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International Referred Research Journal ISSN-0975-3486 VOL.

- ISSUE- 8 RNI : RAJBIL/ 2009/30097

Research PaperComputer Sciecne

GLOBAL RECESSION : CHALLENGES AND OPPORTUNITIES FOR INDIAN TOURISM AND HOTEL INDUSTRY
May, 2010

* Muthe, P.R.

* Asstt. Prof. Head Economics Dept. Indira Gandhi ( Sr. ) College, Cidco,
Referred By INTRODUCTION : Almost everybody today seems to be discussing about Recession its impact on emerging countries because almost all business sectors have been more or less affected by this Global recession. A Global recession is a period of Global Economic slow down. Which is really started in mid 2007 and shortly spread over the world. The current wave of US recession has made every Nation to look inwards to think seriously regarding impact of recession on different sectors of their economy. The Indian economy is consist of majrly three sectors 1) Primary sector ( known as Agriculture ) , 2) Secondary sector ( known as Industry ) and 3) Tertiary sector ( known as service sector ) which service sector recently alone contribute 55.1% of Indian GDP. This paper attempt to analyse the impact of global recession on service sector in India, specially Tourism and Hotel Industry in the country, because tourism and hotel industry has playing the vital role in service sector regarding economic development of Indian economy. This paper further focuses on challenges and opportunities for tourism and hotel industry during recession period. MEANING OF RECESSION : Before enter into the actual subject lets understand the term Recession in economics sense. The International monetary fund ( IMF ) defined a Global recession as global economic growth of 3% or less is equivalent to a global recession. A recession is a general slowdown in economic activity over a particular period of time. During recession, many macroeconomic indicators vary in similar way. Production (GDP), employment, investment, spending, capacity utilization, households income, business profit and inflation all fall during recessing, bankruptcies and the unemployment rate rises. CURRENT GLOBAL RECESSION : Current Global Recession beginning in December 2007 in United States ( with collapse of Banking system ) and shortly spread over the world. Much greater intensity seems since September 2008 the industrialized world has been undergoing a recession. Several countries get influenced by the recession wave, are experiencing rapid contraction in their GDP, employment level, Investment activities. This affected badly on Indian economy sectors, like service sector including Banking, Communication & transportation, health, education, Tourism and Hotel industry growth. Other sector like GDP, Industrial output, employment and investment. MEANING OF TOURISM : - The World Tourism Organization defines Tourism as People who travel to and stay in places outside their usual environment for more then twenty four hours and not more than one consecutive year for leisure, business and other purposes not related to the exercise of an activity remunerated from within the place visited. - The term Tourismis defined as travel for recreational, leisure or business purposes. - Tourism is the temporary, short-term movement of people to destination outside the places where they normally live and work and their activities during the stay at each destination. Types of Tourism In India : There are several segments within the Tourism in India and some new up-coming tourism segments added recently. The major Kinds of Tourism are as follow : A) Heritage Tourism : India has a rich cultural history

