OUTLOOK FOR INDIAN THE TOURISM AND TRAVEL INDUSTRY IN 2023

OUTLOOK FOR INDIAN THE TOURISM AND TRAVEL INDUSTRY IN 2023

INTRODUCTION

In 2023,?Indian tourists will be among the biggest spenders on travel the various travel options. Travelers between the age groups of 23 and 40 are. Weekend trips are expected to grow in popularity this year among willing to better their experience and spend more money on vacations. In 2023, travelers will be going one step further as we look packing to take a tour to outlook the trends for Travel and Tourism Industry in 2023. Travel and tourism returned to form in 2022, and even though costs are rising globally, travelers are still taking holidays and exploring the world. With millions of travelers already planning trips, and a 20% increase in earnings for the global tourism sector, 2023 looks promising.

to deepen these experiences by having a lasting positive impact on the places and people we visit.?2023 – Consolidating on the gains from last year. There are signs of recovery in the travel and hospitality sector, with domestic tourism returning to its pre-Covid levels, as well as a growing interest in international EaseMyTrip travel in 2023. Affirming that?Rikant Pittie, Co-Founder, EaseMyTrip,?said, “The year 2022 witnessed an exceptional rise in travel demand along with the sector being surfaced from the disruptions caused by COVID. Even though the industry faced airfare hikes, the desire of people to travel did not stop and we expect the demand momentum to continue in 2023. Travel has become the way of life and people are not hesitating to direct their expenditure towards experiencing new adventures and exploring destinations.” Sharing insights on how 2023 is going to be the revive of the travel industry,?Varun Arora, CEO & Co-Founder, of Ekostay, A Homestay Venture,?said, “The hospitality industry is looking to the upcoming Union Budget 2023 with high hopes as it could offer some relief to the sector.”

“The sector is expecting a number of measures that can help it recover from the losses suffered during the pandemic.?Some key expectations include extending the current GST rate of 12% to the industry, setting up a Tourism Promotion Fund, tax incentives for capital investments, and special packages for developing increase tourism infrastructure.” he further added. According to,?Liberatha Kallat, Chairperson & Managing Director, DreamFolks Services Ltd,?“As a leading airport services provider, we are optimistic about the recovery of the travel and tourism industry in 2023. We are seeing a steady in bookings and flight schedules, indicating that people are eager to travel again. With business & leisure travel picking up in 2023, we anticipate an increase in demand for various services such as lounge access, meet & assist, F&B offerings, airport transfers, spa, and transit hotels/nap rooms.” Akash Dahiya, Co-founder, SanKash, pointed out, “With a projected annual growth rate of 20.7% in 2024, the travel and tourism sector's contribution to India's economy is predicted to reach pre-pandemic levels. In 2023, Indian tourists will be among the biggest spenders on travel. Weekend trips are expected to grow in popularity this year among the various travel options. Travelers between the age groups of 23 and 40 are willing to better their experience and spend more money on vacations. Even if it requires occasional spending, travelers would be expected to travel the world, and planning is a common subject.”

Traveling Experience

There has been a noticeable change in travelers’ behavior in recent years, which has forced companies and destinations to adapt in order to meet travelers’ high expectations. There were a number of factors driving this change, including the popularity of remote working, the growing concern about sustainability, the desire for flexible cancellation policies, and the sentiment of revenge travel. As we can see from the numbers, international tourism showed strong signs of recovering in 2023. By 2025, this segment should be fully recovered.

Liberatha Kallat, Chairperson & Managing Director, DreamFolks Services Ltd, said, “Travelers will actively seek these services to ensure a hassle-free experience. For example, self-check-in kiosks will become a preferred choice among travelers to avoid queues. In response, we aim to provide better seating arrangements and customized lounges that cater to diverse audiences. In addition, we are committed to introducing new and innovative technologies that will streamline the travel process and make the experience more convenient and enjoyable for travelers. Furthermore, we believe the industry will continue to prioritize sustainable and responsible tourism practices, offering more opportunities for travelers to explore and discover new destinations in a conscious and responsible manner.” According to?Akash Dahiya, Co-founder, SanKash, “At the point of sale, technology will be even more prominent, enabling such traveler experiences. The global market for travel insurance, according to studies, was estimated to be worth $17.8 billion in 2021 and is projected to increase at a CAGR of 15.4% from 2022 to 2030. As a result, TNPL (Travel Now, Pay Later) platforms are increasingly popular since travelers want to save money by carrying less cash or keeping it in their savings. Even if a lot of individuals desire to travel, most of them are hesitant to use their savings for it because they are still concerned about another pandemic-like crisis. Therefore, TNPL platforms make sense since they enable travel experiences that are cost-effective. This not only enables individuals to plan vacations without worrying about their budgets but also keeps their savings intact and enables them to pay for the same in a convenient way. “We anticipate international travel to pick with an increase in MICE bookings along with business travel. 2023 is expected to be a good year for the travel industry and we anticipate further growth in the sector,” said?Rikant Pittie, Co-Founder, EaseMyTrip.

ECONOMIC SURVEY 2023: TOURISM SECTOR SHOWING SIGNS OF REVIVAL

Foreign tourist arrivals growing?

