projects.
2. Exemption of expenditure tax to heritage hotels.
3. Extending income tax deduction on 25% of profits to hotels constructed
beyond 31st March 1995 & making this deduction applicable to
restaurants, air taxi operators and other tourism related industries.
4. Removing distinction between plant & machinery and furniture & fixture
for deprecation allowance.
5. Interest subsidy up to 10% for capital-intensive projects with long gestation
like hotels & restaurants, airport development and air services.
6. 15% interest subsidy for development of water transportation in mega
project areas.

7. Export house status and benefits to tourism establishments earning foreign

exchange.
8. Duty free import of tourist transport vehicles, specified adventure sports
equipment by travel agents and tour operators and of specified equipment
for tourism related amusement parks, health & science tourism.
9. Removal of hotels from tax deduction at source by companies paying rent
of Rs. 120000.

14.9 Investment vis-à-vis govt. policy

Investment opportunities are varied, from leisure activities like water
sports centers, amusement parks, and health farms to hotels, beach resorts and air
links, train circuits and ropeways.
The state government has declared its policy of promoting tourism, and
particularly of encouraging private investment in this sector. The main points of
this policy are:
1. Welcoming of private investment in creating tourist facilities as well as
related infrastructure.
2. Encouraging the transfer of technology in tourism related industry.
3. Flexibility in policy on joint ventures participation, and terms for Build,
Operate and Own or Transfer models.

15. Impact of Budget on tourism

Tourism has been given rightful place L. Krishna Kumar, Vice President-
Finance, Indian Hotels Company says;
• The Government has followed up its promise in the budget speech last year
by giving tourism its rightful place along with other industries. The budget
will have an extremely favorable impact on the hotel industry, said L.
Krishna Kumar, Vice President Finance, Indian Hotels Company. He
further added that, "Specific proposals, which will benefit the industry
include.

• Withdrawal of Expenditure Tax. This will have the effect of improving

the demand and net realization for the hotel industry. It is a major step taken
by the Government in rationalizing taxes on the tourism sector.
• Reduction in customs Duty to 5% and abolition of countervailing duty
for hotel projects This will help to reduce project costs and improve returns
from projects.
• Extension of relief u/s 10(23)(g) to lenders for hotel projects
• Since lenders will get tax exemption on income from lending to hotel
projects, this will have the effect of lowering borrowing costs for hotel
companies.
• Extension of eligibility to set off past losses in the case of amalgamation
of hotel companies u/s 72A of IT Act: This benefit, which has been
available to other industries, has now been extended to hotel projects. The
amendment will help hotel companies to restructure their operations and
improve viability. The budget speech also referred to exemption from
Service Tax in the case of hotel operations. While the exact nature of this
proposal is not clear, exemption from Service Tax presently applicable
could also benefit the hotel industry.
The Union budget has set the right tone for meeting many of the
demands of the tourism industry. This has to be supplemented with other
policy initiatives such as streamlining entry procedures for tourists and
upgrading airport and other travel related infrastructure.
The budget includes proposals for upgrading major airport and
privatization of certain other airports. This should be followed up with a
liberal open skies policy.

15.1 Impact of Budget on Hotels

The Finance Minister has given an impetus to the tourism and the hotel
sector. In order to provide further fiscal relief to the tourism sector the following
measures have been adopted:-
• Expenditure tax on hotels will, henceforth, apply only to room charges,
and will be payable only where such charges are Rs. 3,000 or more per day, as
against the existing threshold of Rs. 2000 per day.
• The deduction available under section 80HHD of the income-tax Act
In respect of foreign exchange earnings of hotels or tour operators will be
enhanced to bring it in line with the deduction available to exporters under section
80 HHC.
• A deduction of 50% of the profits earned by units setting up and
operating large convention canters will be allowed for 5 years under section 80-
IB.
• By the recent spate of events. In December 2001, service tax on the services
provided by hotels had been exempted. This exemption expires on 31st March
2002, which has been extended for one more year upto 31st March 2003.

15.2 Impact of Budget on Airlines

Propelling the tourism industry will harmonize with the expansion in the
hotel industry. The industry found good mention in the budget .with the following
proposals:
The plan outlay for tourism has been increased by 50 per cent to Rs. 225
crores for 2002-2003. Private sector management and investment inn the
development of airport infrastructure through long term leases have been
emphasized. Up gradation of the 4 metropolitan airports to international standards
has already been announced. Modalities for inviting offers have been finalized
and the lease process is expected to be completed in 2002-2003.
Private sector participation in Greenfield airports will be encouraged through a
package of concessions:
• Availability of land and related infrastructure from the State Governments.
• Exemption from levy of Inland Air Travel Ta (IATT) and Foreign Travel
Tax (FIT) on departing passengers for projects located in States that charge
sales that charge sales tax on Aviation Turbine Fuel (ATF) at Central Sales
 Tax (CST) rate.
• Charging of Advance Development Fee (ADF) by way of additional
Passenger Service Fee (PSF) at the existing airports for help in financing
of the Greenfield airport.
• Levy of User Development Fee (UDF) at the new airport.
• Financial assistance/equity participation by Airports Authority of India.
• In order to encourage development of world class infrastructure facilities,
the customs duty on specified equipment for ports and airports has been
reduced to 10% the proposed new airports in Bangalore and Hyderabad
will benefit from these concessions. In pursuit of the government's
disinvestment plan, disinvestment in the Hotel Corporation of Indian (HCI)
and International Tourism Development Corporation (ITDC) is expected
this year.
In order to promote air travel, in addition to the exemption of inland air
travel tax within the North East States, the exemption has also been extended on
air travel to and from North East States.

