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Q2 2013

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INDIA
TOURISM REPORT
INCLUDES 5-YEAR FORECASTS TO 2017

ISSN 1747-8928
Published by:Business Monitor International

India Tourism Report Q2 2013
INCLUDES 5-YEAR FORECASTS TO 2017

Part of BMI’s Industry Report & Forecasts Series
Published by: Business Monitor International Copy deadline: February 2013

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India Tourism Report Q2 2013

CONTENTS
BMI Industry View ............................................................................................................... 7 SWOT .................................................................................................................................... 9
Political ................................................................................................................................................. 10 Economic ............................................................................................................................................... 12 Business Environment .............................................................................................................................. 14

Industry Forecast .............................................................................................................. 16
Inbound Tourism .................................................................................................................................... 17
Table: India Inbound Tourism, 2010-2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Table: India Inbound Tourism, Top 10 markets by arrivals, 2010-2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Outbound Tourism ................................................................................................................................. 18
Table: India Outbound Tourism, 2010-2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Table: India Outbound Tourism, Top 10 destinations be departures, 2010-2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Travel .................................................................................................................................................. 21
Table: India International Tourism Receipts for Transport and Travel, 2010-2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Table: India Breakdown of Methods of Tourist Travel, 2010-2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Hotels .................................................................................................................................................. 23
Table: India Domestic Hotels and Restaurants Industry Value, 2010-2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Table: India Hotel Accommodation, 2010-2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Economic Analysis ............................................................................................................ 25
Economic Outlook ................................................................................................................................... 25 Positive Implications For Reform .............................................................................................................. 28 Staying Above Consensus ........................................................................................................................ 29
Table: India - GDP by Expenditure, Current Prices Breakdown . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Industry Risk Reward Ratings .......................................................................................... 31
Table: Asia Tourism Risk Reward Ratings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

India Risk and Rewards ........................................................................................................................... 31 Security Risk Analysis ............................................................................................................................. 32
Table: Table: Asia Pacific Regional Security Ratings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

India's Security Ratings ......................................................................................................................... 33

Market Overview ............................................................................................................... 34
Table: India Key Infrastructure Development Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Table: India Top 10 Global Hotel Groups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

Company Profile ................................................................................................................ 39
Taj Hotels .............................................................................................................................................. 39

Global Industry Overview .................................................................................................. 40
Table: Global Tourism Indicators, International Tourist Arrivals, 2009-2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