?The survey further stated that aircraft movement increased by 52.9 % on-year in the country between April and November 2022 on account of relaxations in COVID-19 norms and the resumption of scheduled international flights.?Economy Survey FY23:?India’s tourism sector is showing signs of revival with the waning of the COVID-19 pandemic and the removal of the restrictions and is ranked 10th out of the top 64 countries in the world in the Medical Tourism Index FY21, according to the Economic Survey.?The survey said that medical tourism is on the rise due to government initiatives like the Ayush visa for medical tourists, the launch of the National Strategy for Sustainable Tourism and Responsible Traveler Campaign, the introduction of the Swadeshi Darshan 2.0 scheme and Heal in India.. The survey stated: “The tourism sector is also showing signs of revival, with foreign tourist arrivals in India in FY23 growing month-on-month with the resumption of scheduled international flights and the easing of COVID-19 regulations.”?The coronavirus pandemic not only impacted the tourism sector but also the hotel industry as the average hotel occupancy stood at 33 % to 36 % in 2020.?

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“The COVID-19 pandemic affected the fortunes of the hospitality and tourism industries in recent years. The hotel industry closed the year 2020 with an average hotel occupancy rate of 33-36 %, reflecting a decline of 32 %. In the wake of failing demand and occupancies, hotels reduced tariffs significantly to attract business, thus, pulling down Revenue per Available Room (RevPAR) to [a] dismal low of Rs 1,500- Rs 1,800, a decline of around 57-59 %,” the survey noted.?

SPOTLIGHT

The Indian temple Steve Jobs advised Mark Zuckerberg to visit

The hotel industry, however, recovered in the Q3 of 2021 due to growth in domestic leisure travel, partial resumption of business travel in India and wedding and social events. During the year 2021, small to medium-sized meetings also made a comeback, leading to a rise in demand for hotels. The sector recorded an average occupancy of 42 % to 45 % in 2021, 10-13 %age points higher over 2020.After a revival in 2021, the hotel industry was hit by renewed travel restrictions across states in the beginning of 2022 due to the emergence of the Omicron variant of COVID-19 as people put their holidays and business travel plans on hold. Travel return to normal levels in March 2022 given lower severity, lower hospitalization rates, higher vaccination rate, and overall effective management of the COVID-19 pandemic. The hotel occupancy rate in November 2022 was around 68 % to 70 %, reaching the average pre-pandemic level of 2019-20.?

Budget 2023: Travel industry wants industry status, tax benefits for speedy recovery Budget 2023: While the industry is recovering from the impact of the pandemic, it is concerned about the high GST rates on flights and hotels as well as the limited support from the government, said an analyst. Covid set this sector back by a few years and we witnessed significant decline in profitability for companies, job losses and even business shutdowns," said?Rajat Mahajan, Partner, Deloitte India.

?????Travel startups: Disruption from within?

Travel startups may be well prepared to contribute to the industry’s next digital horizon—a new report examines who is investing, and why. Startups play an essential role?in spearheading innovation that benefits consumers, businesses, and industries. But travel startups have been underfunded when compared to startups in other sectors. Looking back over the past 15 years, the travel and tourism industry received around 1 % of funding for startups across all industries.?This relatively low level of investment stands out in contrast to the industry’s size: Travel and tourism contributed to over 10 % of global GDP in 20192?These factors suggest that it’s a tough industry in which to raise money. Despite these funding challenges, and unprecedented industry uncertainties, over $27 billion worth of investments were poured into travel companies from 2020 to 2022. In fact, in 2021, investment set a new record of just under $11 billion—indicating that investor appetite has not only returned to pre-COVID-19 levels, but even surpassed it.Given this context, a new report?Travel startup: Disruption from within–or not??presents an overview of the travel startup environment, and how the funding landscape has evolved across geographies, and across the different types of travel startups. Analysis is based on information obtained from the Phocuswright startup database and draws on insights from industry executives (see sidebar, “About this research”).The report examines the kinds of investors that are funding these startups—and the types of businesses they choose for investment. It also puts forward possible future scenarios that would have implications for travel companies and stakeholders in the startup space. This article presents some of the key findings.

Fewer travel startups are attracting funding, but when they do, they secure a substantial amount.

Even though funding may be hard to come by, compared to other sectors, investors are interested in travel and tourism. Investment in travel startups has returned to pre-pandemic levels and has even surpassed record-breaking years in the past, such as 2015 and 2019. These peaks were achieved through significant acquisitions that may have consolidated the market. For instance, the online travel agency Expedia acquired HomeAway for $3.9 billion in 2015.

Furthermore, funding per round has increased over the past decade from an average of around $4 million in 2010 to $20 million in 2022, with the steepest increase seen during the pandemic. This indicates that fewer travel startups could be attracting funding, but when they do, they secure a substantial amount. In essence, the relatively small amount of funding that exists is shifting toward fewer startups. Across industries, later-stage funding (i.e., Series B, C, D) has made up the majority of startup investment. Between 2020 and 2022, more acquisitions (e.g., Getaroom.com and On Location Experiences) and public financing rounds (e.g., Sonder and Vaasa) took place than in previous years. This could be symptomatic of a trend: Investors may want to back category leaders that have reached scale.

Hospitality startups remain the leading category for investment

Most recent funding has been channeled to hospitality startups, making up 49 % of investment between 2015 and 2019, and 41 % between 2020 and 2022. This is likely due to the rising popularity of short-term rentals. Startups providing services for short-term rentals, such as Airbnb or AvantStay, accounted for 55 % of hospitality startup funding in 2021.Business travel startups doubled their share of investment during the pandemic, and within this category, startups in the corporate segment, such as the expense-management software provider Divvy, secured 98 % of funding between 2020 and 2022. The MICE segment received the remaining 2 %, likely due to the decrease in events during the pandemic. In the same period, booking and transport startups lost some share of funding as investor priorities may have shifted during the crisis. In the booking category, online travel agency businesses secured 90 % of funding. Overall, the pre-trip category remains the least funded, having attracted 1 % of total funding in the past seven years. Within this category, startups in insurance attracted 84 % of funding in 2021.