15.3 Impact of Railway budget on tourism industry.

The Railways has also done its bit to promote tourism in the country. In the
FY 2001 Budget the Minister for Railways made the following announcements.
• Indian Railway Catering & Tourism Corporation Limited incorporated
and expected to become functional by lsl April, 2000.
• Inspection carriages, popularly called 'saloons' to be increasingly used for
commercial purpose and tourism; wide publicity to be given to availability
of such saloons to public on payment basis.
• New 'Place on Wheels' type of train as joint effort between Railways and
Government of Maharashtra to be introduced on route from Mumbai -
Ratnagiri - Sindhudurg - Goa -Kolhapur - Pune - Ajanta Ellora - Nasik to
Mumbai.
Tourism industry seeks direct - tax sops in budget
The tourism industry is looking forward at direct tax incentives from the
for the coming budget. The recommendations made by the industry include
consideration of foreign exchange earned through tourism to be treated as deemed
export, introduction of investment allowance for the tourism sector and creation
of foreign currency fluctuation reserve.
The travel and tourism industry has also requested the exemption of the 5
percent service tax for at least five years and to cap the aggregate indirect tax
impact at 15 percent Jehangir N. Katgara, president of The Travel Agents
Association of India Said, "The tourism industry has faced a rough weather in the
recent past. While a recovery is underway, it would take some time to wipe out
the losses. At this juncture, we are looking forward to a rationalization of taxes
and additional tax incentives to the tourism sector the government to make Indian
tourism globally competitive.
At a time when foreign countries like Malaysia, Thailand and the UAE are
making money hand over fist by promoting tourism, India, with far superior
inherent advantages should not let go the opportunity," Katgara added.
According to a study conducted by the Bombay Chamber of Commerce and
Industry, the share of tourism in India's GDP is 5.6 percent while the would
average is 11.6 percent.

The study also highlighted that investment in the tourism industry generate
larger number of jobs compared with other industries.
For instance, while an investment of Rs. 10 Lakh in tourism sector creates 89
jobs, a similar investment 45 jobs and 13 jobs respectively in agricultural and
manufacturing sector respectively.

16. Challenges Faced by the Tourism Industry

 The Challenges faced by the tourism industry are : 16.1 Hurdles to
growth such being the potential for growth of travel & tourism in India, one
should naturally examine the measures necessary to realize this potential fully.
To do that, we must begin by looking at the inadequacies in the present
arrangements, which hamper growth. These inadequacies are many and can be
broadly listed as follows:
a) Lack of adequate infrastructure in the form of air services and airports,
roads, telecom and accommodation.
b) Levy of tax on tourism and tourists that are not only high but also
unconscionable.
c) Plethora of clearances to be obtained from numerous agencies of the
Central and State Governments.
d) Difficulties in obtaining land for hotel projects.
e) Restrictions on movement of tourists and tourist vehicles.
f) Lack of adequate security to foreign tourists to go around without fear of
bodily harm of loss of belongings.
g) Inadequate human resource development leading to the visitor being
treated more as an intruder than as an honoured guest.

16.2 Infrastructure
A) Air services
Air services and airports are still at a primitive state in India. Hardly a day
passes without the newspapers carrying angry letters to the editors from irate
foreign tourists complaining of cancellation of flights or the lack of facilities at
the airports. (There are less than half a dozen international airports in this vast
country. The tourist is compelled to take to connecting flights to his chosen
destination from these airports. This result ' in needless waste of time which is so
precious and causes inconvenience to the foreign tourists, who often travel in
groups. The loss of personal effects is an ever-present risk during internal flights.
The first and foremost suggestion to e made in this context would be that
(a number of airports would need to be expanded and modernized to international
standards and serve as models for the others. Many others, for example,
Bangalore, Calicut, Cochin, Goa, Hyderabad and Jaipur Would need to be
converted into international airports. Airports at important tourist up gradation to
handle bigger aircraft and more passenger traffic than now.
The architecture and designing of airports and related facilities is a highly
specialized job. We do not have such specialist architects and designing firms or
consultants in this country. It would be advisable to enlist the services of
experienced foreign consultants and firms to design our major airports.
(For facilitating reliable short-haul services, a number of airstrips would
need to be maintained better. It is estimated that there are 139 such airstrips under
the control of State Governments and 121 with the Central Government.
According to the Department of Tourism, Government of India, international air
seat capacity to India would need to be doubled to enable 5 million tourists visit
India. This calls for permission for chartered flights to carry passengers to non-
designated airports, "adoption of a liberal policy in allowing capacity expansion
by international airlines", capacity additions to local airlines, etc.

B) Road Network
It is estimated that 80% of the foreign and domestic tourists make use of
the road transport system for visiting different destinations. However, the
condition of Indian roads and of the Indian road transport system is deplorable by
any standards.
The absence of goods roads and a modicum of comfort for the traveler
makes road journey an ordeal. Since private enterprise has been allowed to enter
the infrastructure sector, particularly highways, the development of highways,
camping sites and motels leading to important tourist destinations may be given
high priority. This would also need fiscal and financial incentives in the form of
abolition of customs duties on import on of tourist vehicles, provision of
Concessional interest, etc.