© Business Monitor International

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. . .... ... . .... .. . .. . . .. . .. . . .. ........ . . . . ......... .. . . . . ....... . . ... . ... .. ... ... .. ... .... .. . . .... . . . .... . . . . . . .. . .. . ... . .. ... . . ..... .. . .. . .... .. ..... . .. ...... ... . . . . .. .. .. ... ... ... .... .. ... 50 Table: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS (%) .... . . ... ... .. . .. ..... . .. Real GDP Growth Forecasts .. . . . . . . . . . .... . . . . .... . . . . .. ... ..... .... ..... . .. .... .. . . . . . ... . .. ... . ... .. . .... ...... ... ... . ..... . . .. .. . . .... ... ... . . 2009-2017 .. .. .. . . . . . .. ... ... .. . .. .. ..... ... .. .. . ...... . . .. . .. . . . .. . .. . . .. ..... ... ... ... .. . . . .. .... ..... ... ... . . .. .. .. ..... .. .... ... .. ..... .. . .. .. .. .. ... . . . . . .. .. .. .. .. .. ........... . .... . . .. ... .. . ... . .. ... .. ..... . . ... . .. . .... .. ... . . . . . . ...... . . . .. .. . . . . . . ... ... . . . .... .. .... ... .. . .... . . ... ... . .. .. .. . .... . . .. . . . . . .. . . . . . . . . . .. . Fixed Income ... . . .. .. ..... . . . . .. .... ... 49 Table: Emerging Markets..... .. ... 60 Table: India's Key Population Ratios. . . . .. ...... 59 Table: India's Population By Age Group... .. ... . ..... .... .. ... . . . ... .. . . 43 Global Assumptions ... . .. ... ..... .. .. . 53 Macro Outlook . ... .. ... .. . . ... . ... . . ...... . . .. ........ . 41 Table: Global Sporting Calendar... . . .. . . .. .. ........ . . . . . ...... ... ... .. .. . . . . . . . . .. . . . .. . . .. . . 2013-2022 . . . . .. .. .. .. ... . .... ....... 61 Table: India's Rural And Urban Population. .. .. . ... .... .. . . .... ... .. .. . . . .... . ... .. . .... . . 53 54 55 56 Demographic Forecast . .. . ..... ...... . . . . . . .. . . .. . . ... . . . . .. .... . ... ... . ... .. . . . .. .. hotel and establishment units. . .. .. . . .. .. .. .. .. .. ... .. . ..... . . . .. ... .. . .. . . . .... .. ...... . .. . .. .. . ....... ... . . .... .. ... ... . . .. .. .. . .. ... . 46 Table: Global Assumptions .. . .. ... . . .. . .... .. .. .... ..... . ..... .. ..... . .... . ... ..... . .. . .... ... . . . . ... . . . .... .. . . ... .. . .... . . . . 46 Global Macroeconomic Assumptions . .... .India Tourism Report Q2 2013 Table: global tourism indicators.. . . . . . . .. . .... .. ... .. ... ....... . .. . . . . ...... . ..... . ........... . 58 Table: India's Population By Age Group. .. . .. . . .. . .. . .. .. . . . .. ...... ... ...... .. .. . . . .. . .. .... ... . . . ... .. . . ... .. . ... .. . . . 1990-2020 ('000) . . .... . . . .. . . . .. . . 62 © Business Monitor International Page 5 ... .. .. .. .. . . . . . .. ... . . . . .... .. . ... 48 Table: Developed States.. 1990-2020 .. ... . ... .. ... 1990-2020 (% of total) .. . . .. ... ... ..... . . ... . .. . . ... . ... . ... . ..... ....... ... . .... .. .. ........ . .. . Currencies .... . . ... . ... . . . ..... . . ...... . ... .... ... .... .. ..... ... . .. . . . .. ......... ..... . . . ... Real GDP Growth Forecasts .. .. .. .. . . . ... . ... . . . . .. . ..... . . . ....... ... . . . ... . . .. ... .... .. ... . . . ....... . . .... . .. ... ....... 46 Table: Global & Regional Real GDP Growth.... . .. .. .. . . . . ..... .. . ... . . .. .. . . . . ..... .. . . . ... . .. . . . .... ..... . . .. ... . . .... ... ... ..... . .... . .. . .. . ......... . ... . ... .. . .... .. ... . . ... . . . . .. . .. . ...... . . . . .... ..... . .. .... .. .... . ... . .... . . . . . .... .. % chg y-o-y ... .. ... . .. . .. .. . ....... . .... .. .. ...... .. .. .... . ... . . .... . ... . .. . .. ..... . .. . . . . . .... . . .. . . . . . 1990-2020 ....... .. .... . . . . ....... ... . ... 52 Global Asset Class Strategy . . .. ..... . ... . ..... . .. ....... . . . . . . .. ... ... . ... . ... .. .. .. .. ... ..... 61 Methodology ... . ... . .... .. . .. .. .. .... ... Equities . .. . .. .. ... .. . . . . . . . .. . ... ..... . . . ... .. .. . . . ..

burgeoning affluent middle class and a broad variety of consistently popular tourist attractions means BMI expects to see substantial growth across a range of indicators including arrivals. number of hotels and tourism receipts. luxury travellers. The country offers a wide variety of destinations. departures. A program of extensions and expansions planned and underway is starting to address this problem. with an increasing number of high-end. India already has an extensive rail network. India will also benefit from hosting the 2020 World Cup in cricket in 2016. As such. excellent natural resources and strong international market links. with a large labour resource pool. Although the domestic air travel industry has been beset with issues in 2011 and 2012. The India Tourism report examines the trends in inbound and outbound tourism forecasts up to 2017 as well as the long term investment potential of tourism industries in India. and the impact of macroeconomic factors. and with continued investment substantial improvements should be realised. Following the Commonwealth games in 2010. While we expect to see the continuing impact of the global credit crunch on long distance travel to the country from Europe and the United States overall we expect to see an increase in travel from all regions. the value of the tourism industry itself. the government continues to focus on development of the rail and air transport networks. we forecast overall growth in air travel as the domestic market grows and the remit of domestic airlines expands. India itself is a generally stable democracy. Security concerns with neighbouring Pakistan could impact on tourism. which saw extensive investment in tourism related infrastructure. India continues to remain a popular tourist destination. incorporating a greater range of data and focusing on the hotel industry. led by terrorist groups based across the border in Pakistan. however this network frequently suffers from overcrowding and lack of adequate facilities which could impact on its growth potential.India Tourism Report Q2 2013 BMI Industry View This quarter BMI has revised and restructured its tourism reports. from tiger treks in rural jungles to pristine beaches and modern metropolises. © Business Monitor International Page 7 . including problems caused by fluctuating oil prices. A fast growing economy. many of the top ten global hotel chains are seeking to expand their presence in the country with both city centre hotels and resorts. particularly in the wake of the Mumbai hotel attacks in 2008.