Travel companies account for a relatively small %age of travel startup funding. Since 2015, five categories of investors have funded travel startups: Angel and private investors:?These investors oversaw 138 rounds of capital raising totaling $3.6 billion between 2015 and 2021.Banks and the public sector:?These institutions oversaw 125 funding rounds, totaling $6.4 billion. Much of this funding took place in 2021, likely due to pandemic-related bailouts and large rounds of debt funding. Venture capital (VC) and VC-orientated private equity (PE) firms:?This group raised 2,090 rounds of funding, totaling $72 billion.

Travel companies:?These are frequently in-house incubators or joint ventures that provide potential businesses with direct support. Travel companies raised $7.8 billion in investment through 389 rounds. Non-travel companies:?Despite not being in the tourism sector, these companies raised more money ($12.5 billion) in 264 rounds than their travel-industry counterparts. Overall, VCs have been the leading investor category, and spent nine times more than travel companies in 2021. Since 2015, travel companies accounted for a relatively small %age of startup funding, and this has decreased in recent years, dropping from 18 % in 2020 to 5 % in 2021. Between 2015 and 2019, VCs and PEs invested at least twice as much per funding round compared to travel companies. Average funding size was roughly $37 million for VCs and PEs, compared to $17 million for travel companies. This leveled out between 2020 and 2022 where both groups invested approximately $30 million on average per funding round. In 2021, banks greatly increased their investment share and matched VC investments, likely driven by increases in debt funding).

The travel industry could benefit from supporting startups

To date, travel companies have played a very small role in investing in the industry. As startups generally spearhead innovation, travel companies could take up opportunities to support startups—and reap the benefits. Furthermore, by not supporting, or finding ways to engage other players in the industry, travel companies may be missing an opportunity to shape the next generation of travel businesses. And as the investment landscape becomes tougher, travel companies are well placed to ensure that the innovation pipeline continues to flourish, even if VCs and larger players withdraw.Travel companies could become more involved in investing in the industry and bring their expertise to bear on innovation and the sorts of capabilities and technologies that may be needed. And they stand to gain from leveraging startup capabilities in-house. Research into collaboration between corporates and startups in other industries shows that both parties stand to benefit. Startups can benefit from corporate funding, resources, and customer access, while corporates may need the innovation that startups offer to stay ahead of competitors and disruption, and also to access new technology.

Three likely future scenarios could materialize in light of the trends in travel startup funding. Incumbent-driven consolidation:?In this scenario, sustained emphasis on short-term profitability due to inflation and increasing cost of capital would make it difficult for travel startups to attract funding and gain ground in the industry. Funding rounds would be smaller due to early exits, closures, bankruptcies, or consolidation by established and scaled technology-driven firms. Established players would focus more on developing products and services that can be scaled globally and less on optimizing backend processes where rapid scale-up is potentially more challenging, such as manual check-in processes in hotels. This situation would lead to less innovation across the industry. In the long run, reduced innovation due to less startup diversity may require more in-house innovation for optimizing backend processes and technology.

Emergence of multiple niche startups:?Early-stage startups would see sustained and potentially increased funding, while funding for startups in the later stages would plummet. This could lead to an exit wave across later-stage startups due to bankruptcies. At the same time, a wave of new, more diversified, startups could emerge that aim to tackle a variety of niche problems in the industry, such as core technology elements. The result could be an even broader but more fragmented ecosystem of new industry players, leading to higher levels of innovation throughout the industry. Travel companies could acquire distressed startups, at lower valuations, which would boost in-house innovation and allow incumbents to provide new offerings. Travel startups golden 20s:?In this scenario, travel startups across all growth stages and categories would see continuous increases in funding and growth. There would also be an increase in larger investments aimed at developing technology and core industry processes such as AI-enabled fulfillment, and disruption management. Innovation could flourish across the industry. In this fast-growing landscape, competition for funding would intensify and investors’ expectations around performance could increase. At the same time, collaboration would become more complex due to the diversified landscape of partners and suppliers. Established businesses would need to build in-house innovation capabilities organically or acquire them. Differentiation would become more difficult and several leading incumbents may be replaced by new challengers in the market.