C) Hotel Accommodation
The total availability of hotel rooms in India is 58,000. This is less than the
number of rooms in the city of Bangkok alone. China has over 3.9 million rooms
and Indonesia has over 1.5 million. It has been estimated that hotel
accommodation would bid to be at least doubled in the very immediate future to
cater to the projected tourist arrivals into the country.
Since most of the foreign tourist and local tourists are not affluent, it would
be necessary to create reasonably priced middle range accommodation like tourist
complexes, youth hostels and motels. This, incidentally, points to the need to
harness the resources of the private sector in a big way.

D) Telecommunications
A particular irritant affecting any visitor to the country is the lack of
reliable telecommunication facilities.) With the entire world emerging as a single
market place, where production centers and distribution networks are spread over
continents, immediate contact with business associates, relatives and friends, and
travel agents becomes an imperative needs for any foreign traveler. The group
working on the I.T. sector, it is hoped, will look into this aspect.

E. Taxes
In a note circulated by the Federation of Hotel and Restaurant Associations
of India at the meeting of state Tourism Ministers in New Delhi in August, 1998,
it was stated that the biggest factor depressing the Travel & Tourism industry in
India is the charging of higher taxes$)It has been seen in many countries that
lower taxes induce higher tourism arrivals and longer stay", Since travel &
Tourism is of the nature of an exports and that too of a negligible import content.
The imposition of Expenditure Tax by the Centre and Luxury Taxes on hotel
rooms by the state governments inflate the accommodation bill of the foreign
traveler. The net result would be diversion of traffic away from India to other
destinations. It is also seen that may states base their Luxury Tax on a 'rack rate'
compounding the burden on the foreign tourist.

F. Land
Where the number of hotels rooms has to be stepped up steeply in the few
years. It is essential that land for building hotels must become available with ease.
At the State Tourism Ministers Conference held in August 1998, the industry
represented that "land for hotels and Travel & Tourism-related projects should
not be auctioned. Land for hotel use should be reserved and made available to the
promoters on long term graded lease." Along with this , the floor area ratio norms
for hotels should also be increased.

g. Industry status
The conferral of industry status on Travel &Tourism would entitle Travel
& Tourism to secure several advantages, notably in project funding, exemption
from local taxes for the first few years, Concessional power tariffs, etc. Though
the central Government has recognized Travel & Tourism as an industry, many
state governments have still to accord this facility to hoteling and tourism.

3. Tourist facilitation & Security

A) Immigration and visas
The working Group on Tourism for the IX Five Year Plant June 1996
recommended that "the facilitation services available for visiting India are often
the subject of criticism by several tourists. This covers the entire spectrum of
tourist facility in India." (Visitors have often complained of the ponderous ways
of immigration staff at airport. Obtaining of visas from an Indian Embassy abroad
which should normally take less than 24 hours is more in the realms of theory
than practice.
Luggage handling systems at the airport as well as the lack of police
vigilance outside are also a cause for general complaint. The unhelpful attitude of
police personnel at the airports, the pestering of foreign tourists by touts and
shady hotelkeepers, the rickety taxis and the and the wily taxi driver create a poor
first image of the country in the foreigner's mind.^

17. Impact of War on tourism

A U.S. war in Iraq hit hard tourist traffic to India and also reduce leisure
travel within the country industry experts warn. Tour operators who had begun to
recover from the import of 9/11 worry that a conflict in the Gulf would set the
clock back once again in a country trying to replicate the 2001 performance when
2.5 million tourist visited India. Tourism and war, said one man, just don't mix.
Hotel owners share the fears.
The Indian tourism industry is anxious about the war clouds, particularly after
U.S. President George Bush ordered his Iraqi counterpart Saddam Hussein to quit
his country or face war. The war could also derail domestic and outbound travel.
Uncertainty in the Middle East is bound to effect long -haul travel for at least two
to three weeks, he said" As was witnessed after 9/11, holiday makers would try
to stay closer home. Business travel will also be affected.
Optional travel will be reduced. But if the war is short, we can expect
tourist inflows as the perception will return that the region is secure," said
Madhok, who is also chairman of the Indo- American Chamber of Commerce.
As compared to the boom of 2001 when some 2.5 million tourists visited
India, industry veterans say the country has a long way to go despite the
encouraging growth of over 16 percent in tourist traffic in recent months
compared to the corresponding period last year.
With the possibility of a war pushing up the cost of aviation turbine fuel,
Wahi moaned that airlines might cut down unviable flights, In case the price of
aviation turbine fuel goes up further in addition to drop in traffic, there are bound
to be cut in flights.
The timing of the war will not hurt Indian Tourism immediately. The
season is ending, the slack summer months are approaching and if the war doesn't
drag on, officials hope the "pent-up" demand for the leisure tourism will find a
release.
Overall, the figures were so far encouraging, In February 2003, for
instance, 2.72 lakh tourist came in, up from 2.62 lakh in February 2001 and from
2.41 lakh in Febuary 2002 between October and February, the figures indicates a
16.8 percent increase in number.
In foreign exchange earnings, the first two months of 2003 yielded Rs.
3000 crore, up from figures for 2001 and 2002. So officials can only hope for first
ever media campaign running January to march on channels like Discovery,
CNN, BBC will not be money down the drain.
Even as tour operators in Gujarat await special instructions from airlines,
inquiries about refund on cancellation of tickets, rerouting of flights and other
flexible options have been pouring in since US went on the offensive against Iraq.
They all agree that the war has had its casualty already- bookings are not
corning their way due to safety concerns and extra cost one may have to bear on
rerouting of flights.
Says general manager of Prominent Tours and Travels Thomas Omen, "We
mostly cater to corporate clients and this month, the American and British
companies have instructed their employees against flying. Clients are shying
away from visiting even safer destinations like China, Japan and Europe. Though
bookings for April remain untouched, there have been eight to ten parties
canceling their foreign trips this month."
"A group of doctors who were planning a Malaysian tour have backed out
and three families which had world tour plans have dropped the idea. And some
have stopped pursuing the travel plans even after paying deposit, a clear
indication that people are not too sure of their plans now," says Jayendrasinh Jhala
of Transline Tours and Travels, who adds that the silver lining however, is the
possible boom in domestic tours.
"From the time President Bush issued an ultimatum to Iraq, the booking
for foreign travel has dropped. People are apprehensive and have opted out of
travel plans. We too are preparing for last minute changes like re-routing by
airlines," says manager of Sachinam Travels Chandresh Oza, adding that the war
has put a question mark on the fate of tour operators as it's a big 'no' to leisure
trips.
Reiterating the claim that people are traveling only where it is inevitable,
partner of Mark and Mark tours and travels, Hanna Mark says, "Looks like leisure
trips will be put on hold for some time now. First, the safety concerns and then
the extra cost due to re- routing of flights. The most outbound traffic this season
comprises business travelers and those visiting their relatives and family in the
US like every year."
However, a few travel agents confide that people, who have already made
their travel plans are now trying to avoid flying over or halting in the Gulf region
and many are seeking 'safer' airlines. Says a sales representative with the Gulf
Airlines, "So far, we haven't faced any rush for cancellations, though we have
been receiving inquiries from people who are worried about security concerns."
Mahendra Vakharia, director of Pathfinders travel agency, says, "they are hoping
that the war is short-lived. Those wishing to holiday abroad are apprehensive and
have called us up enquiring about a possible fare hike or if their flight- route takes
them over the war-zone."
18. Recommendations
To boost tourism the government should strive towards achievement of the
following targets -
• The plan outlay for tourism has been abysmally low over the years. The
share of outlay for tourism must be increased substantially. Once a sizeable
amount of money is made available to this sector, only then correct
allocation of funds can be made to set up the proper infrastructure
necessary for facilitating tourism. Once a proper infrastructure is in place,
tourism is bound to flourish.