Hyatt aims to open five new hotels by March 2013 and Hilton will be expanding into the luxury market. Inbound tourism is also expected to increase.India Tourism Report Q2 2013 Recent events and changes in BMI forecasts include: ■ Major hotel chains continue to expand their presence in India. putting it behind Sri Lanka and Cambodia and ahead of Laos and Indonesia. Large scale investment in transport infrastructure will be seen in 2013 with the development of the international airport at Navi Mumbai. expansion of Indira Gandhi International Airport and Cochin International Airport. in 2013. opening its first resort. ■ ■ ■ © Business Monitor International Page 8 . though by a smaller average rate of 3. Starwood expects to open between 6 and 8 new hotels in 2013 aiming to have 100 hotels under different stages of development by 2015.8mn. the Hilton Shillim Estate Retreat and Spa offering 99 villas set in 70 acres. as well as many other projects. almost double the 2012 figure of 10. Outbound travel is expected to continue to increase by an average of 13% a year to reach over 20mn per year by 2017.5% This quarter BMI awarded India an overall Tourism Industry Risk/Reward rating of 48.

■ Weaknesses ■ A complex industry tax code discourages investment. mountain ranges. ■ Opportunities ■ Government expenditure on the tourism industry is rising from a low base giving scope for big improvements. jungles and cultural attractions such as the Taj Mahal. particularly in terms of the currently limited number of international airports. ■ Quality accommodation is increasing in both traditional destinations and further afield. ■ Recent high profile crimes against women could also impact on inbound tourism. to cope with expansion in number of travellers. Infrastructure was improved by preparations for the 2010 Commonwealth Games and continues to grow with solid investment.India Tourism Report Q2 2013 SWOT India SWOT Analysis Strengths ■ Many popular natural attractions including beaches. particularly in relation to tourists from the UK and the US. The global credit crunch will depress growth figures. ■ © Business Monitor International Page 9 . Threats ■ Negative safety perceptions following the 2008 terrorist attacks in Mumbai and continuing regional security concerns will continue to deter tourists over the medium term. ■ Luxury travel to the area is expanding and there is growing demand for high end accommodation. particularly from foreign investors. ■ Medical tourism is on the increase and many firms such as Thomsons are introducing medical tourism packages. ■ A bureaucratic and expensive tourist visa system acts as a disincentive to visit. Infrastructure needs modernisation.

competing for the preference of India's 714mn eligible voters. Both the US and India are democracies and face threats from militant Islamists. The competence of state government varies enormously across India's 35 states and union territories. framed in 1950. India has generally managed to avoid hard authoritarian rule or military coups.India Tourism Report Q2 2013 Political Political SWOT Analysis Strengths ■ India is the world's largest democracy. which Islamabad acknowledges were planned and launched from its territory. Weaknesses ■ Large coalition governments complicate policymaking at the centre as coalition partners and outside parties pursue their own agendas. ■ Thawing relations with Pakistan has made it easier for the parties to defuse potentially explosive situations. and the uneasy influence of special interest groups remain key investor concerns. which have happened in many other developing countries. is bringing the two countries closer together.000 political parties registered for the April-May 2009 general elections. More than 1. ■ Despite its multitude of problems. Threats ■ India's growing regional rivalry with China. combined with the presence of a 2mn-strong affluent Indian diaspora in the US. © Business Monitor International Page 10 . including India's neighbours Bangladesh. ■ Issues such as the ineffectiveness of the executive and judiciary in controlling underhand practices. this. The two countries have gone to war three times since they were 'partitioned' on independence from British rule in 1947. ■ India's tense relationship with Pakistan still weighs on regional stability. A secular constitution. officially guarantees justice. such as the Mumbai attacks in November 2008. if unchecked. Myanmar and Pakistan. liberty and equality while aiming to promote fraternity among the citizenry. Opportunities ■ India has in recent years edged closer to the US in foreign policy. the apparent arbitrary allocation of government licences. could lead to a more hostile regional outlook.

