Bombs and meltdown likely to shoo away travel birds

MUMBAI – After registering a steady growth of 15-20% in the past few years, the Indian tourism industry may undergo difficult times in the coming quarters. Domestic problems, such as recent bomb blasts and meltdown in the global financial markets, may prove dampener to an industry which earns the lion’s share of its business from the September-February peak season.

Several experts ET has spoken to say that all segments of the industry, inbound and outbound traffics as well as occupancy levels, will suffer in the next few quarters. A tour operator said that inbound tourism has dipped by 20% in the last month and the trend would continue. “That a major foreign delegation is seriously reconsidering its trip to India perhaps reflects the lack of confidence,” he said.

Outbound tourism will also be affected mainly due to the global turmoil in the financial markets. However, most of the major tour operators are putting up a brave face and are still insisting that the outbound segment is “doing well”.

They say India has not suffered from the global financial crisis and, therefore, Indians may not change their plans to travel overseas. They, however, admit that there may be a slowdown in the outbound traffic. Last year, India’s outbound tourism grew by 20-25%.

The direct impact of the dip in tourist arrivals is being felt by the hospitality industry in India. The room occupancies in major cities like Bangalore, Pune, Hyerabad and Mumbai could drop by 4-5% in the next three months, says Binifer Jehani, senior analyst at Crisil Research and Information Services.

Although the average room rates (ARRs) in India increased by 22% in July, Mr Jehani says: “There are very less chances of average room rates increasing by more than 5%. They might remain stable or fall by 5% in the cities mentioned.”

ARRs in premium segment hotels at cities like Mumbai, Delhi and Bangalore stand in the range of Rs 9,700-13,000 as of July 2008, according to the Crisil Research data. Travel agency Thomas Cook is pessimistic on the outlook for the industry considering the grim economic scenario.

Thomas Cook COO (inbound business for states) Sunit Suri: “Currently, booking for a November trip can be done two months in advance as compared to 10-12 months in earlier years. Corporate travel will be hit as companies come under pressure to cut costs and the security threat in India just cannot be underplayed.”