?How to entice travelers to change tack to track

Understanding what informs transport choices is the first step to encouraging a shift to trains. As countries across?the world grapple with reducing CO2?emissions in the transport sector. Identifying what motivates consumers to opt for train travel can give operators and policymakers insight into how to improve the attractiveness of this mode of transport. In Europe, various stakeholders—including railway companies, governments, climate change, the shift to passenger rail offers an important lever for and corporates—have already taken a variety of approaches to entice travelers to take the train. For instance, train operators have invested in new high-speed trains to increase attractiveness and convenience. They have also introduced price caps for high-speed lines, or granted free travel for children and youths. Moreover, infrastructure managers have inaugurated new high-speed lines, some of which drastically reduce travel times between different metropolitan areas. Even night trains are experiencing a revival across Euro Governments are setting high ambitions for increasing rail’s modal share, especially in the context of their sustainability efforts. The European Commission launched the Sustainable and Smart Mobility Strategy which lays the foundation for how the European Union transport system can achieve its green and digital transformation and become more resilient to future crises. The strategy includes targets for rail, such as doubling high-speed rail traffic by 2030 and tripling it by 2050. At the same time, countries are pushing to promote passenger rail travel. For example, Germany launched a ticket that allows the use of all regional trains and local public transport at a price of €9 per month for a test period of three months. Organizations across sectors have also committed to decreasing their carbon footprint by shifting their corporate travel toward rail. The Dutch bank ABN Amro, for example, plans to reduce its air travel by 50 % compared with 2017, over the next five years, by ensuring staff travel by rail between European offices.3?Similarly, Lloyds Bank has pledged to peg carbon emissions from business travel and commuting at 50 % below pre-COVID-19 levels, and service providers such as American Express Global Business Travel are striving to “put rail at the heart of business travel”.

To facilitate this shift to rail, train operators and policy makers can make an effort to better understand customer expectations. This could help them to design an offering that competes even more successfully with other modes of transport. Speed, price, accessibility, comfort, and connectivity are the most common criteria that stakeholders in the sector consider as being important to passengers. These expectations can change over time. For example, Wi-Fi and connected services are now almost taken for granted in many regions, while a focus on sustainability might also sway a traveler’s decision. In addition, external events can change expectations—for example, the COVID-19 pandemic gave rise to concerns about cleanliness and health. While these criteria might be relevant for customer satisfaction, they may not shed light on what actually makes people decide whether or not to take the train when compared to alternative modes of transport like car travel. Therefore, McKinsey conducted a targeted customer research survey with the goal of understanding the criteria and trade-offs that influence people’s decisions on mode of transport. This article focuses on results from the European countries in the study, and details findings around customer preferences, highlighting the implications for decision-makers in the rail sector when it comes to making rail an attractive alternative to other modes of transport.

?Overall, customers care about price

When being asked about their travel decisions more generally—without simulating a specific decision situation that enforces the need to balance criteria—passengers consider a broad range of criteria, from the core product offering to auxiliary factors such as the image or status that is associated with a specific mode of transport (see sidebar, “About the survey”). Participants across the nine countries surveyed care more about price than they do about features such as the booking process or additional services. Especially in the five European countries surveyed, price is the priority when choosing how to travel. While sustainability and ecological footprint are deemed relatively unimportant, safety and reliability are valued highly.

What actually matters to people when making decisions on their mode of travel

While these general results shed light on what passengers care about, they do not show how passengers might go about making a decision on whether to travel by train for a specific journey. It is important to understand what actually matters to people when making decisions on their mode of travel. Only then is it possible to determine which improvements could encourage people to switch to rail, and which improvements may enhance the customer experience—but not necessarily lead to an increase in modal share. Therefore, the research included a conjoint analysis where several situations were proposed to participants for which they had to express the mode of transport (for example, car, train, plane) they would prefer.?Safety and reliability are at the heart of customer trust. However, these factors typically inform a more fundamental decision on whether to use a means of transport or not, they do not trigger day-to-day trade-off decisions between the car or the train. As safety, especially, must not be part of an equation to optimize the economic model for train travel, we have not included this factor in our customer trade-off situations.

These situations ranged from short trips (about 30 minutes of travel time, costing up to €15), medium-distance trips (about two-and-a-half hours, between €20 and €300), to long trips (about six hours, between €30 and €500). In addition to travel time and costs, further factors were included such as time to station, frequency of connections, number of required changes, as well as occupancy and the type of dedicated space (for example, a first-class offering). The participants were faced with specific hypothetical travel options thereby simulating actual, real-world, and everyday decisions around the mode of transport. The results of this conjoint experiment confirmed the general findings that in the majority of situations, price is the decisive factor. The second most important factor is travel time, together with the frequency of connections offered. All other attributes might influence overall customer satisfaction but are not directly part of the customer’s evaluation process. When comparing trips of different lengths, long-distance travelers care less about the price, but more about factors related to overall travel time (including the number of required changes), as well as space and comfort of the ride. This is in contrast to medium- and short-distance travelers, who put more emphasis on ticket price.

The study also provides insight into what impact a change in price or travel time could have on rail modal share, across medium- and long-distance trips. For medium-distance trips, if price and travel time of car and train are the same, 25 % of travelers would take the train and 75 % would opt for car. The results show that a shift in a train trip’s price or time advantage can dramatically alter this ratio. In general, passengers are much more sensitive to change of price than any other criterion. The journey from Sevilla to Malaga, in Spain, can be used as an example to contextualize the impact of price and time changes for a medium-distance trip. This journey by train would cost around €40 and take about two hours to complete. The same journey by car (about 200 kilometers) would also take about two hours and cost €70.6?This presents a cost advantage of €30 for the train, at time parity. Within the survey, for this case, 30 to 35 % of participants opted for the train, while the rest chose car. A 10 %age-point increase in rail’s modal share could be achieved, for example, by a combination of decreasing ticket prices by €30 and decreasing travel time by 20 minutes .

