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Why the Most Prominent Travel Brands in the World are Making Significant Investments in Indian Tourists

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By parm maan

India's growing middle class is projected to spend up to $144 billion annually on international travel by 2030. And hotels, airlines and cities spend millions to get it.

Last week, hundreds of travel professionals from around the world gathered in Delhi for the inaugural Skift India Summit and had the opportunity to gain valuable insights from CEOs of leading travel brands including The Oberoi Group, OYO, Agoda and the country's national airline, Air India. . “India is living at a moment,” explains Skift's head of event programming Brian Quinn, “where the Indian outbound traveler is poised to become the biggest global force in the coming years.”

A decade ago, the same could be said about Chinese tourists. About 117 million Chinese tourists traveled internationally in 2014, up 20 percent from the previous year. But ten years and a pandemic later, Chinese overseas travel has yet to recover to pre-pandemic levels, while the energy and focus of the global tourism machine has shifted southeast to India.

With more than 1.4 billion people, India now has the world's largest population and fifth largest economy. Outbound travel from India is growing far faster than from any other country, triggering an avalanche of predictions that have travel brands salivating.

“There is huge potential,” said Caroline Bremner, head of travel and tourism research at Euromonitor International, which projects 47 million outbound Indian travelers by 2030. better”: From 35 billion dollars in 2019 to 84 billion dollars in 2030,” he says. “Basically, India is on the rise and will be the sixth largest source market in the world by 2030, behind China, the United States, the United Kingdom, Germany and France.”

A 2023 report by Nangia Andersen, the Indian arm of Andersen Global, projects India's outbound travel to grow at a compound annual growth rate (CAGR) of 1.2% through 2032, roughly in line with Euromonitor's forecast. tourists. If these predictions are confirmed, another wilder prediction may not be so far-fetched after all. Organizers of the Arab Travel Market (ATM), an industry conference to be held in Dubai in May, said the Indian issue market is worth $144. billion dollars by the end of this decade.

And a recent McKinsey report is equally optimistic about the long-term prospects for Indian tourism. “India's outbound travel has the potential to grow from 13 million in 2022 to more than 80 million in 2040,” the authors write. “If India follows China's outbound travel trajectory (which it could, given the similarity in population and per capita income trajectories), Indian tourists could make 80 to 90 million trips annually by 2040.”

Given all the hype, travel brands have naturally started courting Indian tourists in a big way, often turning to celebrities as influencers. Bollywood icon Shah Rukh Khan promotes Dubai and British actress Katrina Kaif, who is doing Indian films, professes her loyalty to Accor. Actor Ranveer Singh appears in Abu Dhabi ads, while his wife Deepika Padukone is the global brand ambassador for Qatar Airways. Meanwhile, Neeraj Chopra, current Olympic gold medalist and world javelin champion, has been hired to promote Switzerland's stunning alpine landscapes.

However, before India's outbound travel reaches its full potential, industry experts say the volume of flights within and outside the country (a figure mutually decided by the two respective governments) will have to increase dramatically. According to FlightAware data, there were about 14% more city-to-city flights to and from India last year compared to 2019. Airlines currently operate just 18 scheduled passenger flights a week from India to the United States, compared to 14 in 2019. .

Some destinations have made changes to their policies to increase capacity. By the end of 2022, Canada raised the limit on the number of flights from India from 35 per week to “unlimited” and allowed Indian airlines access to six hubs, including Toronto, Montreal, Edmonton and Vancouver. Meanwhile, South African Tourism has partnered with Ethiopian Airlines to provide faster connections between India and Africa. Even Bhutan's Prime Minister has emphasized the need to strengthen air connectivity between India and the small Buddhist kingdom.

Airlines are also taking note of India's growing importance. Notably, Singapore Airlines signed an agreement with the Tata Group at the end of 2022, paying $250 million for a 25% stake in Air India. In November last year, Singapore Airlines CEO Goh Chun Fong told Forbes Asia about his plans to make India a new hub. “You can just tell him how much potential there is,” Goh said. “India is growing, but it is very neglected.”

