India outbound: Forecast 2018

iGATE Research report entitled ‘India Outbound Tourism Market and Forecast to 2018’ provides an in-depth analysis and clear picture of the booming India outbound tourism industry

The sluggish economy and poor sentiments did not have any adverse impact on the Indian outbound tourism market. Despite drastic fluctuations in rupee value recently, numbers of outbound tourist’s departures from India did not take a hit. India has emerged as the world’s fastest–growing outbound market and in absolute numbers it is second only to China.

The foreign tourism boards are gearing up to meet the growing number of Indians who are travelling abroad and splurging. While many of the National Tourism Organisations have established their own offices in the country, others are making use of representations or their embassies/ cultural desks to test the waters, before taking the plunge. Personal and official travel for holiday/ leisure, business and MICE tourism are the most significant contributors for growing outbound travel. The easy availability of attractive packages, increased promotion by travel agents/ tour operators and destination countries will further drive outbound departures.

Visit analysis

It is predicted that India will account for nearly 30 million outbound tourists by 2018. While business travel, holiday and VFR trips dominates outbound volumes, people are also opting for niche products like sports tourism, luxury travels, MICE, honeymoon packages and cruises.

Thailand has emerged as the most popular tourist destination for Indian travellers. In 2013, over six per cent of the total Indian outbound tourists visited Thailand. Thailand has seen growth in the number of Indian travellers due to its wide range of ‘value for money’ offerings that include leisure sports, fine dining, adventure services, wellness and quality hotels and resorts.

Singapore is the second most popular destination for Indian outbound tourists being followed by United States and China which stands at the third and fourth spot respectively. Malaysia is the fifth most popular destination for Indian tourists.

Spending analysis

Indian outbound tourists spending was around US$ 17 billion in the year 2013. In terms of spending by Indian tourists, United States is the leader with over 30 per cent of spending share in 2013. United States is likely to maintain dominance during the forecasting period as well. Thailand and Singapore together accounts for around 15 per cent share of total outbound spending by Indians in 2013. Australia and United Kingdom stands at the fourth and fifth spot respectively and the gap between them are narrowing. Italy held sixth position in the year 2013, being followed by Malaysia, which is at seventh spot in the same year.

Emerging countries

Indian tourists have now started exploring new destinations as well. Among the emerging countries, Sri Lanka, Nepal, China, Japan and South Africa are becoming the destination of choice for Indian tourists. In 2013, over 200 thousand Indian tourists visited Sri Lanka while number of Indians visiting Nepal was a little less than Sri Lanka. Japan is also focusing on plans to triple the number of tourists travelling from India to the country by 2020 from the 2013 level. Countries like Indonesia, Philippines, Mauritius and Egypt are also seeing an increase in influx of Indian tourists. We believe that increased promotional activities by travel agents will further drive outbound departures to many new destinations in the years to come.

Driving factors

Much of India’s outbound growth may be attributed to increasing disposable income, decreasing cost of international airfare and availability of affordable travel packages. In particular, the rise of low cost carriers (LCCs) in India has impacted the way Indians travel as they now have more alternatives, beyond domestic travel, when planning for short holidays.

The proliferation of the internet has also significantly changed the way Indian travellers now plan and book their trips. The availability of information on the internet has instilled greater confidence among Indian travellers to look farther when planning their travels. With information readily available at the click of a mouse, consumers are no longer dependent on traditional travel agents. However, feedback and recommendation from travel agents is still held in high regard.

In December 2011, Outbound Tour Operators Association of India (OTOAI) – a national, not–for–profit organisation was formed by India’s outbound tour operators and travel agents in order to promote quality outbound tourism. Since its inception, OTOAI has also established itself as a collaborative platform for all key stakeholders to engage, network, discuss, resolve and address multiple issues concerning the industry and its constituents.

The Indian film industry, termed as Bollywood has significantly influenced Indian culture. According to an estimate, almost 14 million people in India enjoy Bollywood movies on a daily basis. Bollywood has always been recognised as having the strongest influence for potential Indian travellers. For example, Bollywood films such as Dilwale Dulhania Le Jayenge, Kabhi Khushi Khabhie Gham and Mujhse Dosti Karogi have all presented Switzerland in a new light to Indian tourists. More recently, with the popularity of Bollywood blockbuster Zindagi Na Milegi Dobara (ZNMD), Spain witnessed a surge in the number of India tourist arrivals in 2012 and 2013.

The challenges

In India, companies tend to specialise in either inbound or outbound; few do both successfully. The skill sets and experience needed for both segments are unique and not  complementary. The average Indian travel agent deals with customers who are extremely price sensitive and are inherent shoppers. Bargaining is a cultural trait. There is basically a feeling that agents have no right to make money. In general, agencies in India are not equipped or trained in charging fees. Another hurdle for Indian outbound tourism market is the rupee depreciation that has become a very big hurdle for Indian outbound tourism. Destinations such as United States, Canada, London, France, Italy and Switzerland have seen a dip in bookings due to rupee depreciation.

(Courtesy: S S Sah, Project Manager, iGATE Research)

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