On long-distance trips, rail’s modal share—under parity of travel time and price—amounts to about 45 %, which is higher than for medium distances at around 25 %. But the overall relationship between time and price is much the same. For example, the train from Cologne to Leipzig takes around five hours and costs about €140 for a one-way ticket in second class, standard tariff.7?The same journey by car (about 500 kilometers) also takes about five hours and costs around €170. This means it is €30 cheaper to travel by train, at time parity. For this scenario, about 50 % of the survey participants said they would take the train, while the other half opted for travel by car (in this case not accounting for other possibilities such as air travel).In this context, one way to increase rail modal share by ten %age points would be to decrease train ticket prices by about €90. Conversely, if the relative price of train travel compared to car travel increased by €90 (as ticket prices increase or cars become cheaper) rail’s modal share would drop by 20 %age points. These insights reveal that there is a baseline of people who opt for train over car if the travel time and price are the same. This baseline increases with trip distance, although the train remains below 50 %. Even for long-distance trips, the car is on average preferred to train. If operators and policymakers want to shift this baseline, they can consider the overall price differential between transport modes, and also, their performance relative to each other. For example, investments into better road connections would entail commensurate investments into rail to keep up existing modal share.

Time is money: Decreasing travel time improves value

When weighing the relative importance for travelers of price versus travel time across distances in Europe, a travel-time improvement of one minute roughly corresponds to a value of €1. Although this correlation can only be a rough estimate, and varies across distances, it is an important insight for decision makers in the rail sector. Rail modal share can be increased by decreasing travel times or decreasing prices to have a higher cost advantage—or by a combination of both. For instance, making a connection 30 minutes faster will likely increase modal share the same amount as cutting prices by €30.

Customer segmentation: The impact of trip purpose, traveler attributes, and country differences

Travel mode choices vary according to customer segments, as well as individual preferences. Trip purpose is a decisive factor, specifically if it is for leisure (visiting friends and family, going on vacation) or for business travel (including commuting). Unsurprisingly, the analysis shows that business travelers set more store in time savings and tend to care less about price. Conversely, leisure travelers tend to prioritize cost savings over shorter travel times. These findings highlight the importance of tailoring offerings for different customers. If operators and policymakers want to lure more business travelers to trains, they may have to invest in high-speed services. These investments might include high-speed rail networks, new rolling stock, and premium-priced, non-stop express trains that connect cities and business hubs, in parallel with regular service.

The survey results indicate that personal travel preferences are influenced significantly by whether or not a traveler owns a car. Having a car parked in front of the house might present a highly convenient default option that doesn’t involve paying a ticket price (even if the true costs might be higher). And those who do not own cars are far more likely to take a train than car owners—possibly because they do not have any other options. Nonetheless, the distance traveled influences the extent of this preference, as does price. Overall, regardless of other factors, non-car-owners, on average, show 50 % higher rail modal share, depending on price and speed. Above that, car owners’ preferences reveal that factors such as the time it takes to travel to the train station, and the availability of family discounts are relatively more important to them. This also points to what might prevent them from taking the train: in most cases, the car is available, and additional family members can be taken on board at no extra cost. For these types of passengers, the train has to compete against a high level of convenience and value for money.????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????

The survey also compared urban and rural populations. While the relative importance of decision criteria does not differ significantly between the groups , in rural populations the distances to the train station can present a barrier to using rail. In general, results indicate that modal share for urban responders is about 25 to 40 % higher than for rural responders, ranging from one %age point to 15 %age points additional modal share in most cases. This highlights that access to the train network, and lack of other transportation options, are major factors in people’s choice of travel. Operators and governments could entice more rural residents to take the train by improving the capacity and frequency of trains, thereby rendering the car as the less convenient option while offering cost advantages. Finally, data on a country level shows that sensitivity to improvements in travel times and prices varies between countries. For example, reducing travel time by 30 minutes and price by €60 on a medium-distance trip would increase rail’s modal share by about 80 % in the UK, and about 65 % in France, Germany, and Spain, while only by about 40 % in Italy (which has the lowest rail modal share, at around %, among these countries). This underlines that even though significant impact can be achieved by improving travel times and prices, other basic parameters of the rail offering and surrounding conditions in society need to be taken into account. This also highlights the importance of applying the right levers based on the region. Overall, a targeted approach that suits customer preferences in different segments may be key to improving modal share.

There is potential to increase modal share

In principle, results indicate that trains are reasonably competitive against car travel if costs and travel times are equal, and there is potential to increase rail’s modal share. However, modal share for trains seem to have clear lower and upper boundaries. At the lower end of all analyzed scenarios for Europe, even when the train offering is drastically disadvantageous in terms of cost and travel time compared to the car connection, there is a baseline clientele of around 10 % of people who seem to take the train regardless of conditions. At the upper end, even when the train significantly outperforms the car in terms of travel time and price, about 40 to 45 % of respondents are still unwilling to take the train. This indicates some maximum attainable modal share for trains versus cars, if operators can make rail price and time competitive. In the five European countries in the survey, the average modal split in 2019 was about 9 % for trains and 91 % for cars (not accounting for alternatives such as bus and plane).8?Hence, the train offering seems to reach the baseline clientele, who would take the train no matter what, which means there is huge potential to increase rail’s modal share.

Getting rail on track

These findings could have several implications for decision makers in the rail sector. Customers consider basics such as safety and reliability as given—and if these conditions are not in place then they should be tackled first.??Overall, ticket price is the main lever that operators can pull to improve rail’s attractiveness, for journeys of all distances. Travel time is also important, especially on longer routes. Accessibility matters too, and the offer can create demand. While other factors such as station connectivity, comfort while traveling, and an integrated end-to-end travel experience are important and cannot be neglected—these and other additional services may not increase modal share on their own. Tweaking ancillary services will not have as much impact as getting the price and time right.It is important that operators try to understand passenger preferences holistically—especially their willingness to pay, and their value of time. This includes understanding what alternatives are available, as passengers evaluate ticket prices against these alternatives.

