India’s tourism sector has bounced back, but international sector still lags

India’s travel and tourism sector has seen significant improvement, but spending on outbound travel in India remains below pre-COVID-19 levels, according to a new report by the World Travel & Tourism Council (WTTC).

The WTTC report revealed:

• The travel and tourism sector’s contribution to India’s GDP was Rs 19.13 trillion ($230 billion) in 2023, up almost 10% from 2019 levels.
• Industrial employment rose 8% to 43 million.
• Domestic tourist spending totaled 14.64 trillion Indian rupees ($175 billion) last year, up 15% from pre-COVID-19 levels.
• Spending by foreign tourists was over 14% lower than in 2019.

The key role of domestic tourism

Consulting firm McKinsey and Company previously forecast that India would become the fourth-largest domestic tourism market by spending by 2030.

Co-founder of online travel agency EaseMyTrip, Rikant Pittie, agreed with the WTTC report. He said, “Domestic travel and the tourism sector have become the backbone of India’s economic growth in recent times, especially as the government focuses on promoting India as the equivalent of a global destination.”

India is now the third-largest domestic aviation market after the US and China, according to the latest data from aviation analytics firm OAG. India’s domestic passenger traffic in 2023-24 is also expected to exceed pre-COVID-19 levels,

Earlier this year, Hyatt Hotels CEO Mark Hoplamazian also spoke about his company’s focus on India, particularly domestic travelers. “The leisure travel market in the country is primarily driven by Indians traveling in India and exploring the country,” he said.

“The Indian market started recovering from the end of last year with the resort segment leading the way. Especially post Covid, inbound India has become the buzzword. Indian travellers have also started finding India more attractive due to the combined effect of increased marketing efforts and high international airfares,” said Arindam C. Bahel, General Manager, The Fern Brentwood Resort, Mussoorie.

India Tourism Outlook 2024

According to a report by WTTC, the Indian tourism industry is expected to outperform 2019 in four indicators: contribution to the Indian economy, employment, domestic tourist spending and international tourist spending.

It is estimated that:

• In 2024, the sector will contribute about 21.15 trillion Indian rupees ($253 billion) to GDP.
• The industry is set to add 2.45 million jobs this year, accounting for one in 11 jobs in India.
• Spending by foreign tourists will increase by more than 17%.
• Spending by domestic tourists will increase by almost 10%.

There are risks to these forecasts, however: the peak domestic travel season in summer saw record numbers of travellers leave due to a heatwave in northern India. Extreme weather conditions also led to a nearly 40% drop in inbound flight sales in May compared to April 2024.

Pain points

Despite these optimistic forecasts by WTTC, Sarovar Hotels and Resorts Managing Director Ajay Bakaya shared a different point of view.

“2023 was a phenomenal year. Our domestic tourist numbers increased everywhere we operated. We saw a change in 2024. We had a really good first quarter from January to March and in April we had a reasonable increase. But we have places where there was a decline in May and June. It may have been the election but the results were way below expectations and budgets,” he said, adding that he hoped it would be a short-lived decline.

Bakaya also shared that while the overall tourism sector in India is doing well, the situation is not so favourable for the hill resorts. “Across Uttarakhand and Himachal Pradesh, tourism this year has been below the levels of 2022 and 2023. The reason is that our international travel is healthier and stronger now with more options, easier visas and more economical flights.”

In the long run, he believes that the hill resorts will return to their pre-Covid levels of reasonable business, but they will not witness a boom in business. Goa, he explained, is also not seeing the growth it should, as arguably India’s most popular tourist destination. “So the picture is very good and very positive, but not everything is fine. We will have some challenges before we get to the top,” he said.

Meanwhile, international arrivals are lagging. And India has cut its global tourism promotion budget by 97%.

Bakaya said, “We are all hopeful about what will happen from October 2024 (India’s inbound tourism season), but so far we have seen very little inbound travel. It has been disappointing.”

Image Source: WTTC report predicts India’s tourism industry will overtake 2019 by the end of 2024