© Business Monitor International Page 11 . perpetrated by radical Islamist and rural Maoist groups.India Tourism Report Q2 2013 Political SWOT Analysis .Continued ■ India has experienced a series of serious terrorist attacks over the past few years. The surge in Naxalite attacks has also raised the spectre of further violence.

subsidies. Opportunities ■ India's emerging middle class will continue to drive demand for new goods and services. India may well enjoy a manufacturing boom in the coming years as multinational look to take advantage of a young. salaries and pensions. ■ Agriculture remains inefficient. Two-thirds of the population depend on farming for their livelihood. combined with tax reforms. Threats ■ India's dependency on oil imports is problematic. This limits the amount of money available for infrastructural improvements. Weaknesses ■ Despite rapid economic growth. and poor monsoon rains can slash rural incomes and consumption. relieving fiscal pressure. ■ The government has implemented some tax reforms. © Business Monitor International Page 12 . According to BMI estimates. The government spends a significant part of its revenue on interest payments. ■ India runs chronic trade and fiscal deficits. India's GDP per capita was roughly US$1. both of which are near historic highs. ■ With Chinese labour costs rising aggressively.400 in 2011. a third of the size of China's. This undermines the trade balance and makes India vulnerable to energy price-driven inflation. ■ A vast supply of inexpensive but skilled labour has turned India into the back office of the world. competitive workforce and major transport network improvements. India remains a very poor country.India Tourism Report Q2 2013 Economic Economic SWOT Analysis Strengths ■ India has a very large domestic market. A wealthier society. A uniform goods and services tax to be implemented in the near future should help boost compliance. and rising domestic demand is a major driver of economic growth. would serve to boost revenue receipts. thereby raising government revenue. Around half of the population is younger than 25.

Many of its cities' air and rivers are heavily polluted.Continued ■ India is at risk of severe environmental problems. raising questions about the sustainability of the economy's rapid growth. © Business Monitor International Page 13 .India Tourism Report Q2 2013 Economic SWOT Analysis .

Weaknesses ■ Despite pockets of excellence. ■ Indian Prime Minister Manmohan Singh is eager to reform the banking sector in order to increase the availability of long-term financing. overall literacy rates in India remain far lower than in other Asian and key emerging market nations. such as the IT sector. from foreign investment restrictions to inflexible labour laws. congestion and toll booths. Threats ■ The arrival of Western players. The country remains one of the 12 countries on the 'priority watch list' for 2012 compiled by the Office of the US Trade Representative. ■ An inexpensive but skilled English-speaking labour force can do the jobs of Western workers for a fraction of the wages paid in North America or Europe. ■ Ongoing infrastructure projects ranging from roads. ■ India's infrastructure is notoriously inadequate.5bn of inflows in FY2011/12. © Business Monitor International Page 14 . ■ The competitiveness of local firms is undermined by reams of official red tape. Bangladesh in a variety of sectors. the Philippines and. A 500km road journey can take as much as 24 hours owing to poor road conditions. particularly for large infrastructure projects. ■ Intellectual property rights are poorly protected in India. India faces growing challenges from countries such as Vietnam. including management consultants Accenture and technology giant IBM. is bidding up local wages in the outsourcing sector. having attracted US$36. Opportunities ■ India could enhance the competitiveness of local industry through further liberalisation and deregulation.India Tourism Report Q2 2013 Business Environment Business Environment SWOT Analysis Strengths ■ India is now one of the biggest recipients of foreign direct investment (FDI) among emerging markets. railways and airports are likely to provide opportunities for foreign investors for many years to come. potentially.

■ The November 2008 Mumbai terror attacks demonstrated that security issues will remain a key investor consideration. India has excessive bureaucracy and poor infrastructure in comparison with China.India Tourism Report Q2 2013 Business Environment SWOT Analysis .Continued ■ China still remains a major competitor for FDI flows into India. © Business Monitor International Page 15 .

totally over 64 thousand km in length.000 10. Extensive investment projects are in the pipeline with the government planning to invest US$30bn in airports between 2004 and 2020. widespread poverty. Infrastructure investments combined with the enduring attraction of India as a tourist destination make this country an attractive prospect for investment. total departures~ '000 BMI expects that outbound travel will experience consistently large increases over the forecast period. reaching over 20mn per year in 2017. India has an extensive travel network. However. after the US. however it is in need of large scale investment.000 20. English speaking workforce. with its large. A burgeoning middle class with increasing amounts of disposable income is resulting in growth in the domestic travel industry as well as an increase in outbound travel. ('000). Between 2012 and 2017 we forecast that outbound travel will almost double. The USA is expected to remain the most popular destination for outbound travellers. becomes a more attractive international investment prospect.India Tourism Report Q2 2013 Industry Forecast BMI View: India is experiencing a period of rapid economic growth. The country has 454 airports. closely followed by Saudi Arabia.000 2011e 2012e 0 2005 2006 2007 2008 2009 2010 2015f 2013f 2014f 2016f TOTAL ARRIVALS: Total arrivals. The strength of the outbound travel market is based on the increasing wealth of the middle classes as India. © Business Monitor International Page 16 2017 . of which 16 are designated as international airports. 5. limitations on international investment and ongoing regional security concerns could impact on growth. Russia and China. The rail network in India is the fourth largest rail network in the world. The industry suffers from a lack of funds and is in need of extensive investment however BMI expects the railway industry to experience annual average real growth of 8. '000 TOTAL DEPARTURES: Out-bound.1% between 2013 and 2017. This includes plans to have 500 operational airports by 2020. 2005-2017f 15. The rail network combined with the extensive range of airports makes travel around the country simple and inexpensive for tourists.000 Ins and Outs Total Arrivals and Total Outbound Departures.