• For the next 5 years, Government should have an intensive focus on

tourism providing incentives and removing all disincentives in consultation
with the industry. Government should actively support capital formation in
the form of domestic and foreign investment and encourage participation
of the organized sector.
• In terms of support, government should provide facilities in terms of
providing quick clearances (to potential investors for various projects.

• Land should be made available to projects at reasonable rates.

• In order to make business ventures viable, the government must urgently
rationalize the tax-structure. There exists a plethora of taxes and sometimes
duplication of taxes at both central and state levels. There need to be
adequate linkages between Centre and the States on the tax front.
Centre and State Governments must announce various tax-concessions and
incentives to enable new tourism project. In order to enable tax-rationalization,
Tourism may be placed in the Concurrent List. The New Tourism Policy has
already initiated action on this front.
• India being a long-haul destination, civil aviation must play a very crucial
 role and thus the Civil Aviation Policy (which has been*on anvil for quite
a few months now) with respect to its bilateral, airport development,
airlines etc. must be in tune with the national Tourism Policy.
The scrapping of the proposal on visa-on-arrival for security reasons is
understandable. However, this practice may be restricted for select nations
which pose security threat.
• Tourism's benefits are yet to sink in amongst the masses. Thus massive
awareness campaign should be initiated to educate how tourism can be
powerful engine for economic growth. In a country which has believed in
"Atithi debo-vabo" (Guest is like a God), tourism must involve the
communities and local people and it as to be transformed in to a "People's
Movement".
• India's heritage and culture, natural or man-made, should be leveraged as
her unique selling proposition (USP). For heritage in the man-made
category, Government needs to actively promote private participation inn
terms of adoption of monuments, heritage building etc. by providing
adequate incentives to the private sector.
• Cleanliness and hygiene at tourist spots figured as one of the major
negatives in a survey conducted by CI1 & A T Kearney on the experience
of foreign tourists in India. Thus it is imperative to maintain cleanliness at
least in and around all the major tourist attractions.
Human Resource Development (HRD) is a very crucial aspect for an
industry that is largely service-oriented. A focused approach on manpower
training is an absolute must. Educational courses at primary level should include
tourism. A National Volunteer Corps for Tourism may be modeled in the lines of
NCC and some "learn-and-earn" programmes is started for students and youth
during their vacations. A fund is set up for special training for heritage
management.
Central Government should actively support State Governments to build
their own "brand image" and market that at both domestic and international levels
as some states have already started doing. Of late there has been some degree of
sensitization amongst the English dailies on the benefits of tourism and they have
started bringing our tourism supplements. The Vernacular Press needs to be
brought into the fold so that the message can be conveyed to the masses.
There is a need for better co-ordination at 3 levels -
I Between Central Government and State Governments
ii Amongst Central Government Ministries and other Concerned
Organizations and Departments
iii Between Government and Industry
To tide over the current crisis, the government can take some immediate
steps to give a fillip to domestic tourism -*
• A focused media campaign must be launched projecting India as a "safe
destination". On the international front special focus to be on the main
source markets for India
• Luxury Tax be imposed on realized room rate and not on rack rate in all
States.
• Government should actively consider keeping Leave Travel Allowance
(LTA) outside the tax-net
• Government should ensure that land availability for tourism projects be
made easer and the procedure for obtaining clearances be simplified to attract
more investment to this sector.
For each tourist spot, a Destination Management Authority be created
comprising empowered local bodies so as to involve local communities to ensure
cleanliness and hygiene. Destinations need to be classified in terms of the mix of
tourist traffic that they attract, the kind of facilities they should have and the kid
of safety and security arrangement that they deserve a happy tourist is the best
ambassador of destination. Proper certified short duration training modules (of
various grades) on courtesy, manners, language etc. be started for people like
guides money changers, taxi drivers, baggage handlers etc. who form the primary
interface with the tourists. The students of Institute of Hotel Management can be
used for conducting these training modules. People undergoing these courses
should be issued a Pass Book would acknowledge the various grades of training
modules they have completed tourist guide is probably the most crucial interface
for any tourist. But present licensing policy is completely non-transparent.
Tourism industry must be associated with the selection and recruitment of tourist
guides and their licensing.
Tourism be made a mandatory subject at school levels to foster a better
sense of belonging and instill a sense of pride for motherland amongst the future
generation.
Indian politicians, on their foreign trips, should act as Tourism
Ambassadors and project India's image as a safe and beautiful destination with
loads of attractions on offer.
Tourists while travelling through various states face unlimited difficulties
because of the various taxes that need to be paid to State Governments. Taxes on
inter-state travel of tourist vehicles be abolished Abolish Inland Air Travel Tax
(IATT) to make domestic flights cheaper.
19. Gujarat Tourism
19.1 Introduction
Hospitality, the foundation on which the structure of tourism is built, is
indigenous to Gujarat. Gujarat sends largest number of travelers to almost every
corner of the world. But its strength to be host has not been fully utilized due to
the lack of information highway. Gujarat offers colorful experience to its travelers
packed with pleasant surprises - endowed with forests and deserts, hills and
plains, sea and lakes, tribal hinterlands and special interest destinations with a
strong rail, road and air network. Gujarat - be the only lion sanctuary of Asia, the
only temple clad summit of Shatrunjaya and the only site of the Indus valley
civilization with an elaborate network of hotels, restaurants, entertainment parks,
water resorts, kala bhandars & many more, has an inherent strength to pull the
tourism all over the world under the umbrella of web based services. Gujarat has
made economic strides on the strength of private enterprise, pragmatic public
policies and efficient administration. While industrial growth is particularly
intense in Ahmedabad - Vapi corridor, the development is not skewed.

