India Tourism Report Q2 2008

Strong Arrivals Growth In 2007 Final figures released by India's Ministry of Tourism show that tourist arrivals grew rapidly in 2007. A total of 4.98 million tourists visited India in full-year 2007, representing an 11.9% year-on-year increase on 2006, when 4.45 million tourists arrived in the country. Growth was particularly strong in January, July and November, when arrivals grew by 15.8%, 18.3% and 15.5% respectively, corresponding largely to the holiday season in the western hemisphere, from where many of the visitors to the country arrive.

Rising visitor arrivals has boosted foreign exchange earnings from tourism, which totalled US$11.9 billion in 2007, representing highly impressive growth of 33.8% year-on-year from 2006. This surpassed even our optimistic projections for tourism earnings in 2007, and has encouraged us to raise our forecast for foreign arrivals receipts in 2008 to US$13.2 billion. However, we maintain our forecast of 5.5% arrivals growth in 2008, representing 5.2 million arrivals. We are basing this relatively cautious forecast on the risks posed by the economic slowdown in the US, which we expect to impact negatively on tourist arrivals from the US. However, we will review this forecast regularly and assess the extent to which growing tourism from other countries, such as China, manages to compensate for the downturn in the US.

Ecotourism Set To Expand The Indian government is encouraging the growth of the ecotourism market, which has until recently been underdeveloped. Increased promotion of destinations in remoter regions such as the Himalayas has been combined with promotion of specialist ecolodges and tailored ecotours, which can either be booked in India or via travel agents abroad. While this initiative is in part marketed as an effort to preserve India's environment from the degrading effects of increased tourism, it also offers some financial rewards. Ecotours and ecolodges are packaged to appeal to high-end tourists, who will therefore spend more money once in the country, rather than backpackers and lower value tourists.

Karnataka Launches Investment Drive The Indian state of Karnataka is launching a new investment drive designed to improve tourist facilities and enhance the attractiveness of the region to compete with the neighbouring states of Kerala and Goa, which are major tourism magnets. The state is seeking to attract US$252 million, via government-backed incentives. These include a 50% reduction on land sold for tourism development, and licensing of heritage sites to allow the development of starred hotels in these sites of high tourist potential. The state will concentrate on promoting beach, heritage and ecotourism, tying in with national initiatives.