2 54.825.974.162.7 51. '000.1 2.0 4.6 33.9 2. North America.839.685.8 1. arrivals by region.3 18.8 218.0 2013f 7.3 -0. meaning by 2017 we expect inbound arrivals to reach over 9mn per year.957.5 5. arrivals by region.1 258. arrivals by region.927. Although only a small increase is forecast in 2013. North America.1 373.3 19.5 49. Europe.2 2015f 8. Europe. % change 11.2 2014f 8.2 2016f 8.028. % chg y-o-y In-bound. Latin America. due to the difficult global economic conditions.500.1 3.9 4.665.6 6. of 0.7 413.0 240.9 -1.8%.0 7.1 1.3 5. arrivals by region.1 24.830.587.967.4 8.4 2.1 1.3 7.9 158. arrivals by region.1 2. '000 In-bound.8 4.3 1. Inbound Tourism BMI is forecasting steady growth in inbound tourism between 2013 and 2017.5 2.1 3. Many brands are seeking to expand their presence in the country.7 7.2 16.8 2.8 3. arrivals by region.8 1.4 6.3 1.8 203.9 50. including many high end hotels such as Intercontinental and Hilton brands.3 1. Table: India Inbound Tourism. % chg y-o-y 163.6 23.6 1.4 2.2% is expected. Asia Pacific. % chg y-o-y In-bound.0 2.7 11.3 2017f 9.6 4.2 2.321.6 1. arrivals by region.111.1 1.3 3.7 e/f=BMI estimates/forecasts.0 5.4 394.820.3 1. '000 In-bound. more details are provided in the Market Overview.0 1.2 354.6 5.6 3.6 11. '000 In-bound. '000 In-bound.7 362. % chg y-o-y In-bound.337.7 15. Latin America.872. Africa.2 311.8 y-o-y In-bound.579. Source: BMI © Business Monitor International Page 17 .0 4.022. Asia Pacific.8 27.6 21. % chg y-o-y In-bound.3 1.725.2 2. % chg y-o-y In-bound. Middle East.3 0.9 12.3 36.7 14.7 10.1 2012e 7.1 -3.8 335.173.8 5. arrivals by region.775. 2010-2017 2010 Total Arrivals.1 2.3 0.7 2011 6.2 -7.6 60.9 3.290.6 46.3 8. arrivals by region. '000 5. Africa.2 2.9 188.5 382. '000 In-bound.259.9 6.725.6 5.439.7 8.850. arrivals by region.3 10.617.6 1. from 2014 onwards an annual average growth rate of 4. '000 In-bound. Middle East.9 227.8 2.176.883. arrivals by region.6 2.7 2.6 44.1 2.8 Total Arrivals. arrivals by region.218.India Tourism Report Q2 2013 Travellers have a range of options for accommodation across the country.6 2.9 7.

57 208.40 157.02 149.00 305.17 651. 2010-2017 table.64 120. 2010-2017 2010 USA UK Bangladesh Sri Lanka Canada Germany France Malaysia Japan Australia 526.76 168.21 222. © Business Monitor International Page 18 .37 191.24 541.37 136.83 207.28 103.88 154.24 152. BMI expects to see growth in arrivals from all regions. with Germany and France also in the top ten.81 204.74 799.34 179.34 175.06 804.35 204. reaching over 3mn by 2017.79 119.53 484. Source: BMI As the breakdown of arrivals by country shows.25 759.00 266.00 791.14 931. demonstrating the strength of arrivals from the Asia Pacific region.49 468. Arrivals from the US are closely followed by arrivals from the UK.90 431.India Tourism Report Q2 2013 As can be seen in the Inbound Tourism. Arrivals from North America will see a similar decrease in 2015 but are expected to increase overall by 2017.00 189. the top ten market is dominated by arrivals from the US. Arrivals from Africa are expected to see the highest rate of increase over the forecast period as economic growth in this area allows more people to travel. closely followed by arrivals from Europe. Japan and Sri Lanka make up the rest of the top ten.71 135.004.29 145.08 218. Top 10 markets by arrivals.62 227.00 237.12 555.81 176.29 112.72 196. We expect this to continue over the forecast period.20 204.07 169.00 218.00 696.74 115.91 477.08 96. Australia.45 128.54 145.00 186.61 2011 611.80 107.93 146.68 131.00 255.07 242.96 240.52 224.2% between 2013 and 2017 leading the total annual number of outbound travellers to increase from over 10mn to over 20mn.46 225.23 135.26 2012e 2013f 2014f 2015f 2016f 2017f 1. Bangladesh.82 84. Table: India Inbound Tourism.00 253.93 734.8mn by 2017.35 109.08 124. Improving economic conditions in Latin America will also result in increased travel from this region.29 769.40 480. Malaysia.81 184.88 116.08 456.24 796. after a slight decrease in 2013 due to the continuing impact of the global credit crunch.19 776.00 399.87 135.26 96.36 156.21 827. expected to reach 2. Arrivals from the Asia Pacific region will continue to dominate inbound tourism figures. to reach almost 19mn in 2017. Outbound Tourism Outbound travel from India is expected to increase steadily over the forecast period.65 e/f=BMI estimates/forecasts.85 81.39 96. in fact BMI predicts that India will see an annual average increase of 12.