19.2 Infrastructures Position.

1. Installed Electricity Generation Capacity (MW) 5076
2. Electricity Generation (Crore KWH – 1993-94) 2412
3. Roads (km)
* National Highway 1570
* State Highway 19609
* Main district roads 20268
* Other district roads 10337
* Village roads 18175
4. Railway Track (km) 5227

19.3 Transport Connection.

1. Railway Facilities Extensive Network
2. Functional Airport 11
3. Non-Functional Airport 14
4. Airlines operating in Gujarat Indian Airlines
Jet Airways
Sahara
Gujarat Airways
5. No. of flights landing in Gujarat Over 100
6. International flights from Ahmedabad London
New York
 Muscat
Other Destinations

19.4 Marketing.
In tourism marketing a destination is being marketed. Once a destination is
shall to a customer or customer group, everyone who is providing the service in
relation to tourism gets benefited. A destination can have a large variation of
products or benefits to offer and a unique combination of features that cannot be
duplicated elsewhere. The question that arises is how is one to attract tourists to
Gujarat – an industrial hub of India – had nothing as glamorous as the Taj Mahal
or the backwaters of Kerala or the beautiful landscapes of Kashmir to talk about.
This was the task faced by TGCL in 1975 i.e. how to develop and promote
tourism in the state and maintain and strengthen the existing tourist infrastructure.

19.5 Major Developments

The foreign tourists are slightly bored with Rajasthan. Gujarat in terms of
culture and craft is rich and varied and offers a unique combination of desert and
sea. The private enterprise is adding to Gujarat's attractions. For example, the
high teach mega religious complex of Swaminarayan (Akshardham) set up in
1990s is a tourist destination in itself. The area around Ahmedabad and
Gandhinagar is emerging in to a major recreation region of western India with
Akshardham, waterparks, amusement parks, multiplex cinemas, clubs and
resorts. Big hotel chains like the Taj, Oberoi, Holiday Inn, ITC hotels now have
a presence in Gujarat. The civil aviation scene is also experiencing a boom. Over
100 flights land at 11 Gujarat airports everyday.
A separate Tourism Department was established in 1973 to identify and
develop the tourism potential in the State This was followed by the creation of
Tourism Corporation of Gujarat Limited in 1978, which was entrusted with the
task of undertaking and developing tourism related commercial activities. The
Corporation is presently engaged in a variety of activities such as creation of
loading and boarding facilities for the tourists and other aspects of tourist
facilitation such as transportation, packaged tours, wayside catering along the
National and state Highways, arranging cultural festivals, organizing exhibitions
and producing and distributing maps, posters, brochures and pamphlets. The
Corporation has set up accommodation facilities at Chorwad, Ahmedpur Mandvi,
Porbandar, Veraval, Hajira, Ubharat and Tithal. Similar facilities at pilgrimage
centres like Palitana, Somnath, Dwarkja, Pavagadh and Dakor have also been set
up by the Corporation. One of the recent tourist attractions introduced by the
Corporation in collaboration with the Indian Railways is a special tourist train.
The Royal Orient Train that connects up various tourist destinations straddling
the Gujarat and Rajasthan State. However, the Corporation has suffered
losses due to a number of organizational constraints. In order to minimize these
losses and also to provide better services to the tourists, the Government
has undertaken privatization of some of the commercial property unities of the
Corporation.
In spite of possessing a variety of tourist attractions such as wildlife, scenic
beauty, pilgrimage centres, exotic traditional crafts and festivals, beaches,
hospitality of the region and a varied healthy and tasteful cuisine, the State has
not been able to accelerate the pace of tourism in comparison to other state. In
1991, the State did declare a tourism policy but it did not elicit adequate response
from the private sector since the policy contained only a handful of benefits while
the implementation was tardy due to legal and administrative constraints. This
was at a time when the Government of India had already declared tourism as an
industry and a large number of states had followed suit. This enabled the tourism
industry to avail of incentives, reliefs, and benefits available to the industry in
those states.
While other state Governments made successful offorts in developing
tourism within their states, the relative inability of the Gujarat State to harness
and develop its full tourist potential may be attributed to a combination of factors
such as lack of effective policies, inadequate infrastructure, ineffective marketing
and lack of decent facilities for the tourists.