Hotel CEOs are also tempted by dizzying economic forecasts. “We are simply blessed by the growing demographics in the world and the increase in households wanting to travel,” Sébastien Bazin, chief executive of French hotel giant Accor, told investors during the company's latest earnings conference call in February. He gave a brief lecture on global economics and pointed out that the world's emerging middle class population has grown by a billion in the last 10 years. “Half of them are from India,” he emphasized. “We can probably reasonably say that over the next 10 years, demand will no longer grow by 3% to 5%, but probably by 4% to 6%.” You may very well see demand three times greater than supply. And most of that, once again, is tied to India alone, which is (expected to add) 500 million to (its) emerging middle class.”

“India is definitely a shining economic light,” echoes Bremner, noting that the country's current 8% economic growth rate is stronger than China's. What's more, it shows no signs of slowing down.

Last year, 1.7 million Indian tourists visited the US, making India the country's fourth-largest source of travel after Canada, Mexico and the United Kingdom. The average Indian tourist also spends money when traveling internationally, about $5,252 per trip, according to the last six months of data compiled by the National Travel and Tourism Office (NTTO), the US Department of Commerce's agency that tracks tourism statistics. In comparison, typical visitors to the United Kingdom and Brazil spend $2,656 and $3,344 respectively, while the average Japanese tourist spends $3,672. In other words, two British tourists need to spend as much as one Indian traveller.

If the United States wants to attract more Indian tourists in the future, experts say it needs to make it much easier to enter the country. “I firmly believe that less contact will lead to more travel,” said Omri Morgenshter, CEO of Agoda, Asia's largest online travel agency. “Fractions can be eliminated by adding direct flights as well as introducing visa waivers or being able to book accommodation, flights and activities in one app.”

Currently, 62 countries allow Indian travelers to visit the country without first obtaining a visa; that's up 10 from 2016, the year the Henley & Partners Passport Index was launched. However, the United States does not grant visa-free entry to Indian tourists or make it easier and faster to obtain a visa.

Although the US is approving more visas for Indians today than in the pre-pandemic years, the average visa wait time is still about 10 months, according to the US State Department website. Before traveling to the US for vacation, an Indian citizen must wait for a visa interview, which can take anywhere from 197 days at the US Embassy in New Delhi to 423 days at the US Consulate in Mumbai. In comparison, Indian tourists can get a visa to Canada in just 23 days or to the United Kingdom in about three weeks.

US officials readily admit that visa wait times are a major problem. Speaking at the Skift India Summit on Tuesday, US Ambassador to India Eric Garcetti told conference attendees that President Joe Biden had specifically asked him to address the delay. “I bet that's the only time the president of the United States has said to an ambassador, “Please work on the visa issues,” Garcetti said.

Read more. China is committed to expanding foreign access to its national market. promises a level playing field

Why the world's leading travel brands are betting big on Indian tourists

Visa waivers have a proven track record and give countries a competitive advantage, claims Agoda CEO Morgenstern. After Azerbaijan implemented the ASAN system, which processes e-visas within three working days of application submission, interest from Indian tourists increased and arrivals increased fivefold in two years. “Both Thailand and Malaysia introduced visa exemptions for tourists from India late last year, and that led to an immediate increase in searches from India in both markets,” Morgenstern said, noting that searches for Thailand were up 46 percent, although Thailand already happened. the most popular market. The most sought after destination by Indians. “Within two months of the visa waiver coming into effect, Bangkok has overtaken Dubai as the most booked destination city for Indians.” However, emirate should not be exceeded. In February, Dubai introduced a five-year multiple-entry visa for Indian tourists.

Another reason why India is such an attractive source market is its young population. Only 7% of India's population is 65 or older, compared to 14% in China and 18% in the US, according to a recent Pew Research Center report. People under 25 make up more than 40% of India's population. “In fact, there are so many Indians in this age group that one in five people worldwide under the age of 25 live in India,” the Pew report notes. “If we look at the age distribution of India differently, the average age of the country is 28 years. For comparison, let's note that the average age in the USA is 38, and in China it is 39.

“It's an extremely well-educated and digitally savvy population,” says Bremner, adding that more than 75% of Indian millennials and Gen Xers will travel by 2023, according to Euromonitor data.

“Indian travelers are more committed to ecotourism and sustainability than their global counterparts. “They're open to all kinds of experiences, from luxury to eco-adventure,” Bremner continues. “And, of course, these are big expenses. “I'm not at all surprised that destinations from Asia to the Middle East, Europe and the United States are chasing them.”

This article was originally published by Forbes US.

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