resident 17.597.4 297.6 2.9 9.815.7 343.099. resident 42.5 16. '000 Out-bound.3 1.1 8.8 1. resident departures by destination.2 24.957.3 2.3 10.5 11.3 departures by destination.4 2.9 10.9 72.8 2. resident departures by destination.7 1. North America.8 18. Inflation is expected to remain steady at 5% with a concurrent lending rate expected to remain at 6% which should enable development of infrastructure projects.8 12.2 1. % chg y-oy Out-bound.5 18.tourist departures.4 13.2 14.9 88.6 12. '000 Out-bound.7 14.762.3 5.1 1.004. '000 Out-bound.1 12.530.6 13.477.178.198.1 2. Asia Pacific.0 59.3 1. Latin America.5 12. resident departures by destination.3 14.7 14.4 12.731.0 29.282.4 10.4 7.956.6 -6. resident departures by destination.8 7.6 10.7 2. Africa.639. Private consumption over this same period is forecast to almost double providing greater disposable income for travel.2 departures by destination.9 12.4 2. resident departures by destination.7 per 1000 of the population Out-bound.0 2.8 Out-bound.288.5 3.8 15.525.7 8.4 4.313.India Tourism Report Q2 2013 The increase in outbound tourism is based on the strength of the domestic economy which is experiencing high rates of growth.8 56.5 15.009.9 2015f 2016f 2017f 20.2 12.1 10.5 4.3 1.023.777.0 5. North America.607.0 © Business Monitor International Page 19 .272.8 18. Latin America.299.1 17.2 21.738. Table: India Outbound Tourism.232. '000 42.474.2 6.1 8.6 264. resident departures by destination.8 1.5 4.401.760.6 Out-bound.9 12. resident departures by destination.4 2.8 8.553.395. '000 Out-bound. Africa.831.6 29.114.8 2014f 13. Asia Pacific.272. Europe.7 10.6 9.1 10.310. '000 4.7 14.573.2 6. Middle East.8 12.0 50.1 549.150. tourist departures. BMI expects that India's GDP will increase by over a third between 2013 and 2017. % chg y-o-y Out-bound.1 9.2 9.1 8.3 22.057.6 14.9 23.9 1.4 2.8 65. % change y-o-y Out-bound.1 Average Tourist Departure 6.9 9.6 1. % chg y-o-y Out-bound.0 15.8 80. 2010-2017 2010 Total Out-bound.5 12.1 205.7 474. resident departures by destination.994.0 15.7 14.363.5 13.1 401.5 10.1 2011 2012e 2013f 12. '000 218.295.2 2. resident departures by destination. Europe.4 10.7 10.. % chg y-o-y Out-bound. % chg y-o-y 8.