19.6 Objectives
The main objective of the Gujarat State Tourism is to intensive Development of
tourism in the State and thereby increase employment opportunities. The
following related objectives are dovetailed with main objectives.
* Identify and develop tourist destinations and related activities.
* Diversification of tourism products in order to attract more tourist Through
a varied consumer choice.
* Comprehensive development of pilgrimage centre as tourist Destination.
* Create adequate facilities for budget tourists.

* Strengthen the existing infrastructure and development new ones where

necessary.
* Creation of tourism infrastructure so as to preserve handicrafts, folk arts
and culture of the state and thereby attract more tourist.

19.7 Proposed Approach and strategy.

The Government should adopt the following strategy towards the private
sector with the objective of securing the active involvement in Leading the
development of tourism in the State.
• The tourism should be given the status of industry in order that the facilities
and benefits available to the industry are also made available to tourism
projects.
• A special incentive package should be made available for encouraging new
 tourism projects as well as expansion of existing tourism units.
• Infrastructure facilities should be strengthened and developed within the
State, particularly in Special Tourism Areas.
• Effective mechanism should be set up to build meaningful coordination
with the Central Government and the State Government agencies, the local
self-government bodies and the NGOs.
• Government should encourage building effective linkages with the
economic agents and agencies such as the national and international tour
operators and travel agents of repute, hotel chains and global institutions
connected with tourism such as WTO.

19.8 Planning for tourism development

A perspective plan for tourism development will be prepared in
consultation with experts. An overview of possible tourism products is offered
below.
1. Religious (Pilgrimage) and Archaeological Tourism Gujarat has a hold of
pilgrimage centers like some other states. Somnath and Dwarka- some of the
well-known and revered sites of ancient Hindu temples- are situated in the state.
Architecturally brilliant and of significant religious importance are some of the
temples of the state like the ones at Shetrunji, Girnar, Taranga,and Ambaji. Other
temples like those at Dakor Pavagadh, Bahucharaji, Shamlaji, Narayan Sarovar,
Sudamas Porbandar, Kabirvad, Shuklatirth, Kayavaohan, Bhadrakali
(Ahmedabad) and Tankara(Maharshi Dayanand Sraswati's birth place) are also
important pilgrimage destination, which have kept alive the religious sentiments
of the people, Millions of pilgrims visit these places every year.
Not only the devotees from all over the country but also by Non-Resident
Indians and travelers visit these places especially from the eastern part of the
world. Necessary accommodation Facilities and related services will bee created
on these sites. For ensuring orderly and planned development of pilgrimage
centers, the state government has constituted Pavitra Dham Vikas Board chaired
by the Chief Minister. The board will implement plans to provide necessary
facilities to devotees and also ensure conservation of cultural atmosphere
consistent with sentiments of visiting devotees. Shamlaji is an ancient site for
Buddhists. The excavated relies from the Buddhist period at the site are now kept
in a museum at Baroda.
There are a number of places of archaeological importance such as the
temples town of Palitana. Modhera withits Sun temple, historical Rani ki Vav at
Patan with the relief of an ancient capital, the Girnar Hills with Hindu and Jain
temples, Junagadh with a historical fort,Dabhoi, Champaner, Pavagadh, Shaking
Minsrets, Gandhi Ashram, Sidi Sayed Jali etc. These can be developed by
providing necessary infrastructure facilities and marketed tourist destinations to
attract tourists.

2. Heritage Tourism
A large number of old palaces, havelis, darbargadhs exist in the state.These
historical building can be converted into hotels, restaurant or museum by
providing suitable incentives to owners. Wildlife and pilgrimage tourism circuits
can be linked to heritage properties exploiting the geographical congruity.
Development of this sub-sector will not only attract foreign tourists but also
provide encouragement and support to local art and crafts.
The government will take necessary steps to promote heritage tourism in the state.
3. Wildlife Tourism
There is substantial scopes for development of tourism based on wildlife
in the state. The Gir forest of Gujarat is the last stronghold of the Asiatic Lion.
The bear sanctuary at Ratan Mahal(Panchmahal district), Black Buch Sanctuary
at Velavadar (Bhavnagar district),bird sanctuary at Nalsarovar (Ahmedabad
district), wild asa sanctuary at Kutch etc.can be effectively developed into tourist
destinations by providing infrastructure facilities. In order to facilitate visitors to
these areas, coordination among agencies will be established.

