The travel and tourism industry's direct contribution to India's Gross Domestic Product (GDP) is expected to post an annual growth rate of 10.35 percent between 2019 and 2028, according to a report by the Indian Brand Equity Foundation, an Indian government trust.
In 2020, the travel and tourism industry's contribution to GDP was $121.9 billion; the figure is expected to reach $512 billion by 2028, said the report, which comes at a time the sector is bouncing back from a pandemic-induced downturn.
The pandemic dented travel and tourism globally, causing the industry a loss of almost $4.5 trillion. Domestic visitor spending decreased by 45 percent, while international visitor spending declined by 69.4 percent compared to 2019, according to an estimate by the World Travel & Tourism Council.
Vinutaa S, assistant vice president of credit rating company ICRA Limited, said: "The hotel industry has witnessed a healthy recovery in demand over the last 2-3 months. Leisure travel, transient demand, MICE/weddings and gradual pick-up in business/diplomat travel have been the primary demand drivers. Although FTAs have been reasonably healthy in April and May 2022, FTA recovery to pre-COVID levels could be a few months away and domestic tourism will be the prime demand driver."
MICE is short for meetings, incentives, conferences and exhibitions. FTAs stand for foreign tourist arrivals.
"ICRA estimates pan-India premium hotel occupancy to be ~54-56 percent in 2M FY2023. Pan-India premium hotel ARRs stood at ~Rs. 4,500 – 4,600 in 2M FY2023 and were only at a 10-15 percent discount to pre-Covid levels. Leisure destinations and some high-end hotels reported occupancy and ARRs higher than pre-Covid levels, with the surge in demand. ICRA currently expects the industry revenues and margins are expected to reach pre-Covid levels by FY2023," Vinutaa added.
ARR is short for average room rate.
ICRA expects international air passenger traffic at Indian airports to rise 80-85 percent this fiscal year. By May, traffic had already increased by 72 percent over pre-COVID levels, according to a PTI report.
From January to March 2022, domestic airlines carried 248.00 lakh passengers, an increase of 6.06 percent year on year.
Anil Chadha , Co-Chairman, FICCI Travel, Tourism and Hospitality Committee, said, "The travel Industry has gone through the worst in the previous two years due to the pandemic. However, things are turning around and bouncing back like never before. April and May have been good for the industry . All segments are recovering well . While domestic leisure continues to be one of the drivers of demand, corporate travel has also recovered well. MICE business is slowly but surely coming back even as the big Indian Weddings have already make a grand comeback. Just like rooms, the demand for Food & Beverage across restaurants and takeaways is very reassuring too with increase in both restaurant and banquet business."
"What started off as sustained “Revenge travel”in the domestic segment is now showing healthy signs of converting to a sustainable demand segment for the future With the expected advent of foreign travellers into the country, overall business and profitability should only get better from here on," he further added.
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