36 693.113.155.9 2016f 17. it is a nearby destination with many travel links.375.70 2014f 1. No decreases in travel to any region are expected in the forecast period.022. with close to 3mn travellers per year expected by 2017 and Europe.63 1.91 193.675.19 544.98 1.74 263.50 925.20 345.606.06 1.60 2015f 2.276.09 938.501.442.27 293.30 1.51 1. Source: BMI The majority of outbound tourists will be departing India for the Asia-Pacific region. with 2. up from 8.0 e/f=BMI estimates/forecasts.7mn.836.00 168.97 772.7mn per year in 2017.5 2011 92.78 1.4 2014f 17.799.254.29 1. popular with affluent Indian tourists. with annual travellers expected to reach 9mn by 2017.91 690.16 981.624. Source: BMI The US is expected to remain the most popular destination for outbound tourists between 2013 and 2017.29 889.099.6 2017f 14.211.90 687.45 634.6 forecast for 2012.3 2015f 17.312. with close to 2.140. Shortly behind the Middle East in terms of popularity is North America.80 1.055.63 1.7 2012e -10.6mn travellers per year expected in 2017.30 530.60 842.34 220. Top 10 destinations be departures.41 2.222.06 1.584.69 1.56 1.322.43 1.00 198.085. 2010-2017 .215.1. Not far behind is Saudi Arabia.54 586.28 2012e 1. % chg y-o-y 27.98 1. resident departures by destination. The Middle East in general has a strong presence in the top 10. In fact by 2017 we predict that the average tourist departure per 1000 of the population will reach 15. Table: India Outbound Tourism.01 960. Middle East.99 914.98 1.40 250.18 883.30 688.573.85 549.446.48 768.64 498.0 2013f 12.17 301.400.39 386.India Tourism Report Q2 2013 India Outbound Tourism.94 389. 2010-2017 2010 USA Saudi Arabia Singapore Thailand UAE Malaysia China Hong Kong Italy Oman 1.37 740.31 868.28 737.748.302.930.142.71 1.54 1.92 827. between 2013 and 2017 BMI expects travel to this region to increase to 4. Travellers to Thailand is expected to show particularly high © Business Monitor International Page 20 .12 2017f 2.80 212.7mn.89 1.97 518.94 763.563.22 312.34 2016f 2.37 1.117.04 1.87 2.65 232.04 1. reaching 2.11 e/f=BMI estimates/forecasts.33 2011 1.904.37 1.56 271.47 1.99 2013f 1.06 210.Continued 2010 Out-bound.02 2.82 232.459.12 828. Although outbound travel to the Middle East fell in 2012 due to concerns with regional security.90 760.37 701.

1 23.2 15.3 19. 20. Source: BMI © Business Monitor International Page 21 .7 738.2 32.8 2. receipts for transport services. leading to annual expenditure of US$1.7% won't be replicated in 2013. Travel Due to the strength of the domestic economy and expected increases in travel across inbound and outbound tourists receipts for tourism related transport services in India are expected to grow between 2013 and 2017.8 1100.4 52.5 e/f=BMI estimates/forecasts.5 37.3 2015f 0.9 4. US$bn.9 -98.4 11.9 31. excess baggage fees.2 41. between 2014 and 2017 we expect to see growth of between 8% and 12% per year.6 19. Transport receipts cover costs incurred by tourists on all tourist transportation within India.0 11.1 21. EURbn.9 55. receipts for travel items.9 28. receipts for transport services.1 0. EURbn. INRbn.1 14. Although the 2012 growth rate of 23.0 11.0 11. receipts for transport services.2bn by 2017.1 2.7 0.7 International tourism. carrier charges and fees. including fares on buses. receipts for transport services.8 6.6 23. % change y-o-y International tourism. US$bn International tourism. EURbn International tourism.6 53.8 23.6 26. receipts for travel items. receipts for transport services.4 1035.4 25.3 21.1 2011 0.3 40.9 8. INRbn 647. % change y-o-y International tourism.7 29.0 8.9 56. receipts for travel items.5 29.0 6.9 1.0 12.2 1128. INRbn. INRbn International tourism.3 11.6 11.8 11.5 1220.3%.9 3.1 0.6 2012e 2013f 0. railways. which will see a smaller annual growth of 3.4 International tourism.9 41.9 7.1 growth y-o-y International tourism.0 15.5 53. The only European country in the top 10 is Italy. airplanes and boat trips (operated domestically).2 29. though other European countries remain popular destinations.3 1360.0 10.2 % change y-o-y International tourism. % change y-o-y 34.3 42.2 10.8 3. receipts for transport services. US$bn.India Tourism Report Q2 2013 growth with the number of annual visitors from India expected to double by 2017.3 15.2 33. receipts for travel items.2 18.8 50. receipts for travel items.6 -1. receipts for travel items.9 23. car transportation costs and package holiday trips within the country (excluding cruises). 2010-2017 2010 International tourism.5 0.1 46.1 2014f 0.8 8.3 2.2 19.2 6.5 23. Table: India International Tourism Receipts for Transport and Travel. EURbn 10.4 2017f 1.4 10.2 11. US$bn 14. % change y-o-y 0.2 International tourism.8 6.6 8.2 1033.3 22.5 41. 27.8 2.5 International tourism.8 2016f 1.4 6.7 44.5 23.