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International Referred Research Journal ISSN-0975-3486 VOL. - ISSUE- 8 RNI : RAJBIL/ 2009/30097 and reflection of its glorious past is still visible in its Tourism Competitiveness Report (TTCR) 2009 by the numerous places, forts, places of worship of various World Economic Forum, India is ranked 11th in the Asia religions, ancient monuments etc. So, tourism regarding Pacific region and 62nd, Moving up three places on the above mentioned kinds known as Heritage tourism. Overall List of the worlds attractive destinations. It is Heritage tourism itself can be further classified as ranked 14th best tourist destination for its natural colonial heritage, religious tourism, industrial, heritage, resources and 24th for its cultural resources, with many urban renewal and ethnicity. The Indian Government world Heritages sites both natural and cultural, rich started to preserving the heritage sites from a tourism fauna and strong creative industries in the country. perspective. India also made it to the list of Rising stars or the 2) Adventure Tourism : countries that are likely to become major tourist Now a days the popularity of adventure tourism has destinations in the next five year, lead by the united increased. India has varied geographical and climatic Arab Emirates, china and Vietnam. The Indian travel conditions offer excellent environment & opportunities and tourism industry ranked 5th in the Long-term growth for adventure sports. Adventure sports like - trekking (10 year) and is expected to be the second largest , snow climbing. Rock climbing, Cuba driving, skins & employer in the world by 2019. Estimates of Foreign river rafting can be undertaking in the country and the Exchange Earnings (FEE) and foreign Tourist Arrivals country offers several location for such tourism, like (FTA) are important indicators of the tourism industry. the trans Himalayan region, Garhwal & Kumaon Foreign exchange earning during the month of mountains, western Ghats, desert of Rajasthan, November 2009 were US $ 1.2 billion as compared to US Andaman & Lakshadeweep Isalands etc. Which are $ 1 billion in Nov. 2008. Travel and Tourism sector most popular destination for adventure tourism. accounts for 6.4% of total employment, which is 1 in c) Eco Tourism: every 15.6 jobs in 2009. In short, tourism Industry in India has abundant Natural wealth. Eco India has greater potential to generate both employment tourism is belong to natural beauty & diversity. It is as well as income in the economic for economic relatively new segment in India. India with it natural development. Impact of global Recession on Tourism diversity is one of the pristine places in the world for Industry: eco tourism. The Himalayans region, Kashmir valley, The Indian Tourism & Hotel industry was kerala, Andaman and Nicobar Islands and Lakshadweep somewhat badly hited during the past one year by Islands, wild life in forest and Western as well as Eastern global economic slowdown. The Ongoing global Ghats are some of the hot spots for eco. Tourism in financial crisis badly impacted Indian tourism sector, India. resulting in declining in the number of foreign tourist d) Medical Tourism:inflow. The terrorist attack on Mumbai and most It is one of the rapid growing segment in India. recently the swine Flu (influenza H1 N1) scare magnified Its related to health care therapy system. India has the extent of leakage in revenue from tourism industry. been able to leverage on certain advantages it has over For the Indian tourism sector, the year 2008-09 had a other countries like highly skilled doctors, cost effective year of challenge and response. Foreign tourist arrivals treatment, improved quality of private health care etc. continued to deteriorate due to the impact of global India provided treatments for which overseas patients economic crisis with the growth of overseas tourists are heart surgery, cosmetic surgery, dental care, and visiting India slowing down to 5.6% in 2008 as against knee transplant. Indias traditional rejuvenation therapy 14.3% in 2007. And declined the number of international like yoga and ayurvedic therapy are also attracting tourist visited India in January 2009 were 4.87 lakh as foreigners to the India. Indias health care delivery compared to 5.91 lakh in Jan. 2008. Data released by the market is estimated at Us $18.7 billion. And growing at Ministry of Tourism shown that, Indian tourism was about 13% annually. Wellnes & Spa tourism also showing of flattish trend of arrivals upto 2002, it started becoming popular today. gaining popularity during year 2002 to 2007 but cause TOURISM INDUSTRY IN INDIA :of Global financial crisis tourist in flow gradually showed India has great ancient Historical, Cultural a down turn upto 2010 and it is expected it will gaining background and India also has abundant natural wealth after 2010. Decline in number of foreign tourists also hit which attract worldwide tourists. As per the Travel and Indias foreign exchange earnings, reducing the income