4. Coastal and Beach Tourism

Gujarat state has the longest coastline among the maritime board states of
the country. Identified stretches of coastline can be developed into beaches from
the tourism point of view. It will be the endeavor of the state to develop beach
potential by providing facilities as they attract foreign tourist. Various tourist
destinations easily accessible from the coast will be linked through coastal
shipping circuits.
5. Tourism based on Traditional Art, Craft and Cultural Activities.
Banni in Kutch, Khambhat, Junagadh etc. are known for their
craftsmanship .Similarly, there are hundreds of fairs that are celebrated
throughout the year with enthusiasm. The Tarnetar Fair in Surendranagar district,
Chitra Vichitra Fair at Poshina (Sabarakantha district), Kanwat Fair at Chhota
Udepur Panchmahal district), Danf Darbar at Dang, Bhavnath Fair of Junagadh,
Vautha Fair of Ahmedabad etc. have immence tourism value.By developing
accommodation, transport and other facilities, these fairs and festivals will
promoted nationally and internationally. The places of importance from the art
and craft point of view will be included in the tourist circuits and necessary
facilities will bee provided to tourists.

6. Corporate Tourism
The private sector will be encouraged to build state-of-the-art Convention
centers, seminar halls etc. so as to attract corporate events like seminars,
workshops and annual general meetings. Participants in such events generally
have high purchasing power and provide boost to the local economy.

7. Adventure Tourism
This is also a territory with the possibility of development as a , sub-sector,
which will be examined and new activities like camel safari Kutch, horse -riding
in the Aravalli hill ranges, Parachuting in Saputara, trekking in Dang, Pavagadh,
Palitana etc. will be promoted. Such activities will create large- scale
Employment opportunities for guides, collies, traders for hire Of tents and
equipments etc. and will also encourage paying guest accommodation in such
areas Private entrepreneurs and Institutions will be encouraged to develop such
facilities.

8. Highway Tourism
There is a good network of state and national highways, which Criss-cross
the state and a large number of travelers prefer road journey. Because of the large
geographical expanse of the state, these journeys tend to be quite long and boring.
There is a need for creating necessary facilities like hotels, restaurants, picnic
spots, water parks etc. along the highways at suitable intervals for the highway
travelers to relax. In fact, travelers can be induced to follow certain traffic routes
if such facilities are better developed. Highway facilities and wayside amenities
are so well developed in some states that this has become the mainstay of tourism.
The state shall encourage private investors to create such facilities on the
highways.

19.9 Human resources Development

Human Resources Development is an important aspect of service
industries. Tourist depends upon travel agents, guides and hence trained
manpower is a sine qua non of tourism industry. On the Basis of available
statistics, training facilities can be safely said to be totally inadequate. If trained
manpower is not available locally, the objective of local employment will not be
achieved. Keeping in view the approach of market-led development, the state
government will encourage and support the creation of training facilities in the
private sector by private agencies / individuals.
 Hotel management courses meant for guides, catered and other supervisory
and non-supervisory staff of hoteld would be introduced in the Industrial Training
Institutes(ITIs). Approved hotel associations and private entrepreneurs will be
encouraged to create new training facilities by making available land to them for
this purpose and by giving other appropriate incentives. The government will
consider setting up a Hotel Management Training Institute at the state level
preferably in the private sector. Resident of Gujarat, especially local youths,
would be encouraged to facilitated to take in such training courses.
The Institute of Hotel Management, Catering & Nutrition that is working
under the administration control of the central government will be utilized to start
new training courses so that the residents of Gujarat can get admission and the
manpower Requirement of this sector is met.
19.10 SWOT Analysis-Gujarat Tourism
• Government support( in term of grants) - both government of Gujarat as
well as government of India sets aside annual grants for the development
of tourism in the state.
• Wide network of Services under its fold-includes hotels, tourist
Information Bureaus etc.
Weakness
• Significant internal weaknesses
• Low employee morale
• Lack of professionalism in the organization.
• Bapu culture prevalent
• In-effective Promotions
• Awareness regarding its products, services as will as its investment
opportunities in this sector has not been highlighted.
Opportunities
• Scope for investment in new ventures
• Joint ventures with private parties
• Cashing in on excellent infrastructure facilities
Threats
• Competition from other state tourism corporations
• Private parties assuming the role played by TCGL at this juncture.

19.11 Key success Factors

• Improved service quality
• Increase in usage of those services
• Boosting employee morale

BIBLIOGRAPHY
Articles
1. Business Standard- Jan 28,2003
2. Indian Management, Dec. 2002
3. Times of India-March 21, 2003
4. Times of India- March 24, 2003
Books
1. I. Donald R. Cooper, Pamela S. Schindler: Business research methods: (6th edition) 1
McGraw-Hill, Third Reprint 2001
2. Dr. D. D. Sharma, Marketing Research (Second Edition 1999) Sultanchand & S.
Reprint 2001.
3. Gujarat Industrial & Technical Consultancy Organisation Ltd. - Year 2002.
4. S. M. Jha: Services Marketing: (Millennium Edition.) Himalaya Publications Ltd.
5. Sunil Gupta & S.P. Bansal: Tourism Towards 21st Century, Deep & Deep Publican.
Pvt. Ltd.
6. S. S. Rao: Handbook for writers and Editors, Ahmedabad Management Associate
Seventh Edition, 1999.
7. Tourism statistics of India: Jan-Feb 2003
Websites
1. www.cii.com
2. www.ciionline.com
3. www.ecen.org
4. www.expresstravelandtourism.com
5. www.gujaratchamber.org/articles-tourismincentives.htm
6. www.gidb.org
7. www.indiainfoline.com
8. www.tourismindia.com
9. www.indiantourism.com
10. www.cybrary.com.