Given these findings, train operators could adopt or enhance a value-based pricing strategy that goes beyond setting prices on distance traveled, and takes passenger’s alternatives into consideration. By doing this, they could achieve higher earnings on trips where people have a high willingness to pay as trains are seen to be more attractive than other modes of transport. Operators could also fill empty trains by offering attractive prices, thus limiting the need for state subsidies, as train’s fixed costs are relatively high. Operators could also use these survey insights to develop even more targeted offerings for different customer segments. This may increase the customer base while keeping costs under control. As a competitive offer in terms of travel time drives demand, significant infrastructure investments may be needed to improve high-speed rail travel in combination with the overall network’s density. For Europe, the challenges in doing so include realizing the projects already envisaged in the context of the Trans-European-Network (TEN), and further developing a uniform cross-continental plan to coordinate infrastructure expansions while accelerating the refurbishing and upgrading of current infrastructure. Regulators, meanwhile, could build on the observation that relative price differences matter, especially in the trade-off of train versus car. An increase in rail’s modal share cannot only be achieved by cutting rail ticket prices, but also by increasing or making transparent the cost of other modes of transport, specially the car. Helping travelers to understand the true cost of car rides could compel people to shift to rail.Top of Form

TRAVEL & HOSPITALITY

sector is on the road to recovery, with domestic tourism touching pre-Covid levels, and high interest for international travel in the new year. ?on a kayaking holiday in the Maldives, a magnet for sustainable travel where accomodations are eco-friendly Image: Shutterstock The travel and hospital.

Rapid vaccination drives and easing of Covid-19 restrictions enabled the travel industry to bounce back stronger in Q2 of 2022, with many saying it is the year the sector took a rebirth.

While domestic tourism has touched pre-Covid-19 levels, inbound tourism, ie, foreigners travelling to India, continues to be affected, says Rajiv Mehra, the president of Indian Association of Tour Operators. “By March 2023, we will be at one-third the level we used to be before the pandemic.” He adds, “India has just opened up e-visas to UK nationals again, so that’s a big relief.” By the end of the year, the travel industry is expected to touch the $14.92 billion mark, according to Rikant Pitti, co-founder of online travel aggregator (OTA), EaseMyTrip.

“We are going to get 66 new airports in the next decade. From 85 million domestic flyers in FY22, the number is going to shoot up to 330 million in FY32. The industry will grow 3.5 times in the next few years,” he says.

Hotels and resorts, like airlines, saw an improvement in business as well. At IHG Hotels and Resorts, for instance, owing to the growing demand for domestic leisure travel, early return of business travel, weddings and conferences, the business did significantly well, informs Sudeep Jain, MD, South West Asia.

In Q2 2022, IHG reported a jump in occupancy levels from 60 % in Q1 to close to 75 % in Q2 2022.

It was a similar case at Conrad Bengaluru. “We have touched high occupancies this year, close to pre-pandemic level, but 2023 will be a crucial year as we expect a higher surge in overall business from both domestic and international markets,” says Rajan Malhotra, commercial director.

TRAVEL TRENDS 2022

If 2021 was the year of work from anywhere, 2022 can be termed as the year of the bucket lists, says Alike Bajpai, group CEO and co-founder of OTA, Ixigo. “Travelers are keen on bigger, grander, and more adventurous escapes,” he says. Spiritual hubs were also in demand this year. Compared to 2021, cultural destinations like Varanasi saw more than 50 % rise in search queries for train travel this year, while Tirupathi in Andhra Pradesh witnessed one of the highest comebacks with more than 200 % increase in train search queries for summer travel in 2022, according to data by Ixigo.

Local and exploratory travel experiences also gained traction with quick weekend getaways and staycations. Mindful travel, however, was the flavor of the year. As per a global study by OTA Booking.com in April 2022, Indian travelers show an inclination towards more responsible tourism, with 94 % of the country’s respondents confirming that sustainable travel is important to them, and 88 % saying they would be more likely to choose a sustainable accommodation. Travelers are hence choosing less-crowded destinations, are mindful of reducing food wastage, single-use plastic, and opting for public transport. Another November report by OTA Kayak had similar findings. About 43 % of Indian respondents stated that sustainability will be one of the main criteria for their summer holiday in 2023.

“Traveling responsibly and looking out for sustainable accommodations and travel options was one of the most important trend and a great behavioural change we have witnessed in the past two years,” says Malhotra of Conrad Bengaluru.

???Scope for international travel

Compared to 2019, flight prices have increased by 23 % for international routes, and by 66 % for domestic travel, according to Kayak. However, Indians don’t seem to be deterred. “We have witnessed an increase by 30 % compared to 2021 in pre-bookings for international flights for 2023,” adds Pitti of EaseMyTrip. With airline capacity increasing, and affordability options such as no-cost EMI, buy-now-travel-later booming, international travel will continue to get a push, says Karthick Prabhu, head of strategy at

“So far, international travel recovery is about 75 % compared to pre-Covid levels. We are bullish that this trend will continue,” says Prabhu, adding that the interest for destinations such as Dubai, Bangkok, London, Singapore, and Pattaya continues to be high.