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International Referred Research Journal ISSN-0975-3486 VOL. - ISSUE- 8 RNI : RAJBIL/ 2009/30097 to $ 941 million in Jan.2009 as Compared to $1,382 The state of turmoil in global financial markets has million in Jan. 2008. Further Ministry of Tourism indicate generated new concerns for the hospitality industry. that the tourist arrivals grew by 0.6% year-on-year in Existing hotel in India are also likely to benefit from the July 2009, which only 0.2% growth was recorded in improved performance of the non room source of June 2009. Tourist arrival in July 2009 totaled 4,29,000, income namely food and beverage, spa, corporate club up as Compared 3,41,000 totaled in June 2009. While it membership and other ancillary services.India is is positive, that tourist arrivals have returned to growth. expected to see Asias biggest drop in corporate travel It indicate that tourism industry starting coming out spending failing 25% in year 2009 compared to year from recessionary impact. The rising arrivals during 2008. Growth rate of the aggregate sale of hotel the western hemisphere summer reflect the traditional companies fail down to 9.1% during Dec. 2008 quarter cycle of tourist arrivals to India and the publisher from growth rate of 17.4% during Dec.2007 quarter. believes that arrivals will slow again once the summer The financial year 2008-2009 was an unforgettable one holiday season is over. Tourist arrivals will then begin for the Indian tourism and Hotel industry, with the to rise again around the Christmas season, although Mumbai terror attacks and global economic down turn this may not be sufficient to compensate for the sharp affecting the industries performance. Falls in arrivals earlier in the year 2008-09. As a result, The Hotel industry too, observed an overall they continued to expected a decline in tourist arrivals decline in occupancy and Revenue Per Available Room in 2009 4.8 million from 5.5 million in 2008. ( ReV PAR ) in most cities. According to WTTC HOTEL INDUSTRY IN INDIA :estimates, the adverse impact of economic downturn Hotel industry is one of the most important as on Indias tourism will be far less than global tourism well as indivisible part of Tourism industry in the world. industry. Tourism being one of the determinant of GDP, Hotels are one of the most important support service Higher GDP will lead to higher disposable income that affect the Foreign Tourist Arrivals (FTA) to a leading to surge in tourism and vice-versa. Country. In India Hotel Travels and Tourism industry CHALLENGES FOR TOURISM AND HOTEL is a US $ 32 billion with a Contribution of 5.3% to Indian INDUSTRY IN INDIA :GDP. 100% Foreign Direct Investment is permitted in 1) Poor Infrastructure:-Bad roads, no communication Hotel and tourism under the automatic route in India. facilities and lack of proper accommodation facilities In recent year many international hotel chains are setting etc. 2) Low security :-No security of life in J & K up hotels in India and many international tour operators state. Rasiyan, French and Japanese nationals were are establishing operations from India. Large scale sexually assaulted in Goa, & Delhi, terrorist attacks and global chain like Marriott International, Intercontinental hundred of other indicate like cheating to murder that Hotels Group, Cabana Hotels, Hitton Group, Accors, tarnish the image of country. 3) Lack of trained Berggrusen Hetls and the Major players in the industry professional :-In both Hotel and tourism industry and are, Taj Hotel Group ( Known as Indian hotels Company related several activities. 4)Language and cultural Ltd.) , The Oberoi, welcome Group of Hotels, Hotel barriers :-Between rural peoples and foreign tourist. Lella Venture and The Ashoka chains of Hotels owned 5) Problem of eassy access :-To tourist destinations, and operated by the Indian Tourism Development there is lack of sufficient Air, road, train connectivity. Corporation (ITDC). There are around 1000 classified OPPORTUNITIES FOR FUTURE GROWTH OF hotels and Hotel room availability is pagged at 97,000 INDUSTRY :rooms. Hotels are classified into six categories According to the Indian Tourism Industry according to the star rating assigned by the Department Analysis report India represent one of the most of Tourism. About 30% of the rooms fall under the Five potential tourism and hospitality market in the world. Star deluxe categories. Various Hotel Groups and Indian tourism and hospitality sector has reached new international investors have planned to make a large- heights today. Travelers are lacking new interests in scale invest In the hotel industry. In India investment the country which leads to the up grading of the is likely to torch US $ 11.41 billion within coming two hospitality sector. Indian hospitality industry has year which would add 65,000 additional rooms in various gained a level of acceptance world over. Many tourist hotels in India. prefer Indian hospitality services not for its quality but IMPACT OFRECESSION ON HOTELINDUSTRY:- India being a cheap destination for leisure tourism.