ANNEXURE 1

Hotel Sector Performance in January 2qq3

 Maximum room- nights: 946,678 (0.0%); Available room - nights: 861,248
(-0.3%)
 Gross settings: 613,127 (+0.6%); paid lettings: 603,601 (+0.5%)
 Standard AOR: 71.2% ( up 0.2 percentage points over January 2002)
 Nominal AOR: 63.8% (up 0.3 percentage points over January 2002)
 Standard ARR: $123.0 (-3.3%)
 Nominal ARR: $ 124.9 (-3.2%)
 Revenue per available room (Revpar): $ 87.6 (+3.0%)
AOR = Average Occupancy Rate
ARR = Average Room Rate
Revpar = AOR x ARR
Figure for the Hotel Sector Performance is updated as at 151'1 January 2003.
 ANNEXURE – 2

Foreign Exchange Earnings during 2002 and Corresponding Figures for

2000 & 2001.
IN US$
YEAR IN RS. CORES % CHANGE % CHANGE
MILLION
2000 (Jan-Dec) 14238.00 -- 3168.00 --
2001 (Jan-Dec) 14344.00 0.7 3042.00 - 4.0
2002 (Jan-Dec) 13643.81 - 4.99 2811.14* - 7.6

 PROVISIONAL
Foreign Tourist Arrivals in India during 2002 And Corresponding Figures
for 2000 & 2001.

FOREIGN TOURIST ARRIVALS PERCENTAGE CHANGE

Month 2000 2001 2002 2001/00
January 253666 283750 228150 11.9
February 257403 262306 227529* 1.9
March 234606 248965 225558* 6.1
April 188132 185338 155378* -1.5
May 136575 151098 132988* 8.3
June 161613 176716 143100* 9.3
July 212949 224432 186482* 5.4
August 186843 196517 161477* 5.2
September 180070 162326 151721* -9.9
October 230978 1811605 212191* -21.4
November 290201 209685 243566* -27.7
December 313342 254544 281102* -18.8
Total 2649378 2537282 2354127* -4.2

ANNEXURE 3

Heritage Hotels in Gujarat

 Laxmi Vilas / Motibagh Palace, Vadodara
 Rajmahal Palace, Rajpipla
 Natvar Niwa Palace, Rajpipla (Project Planning)
 The Palace Utelia, Lothal
 Hotel Nilambagh Palace, Bhavnagar
 Riverside/ Orchad Palace, Gondal
 Royal Oasis/ Residency, Wankaner
 Balaram Palace Resort, Palanpur
 Darbargadh Poshina, Poshina
 The Palace, Mansa (Project Planning)
 Garden Palace, Balasinore (Project Planning)
 Digbhuvan Palace, Limbdi (Project Planning)
 Kusum Vilas Palace, Chhota Udaipur
  Gopnath Bunglow, Bhavnagar (Project Planning)
 Vijay Vilas Palace Hotel & Resorts, Paltitana (Project stage)

ANNEXURE 4

Fairs & Festivals In Gujarat

 Tarnetar
 Ravachi ( Rapar in Kutch)
 Chitra Vichitra (Poshina)
 Kavath ( Chhota - Udaipur)
 Dhrung (Kutch)
 Vautha ( Donkey Fair)
 Tribal Fair ( Shamlaji)
 Bhavnath (Junagadh)
 Bhadarva Poonam (Ambaji)
 Janmashtmi (Dwarka)
 Dakor ( Holi and Janmashtami)
 Modhera Festival (TCGL)
 Kutch Festival (TCGL)
  Kite Festival (TCGL)

ANNEXURE – 5

Tourist Flow to Individual Destinations in Gujarat.

Sr. Destination Tourist Flow
No.
1. Ahmedabad 20,82,591
2. Vadodara 4,27,347
3. Surat 3,98,380
4. Pawagadh & Champaner 4,21,341
5. Vapi 1,76,096
6. Valsad 1,53,048
7. Bharuch & Ankleshwar 5,41,821
8. Teethanl 35,514
9. Ubhrat 8,270
10. Saputara 2,36,830
11. Bhavnagar 2,95,152
12. Palitana 7,96,824
13. Patan 66,380
14. Ambaji 14,04231
15. Jamnagar 2,35,801
16. Rajkot 1,70,230
17. Dwarka 5,15,843
18. Porbandar 1,45,565
19. Junagadh 1,69,884
20. Veraval/Somnath 3,74,703
21. Sasangir 58,112
22. Diu 1,20,450
23. Ahmedpur-Mandvi 14,158
24. Mandvi-Kutch 43,890
25. Bhuj 2,18,700
Gross Tourist Flow of 24 Destination* 89,90,715
Say 89.9 lacs
Discounting for inter-destination overlap 8.37 lacs
Allowances for minor destination @ 5% 4.56 lacs
Net tourist Flow to Gujarat 86,09,715

 Excludes Diu from total

Excludes large flow on account of festivals to certain religious pla