Travel in 2023

The industry has made its revival sooner than anticipated from the Covid-19 burn, says Pitti. “Despite the price hike, people are willing to put aside their travel budget. This shows the future of the industry.” Prabhu of Clear trip anticipates that the number of vacations taken per year will increase, while wellness tourism will be another strong trend that will continue in the coming year.

Travel in 2023 is going to be about gaining unique experiences, feels Ixigo’s Bajpai. “We expect people to go beyond regular requirements, pushing their s, it’ll be too soon to pre-empt. Though one thing that is key to the Indian market is its young population and their eagerness to travel for experiences and enrichment,” says Sakari Romu, general manager,

?Foreign Exchange Earnings (FEE) (in rupee & US $ terms) through in India in November 2022 Based on the credit data of Travel Head from Balance of Payments of RBI, Ministry of Tourism estimates monthly Foreign Exchange Earnings (FEEs) through tourism in India, both in rupee and dollar terms. The highlights of the estimates of FEEs from tourism in India for November, 2022 are as below: ?Foreign Exchange Earnings (FEEs) from Tourism in Rs. Terms ? FEEs during the month of November, 2022 were Rs. 15,149 crore as compared to Rs. 7,022 crore in November, 2021. ? The growth rate in FEEs in rupee terms in November, 2022 over November, 2021 was 115.74%. ? FEEs during the period January-November, 2022 were Rs. 1,15,541 crore as compared to Rs. 56,618 crore in January- November, 2021. ? The growth rate in FEEs in rupee terms in January-November, 2022 over January November, 2021 was 104.07%. ii. Foreign Exchange Earnings (FEEs) from Tourism in US$ terms ? FEEs in US$ terms during the month of November, 2022 were US$ 1.8527 billion as compared to FEEs of US$ 0.937 billion during the month of November, 2021. ? The growth rate in FEEs in US$ terms in November, 2022 over November, 2021 was 97.73%. o FEE during the period January- November, 2022 were US $ 14.621 billion as compared to US $ 7.669 billion in January- November, 2021. ? The growth rate in FEE in US$ billion in January- November, 2022 over Jan?November, 2021 was 90.66%

Industry Scenario 2023

Over the last 8.5 years, India has built extensive tourism infrastructure worth approximately?$1 Bn?(INR 7,000 Cr) to improve tourist experience. The travel market in India is projected to reach $125 Bn by FY27 from an estimated $75 Bn in FY20. In FY20, tourism sector in India accounted for 39 Mn jobs, which was 8.0% of the total employment in the country. By 2029, it is India is estimated to contribute 250 Bn USD GDP from Tourism, 137 Mn jobs in the Tourism sector, $56 Bn?in Foreign Exchange Earnings and 25 Mn foreign arrivals are expected to be achieved by 2030.By 2028, Indian tourism and hospitality is expected to earn $50.9 Bn as visitor exports compared with $ 28.9 Bn in 2018. International tourist arrivals are expected to reach 30.5 Mn by 2028 $512 Bn contributions to India's GDP by 2028 and?53 Mn jobs by 2029.?

GROWTH DRIVERS???????????

Incredible India campaign, Extending international tourism business in India, E-Tourist VISA facility, E-visa facility extended to 156 Countries under 5 sub-categories i.e ‘e-Tourist visa’, ’eBusiness visa’, ‘e-medical visa’, ‘e-Medical Attendant Visa’ and ‘e-Conference Visa’

Foreign Tourist Inflow to India March, 2022 Ministry of Tourism compiles monthly Foreign Tourist Arrivals (FTAs) on the basis of information received from Bureau of Immigration (BOI).

The following are the important highlights regarding FTAs during the month of March, 2022. Foreign Tourist Arrivals (FTAs): · FTAs in March, 2022 were 3,42,308 with a positive growth rate of 177.9% as compared to 1,23,179 in March, 2021. · FTAs during the period January- March, 2022 were 7,84,750 as compared to 3,06,641 in March, 2021 registering a positive growth of 155.9%. · The percentage share of Foreign Tourist Arrivals in India during March 2022 among the top 15 source countries USA (24.58%) followed by UK (14.01%), Bangladesh (11.78%), Canada (6.86%), Australia (5.68%), Sri Lanka (4.30%), Nepal (3.10%), Germany (1.94%), Singapore (1.79%), France (1.69%), Maldives (1.51%), Portugal (1.27%), Russian Federation (1.00%), Oman (0.95%) and Italy (0.93%). · The percentage share of Foreign Tourist Arrivals in India during January- March 2022 among the top 15 source countries USA (26.18%) followed by UK (13.05%), Bangladesh (11.18%), Canada (7.39%), Australia (5.67%), Sri Lanka (4.36%), Nepal (2.58%), Germany (1.77%), Portugal (1.71%), Maldives (1.67%), Russian Federation (1.61%), France (1.59%), Singapore (1.41%), Oman (0.96%), and Italy (0.96%). · The percentage share of Foreign Tourist Arrivals in India during March 2022 among the top 15 ports was highest at Delhi Airport (41.58%) followed by Mumbai Airport (14.55%), Chennai Airport (10.08%), Bengaluru Airport (5.86%), Hyderabad Airport (4.85%), Kolkata Airport (4.55%), Cochin Airport (4.25%), Haridaspur Land Check Post (4.01%), Ahmedabad Airport (3.47%), Trivandrum Airport (1.24%), Dabolim (Goa) Airport (1.02%), Gede Land Check Post (0.86%), Amritsar Airport (0.83%), Tiruchirappalli Airport (0.65%), and Agartala Airport (0.64%). · The percentage share of Foreign Tourist Arrivals in India during January-March 2022 among the top 15 ports was highest at Delhi Airport (41.42%) followed by Mumbai Airport (15.04%), Chennai Airport (9.99%), Bengaluru Airport (5.18%), Hyderabad Airport (4.85%), Cochin Airport (4.37%), Kolkata Airport (4.29%), Ahmedabad Airport (4.21%), Haridaspur Land Check Post (3.54%), Dabolim (Goa) Airport (1.36%), Trivandrum Airport (1.30%), Gede Land Check Post (1.00%), Amritsar Airport (0.78%), Tiruchirappalli Airport (0.67%), and Agartala Airport (0.53).