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International Referred Research Journal ISSN-0975-3486 VOL. - ISSUE- 8 RNI : RAJBIL/ 2009/30097 With unlimited tourism and untapped business the aim that Delhi will function as a base from which prospects, in the coming years. Indian hospitality tourist will explore other part of the Country. 2011 Cricket industry is seeing green posture of growth. In Indian world Cup and other international events, will also be hospitality sector is expected to grow at the rate of 8% the major drivers for tourism and Hotel industry growth. between 2007 and 2017. India is expected to see an Government Policy Promotions :- Taking the slowdown influx of 10 million international tourist by 2010, up in tourism sector seriously, the ministry announced from just 4.98 million in 2007. According to the World Policy measure to promote tourism in the country and Economic forum the real GDP growth for travel and declared year 2009 as Visit India year. For that Govt. tourism economy is expected to be 0.2% in 2009 and to tried to provide Complimentary services to foreign an average 7.7% per annum over the coming 10 years. tourist, involving leading hotels and tour operators in Export earnings from international visitors and tourism its tourism promotion programs. And try to focus on goods are expected to generates 6.0% of total exports providing security facilities for tourist. Capital which almost US $ 16.9 billion in 2009 would grow upto Investment - In Indias tourism & travels sector is us $ 51.4 billion in 2019.The travel and tourism sector expected to grow at 8.8% between 2010-2019 and India which accounts 6.4% employment to total employment to get capital investment worth US $ 94.5 billion by which is 1 in every 15.6 jobs in 2009 is expected to 2019. Personal disposable income :- Of Indians during generate 7.2% employment (Which would nearly 4 2002-2007 grew at a CAGR of 14.16% it trend will corer jobs) to total employment which will 1 in every continued which lead to domestic as well as outbound 13.8 jobs by 2019. In short, the Indian hospitality and tourism. The increase in the disposable income of the tourism industry ranked 5th in long term growth and middle class Indian and the higher Propensity to spend expected to be the 2nd largest employer in the world by will yield demographic dividend to tourism industry. 2019. CONCLUSION :Health tourism :Service sector plays important role in Indian economy India has been promoting its health care which accounted alone 55.1% in 2009. Within the tourism by providing the visitors with private health Service sector tourism and hospitality industry care Facilities at cheaper level like heart surgery, bone (including Hotel industry) narrow transplant as well as Ayurveda, Yoga, meditation has more importance about generating employment, therapy, allopathy etc. India is gradually gathering yielding foreign exchange. National income growth popularity as a health tourist destination. This health and providing base to other industries regarding tourism industry alone will accounted US $ 2 billion by tourism directly or indirectly. In Mean time (2008-2009) 2012. United states 7,50,000 citizens experienced medical Recession has affected tourism and Hotel industry treatments abroad in 2007 and could reach as high as marginally; Cause of this tourist arrivals, Currency six million by 2010, As per Sunday time, UK report earnings, and employment in this industry got declined. around 50,000 Britons went overseas for medical Health tourism is observing growth despite global treatment. Most of the foreign patients from developed meltdown. Indian Tourism and Hotel industry start nation wish to take treatment in India. That is indicate came out from the impact of recession in 2010 and bright future of medical tourism. moving towards the bright future. In short, During 2010 Commonwealths Games :- With Indias tourist Recession period Indian Tourism and Hotel industry industry only likely to recover in 2010, the holding of has not been much adversely affected. the 2010 commonwealth Games in New Delhi will provide AKNOWLEDGEMENT a valuable boost. The Government Provided huge The author are thankful to the Principal Dr. grants for infrastructure improvement like to create G.N. Shinde, Indira Gandhi (SR.) College, CIDCO, New new metroline, high speed ring road, express ways with Nanded for providing the library facilities.

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