More than half of the Ministry of Tourism’s budget is channelized for funding the development of destinations, circuits, mega projects as well as rural tourism infrastructure projects. Economical treatment, quality healthcare infra & highly skilled doctors. Promote intra-regional trade among Indian Ocean Rim (IOR) countries.??GIS - based 4map displaying available infrastructure for setting up business operations in the state. India is poised to contribute?250 Bn USD GDP?from Tourism, 137 Mn jobs in the Tourism sector, $56 Bn in Foreign Exchange Earnings and 25 Mn foreign arrivals are expected to be achieved by 2030.

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The percentage of Tourist and travel to the total

Year 2017 (5.70%)?

Year 2018 (5.43%)?

Year 2019(5.80%)?

Year 2020 (2.77%)?

Year 2021 (5.80%)?

Year 2022 (**)

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CONCLUSION

The following is a synopsis of India's tourism statistics 2022: The total International Tourist Arrivals in India was 9.7 million in 2019 whereas for 2022 it was?5.2 million, 46.3 % drop. According to the statistics of India Brand Equity Foundation (IBEF), the Tourism and Hospitality Industry in India is reaching to robust demand, and the travel market is projected to reach US$125 billion by FY27 from an estimated US$75 billion in FY20. The influx of international tourists in India is projected to reach 30.5 million by 2028. The statistics are a reflection of the booming growth and potential of the hospitality sector in India that is rising after the lull created by the pandemic. India is one of the most popular travel destinations in the world that has resulted in Indian tourism and hospitality as industry to emerge as the one of the key growth drivers amongst service sectors in India. The tourism and hospitality sector encompass hospitality services like restaurants and hotels that are a significant source of foreign exchange and crucial for socioeconomic growth.?

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Policy Support and Union Budget 2022-23

In the Union Budget 2022-23, Rs 2400 crore (US $ 309.13 million) had been allocated to the Ministry of Tourism that was higher than the allocation in FY 2021-22, by 18.42%. The Ministry of Tourism also sanctioned 76 projects worth US$ 678.39 million under the Swadesh Darshan Scheme for the growth of the tourism infrastructure in the country. The government has been constantly supportive of the industry post pandemic and is making strategic efforts in the direction by providing free loans to MSMEs to revive from the crisis and provide boost in the tourism sector. The government is also making serious efforts to boost the FDI in the tourism sector, by allowing 100 % FDI, through automatic route, and a 5- year tax holiday has been formulated for 2 -3-4 star hotels that are located around UNESCO World Heritage Sites with Mumbai and Delhi, being an exception.?

Union Budget expectations 2023-24

The finance minister, Smt Nirmala Sitharaman will be presenting the Union Budget to the Parliament on February 1, 2023. Every industry has its own perspectives and expectation from the new budget. When compared to the previous two fiscal years, the hospitality and tourism sector has recovered significantly in the current fiscal year. However the industry expects reductions on the levied current GST, in order to control the rising costs associated with GST. With the Union Budget, 2023-24 the industry expects a lot of sops for the industry. The demand lays expectations for tax relaxation and benefits, infrastructure status and incentives. The GST rates for the hospitality sector In India, is unfortunately one of the highest in the world, and is responsible for making both domestic and inbound tourism expensive. This creates cut-throat competition from other countries, whose GST rates are relatively cheaper, and makes their tourism package more cost-effective when compared to India. The GST in India is distributed slab wise, of under an over 7500 cost/per room which creates compliance issues.?A uniform one slab rate @12 % can help India stay competitive in the global arena. The current differential regulation impacts India-based travel companies and start-ups. It creates an imbalance as it affects the Online Travel Agencies (OTAs) that are operating a permanent establishment in India. For example it is mandatory, as a direct tax provision, to collect 5 % TCS with Pan and 10% TCS without PAN from customers who avail of an overseas package, from an online e-commerce entity. The government must review the differential regulation to avoid an unfair advantage to foreign based entities which impacts Indian hospitality industries and leads to a loss of tax revenue.?An infrastructure status is a long-awaited demand of the sector. With the granting of infrastructural sector, the travel and tourism sector will have easier access to institutional credit which will in turn increase India’s tourism competitiveness for a long-term sustainable growth in the sector. India’s travel & tourism sector has great potential for steady growth and considering the plummeting demand and influx of foreign visitors each year, specific and robust amendments in the Union Budget 2023-24 will serve as a catalyst for further growth and expand the future outlook of the industry, and get the sector on track, after the severe downfall that was caused by the pandemic. It is obligatory for the central and state government to work in liaison to facilitate the sector and revive it to greater heights.?