regaining the 2010 high by 2016 and surpassing it by 2017.5 12. The number of domestic rail passengers may decrease as domestic air travel increases in availability and popularity.4 903. 2013 is not forecast to show such substantial growth.3 871.0 2017f 161.8 630.9 2012f 85.5 12.3 765.5 22. this only led to a slight decrease in the rate of growth to 8.1 898.3 2015f 125. '000 Air transport. While the global credit crunch affected increases in out bound travel in 2012.445 3.4 10. registered airline domestic and non-domestic takeoffs.887 3.0 924.9 4.1 17. both outbound and domestic is forecast to increase between 2013 and 2017. © Business Monitor International Page 22 .7 15.4 8.0 991.8 Domestic Railway passengers 7.4 818. % change y-o-y Domestic Railway passengers carried.3 2016f 143. '000. sun cream etc.465 791.9 949.282 3.8 1254. out-bound Air transport passengers carried. including any prepayment made for goods or services received in the destination country.3 15.7 21. accessories.7 11.7 2014f 108. As with travel receipts this is due to the strength of the domestic economy.5 11. leading to a total outbound air transport passengers per year of 161mn in 2017. however the size of the market means investment in rail infrastructure is still an extremely viable prospect. The number of domestic rail passengers fell in 2012 but increases are expected to resume in 2013. mn per km % change y-o-y e/f=BMI estimates/forecasts.0 8. Domestic take offs experienced a similar decrease in the rate of growth in 2012 but is expected to bounce back in 2013 and throughout the forecast period.3bn by 2017. registered airline domestic and non-domestic takeoffs.494 -12.2 885.4 845.170 3. Source: BMI As the breakdown of travel methods table above shows. mn per km 64. 2010-2017 2010e Air transport passengers carried.3% growth in 2011. air travel.6 2013f 94.9 12.9 14.3 814.3 1115.0 2011f 78.646 2. Table: India Breakdown of Methods of Tourist Travel.6 6.091 2.3% from 22. out-bound.India Tourism Report Q2 2013 Receipts for travel items increased by 22% in 2012 compared to 2011. The annual y-o-y change is expected to increase to between 11% and 15% per year. % change y-o-y Air transport. however over the entire forecast period we expect receipts for travel items to increase by almost US$10bn to a yearly spend of US$28.2 1384.8 carried. mn. Travel items can include luggage. mn. International tourism receipts for travel items are expenditures by international inbound visitors in the domestic economy.

0 20. Tourism has not traditionally been an area of focus for investment for the government in India. 2010-2017 2010 Domestic Hotels and Restaurants 1.2 2014f 1.4 Industry Value. in the Market Overview.2 © Business Monitor International Page 23 .8 17.0 46.2 12.8 24. Despite the lack of importance placed on the industry by the government the value of the industry is expected to see large increases between 2013 and 2017.7 52.0 39. Table: India Domestic Hotels and Restaurants Industry Value.3 12.1 Industry Value.2 1.9 Industry Value.1 18.8 14.India Tourism Report Q2 2013 As the table of key infrastructure development projects shows.3 1.520. Continuing growth based on the strength of the domestic economy. % change y-o-y Domestic Hotels and Restaurants 1.5 35.7 43.0 14.2 13.6 1. though this may change in forthcoming years.5 12. EURbn Domestic Hotels and Restaurants 26.3 30.4 2017f 2.4 34.0 1. and increases in inbound and outbound tourism.8 12.8 1.8 15.3% but in 2013 we expect to see a much larger increase of 16.567. India currently has an extensive investment programme in place to improve air and rail networks.6 12.3 29.6 Industry Value.997.204. EURbn.6 1.3 1.4 34.9 15.4 2016f 2.8 2012e 1.4 Industry Value.8 Industry Value INRbn Domestic Hotels and Restaurants 12.5 39.5% of India's GDP. This figure is not expected to alter over the forecast period as other industries.3 18.4% to over US$30bn. % change y-o-y Domestic Hotels and Restaurants 22. US$bn Domestic Hotels and Restaurants 19.8 Industry Value INRbn.0 Industry Value. % change y-o-y Domestic Hotels and Restaurants 16.0 20. US$bn.4 25.776.1 16.5 23.244. The limitations of the global economy in 2012 meant that the industry value only increased by 0.5 31. US$ per capita 2011 1.5 20.8 17. mean that by 2017 BMI expects the value of the industry to reach over US$50bn.9 0.6 40.384.004.0 2013f 1.4 20.3 25. such as IT and infrastructure remain more important to the economy.5 13.4 2015f 1. Hotels The hotel and restaurant industry currently comprises just 1.5 27.3 19.4 9. % of GDP Domestic Hotels and Restaurants 17.0 17.3 12.

8 Industry Value.200 to 6. Table: India Hotel Accommodation. % change y-o-y 2011 15.5 2016f 5.8 13.5 2012e 2013f 3.1 2015f 15. nights Average length of stay.3 2017f 11.7 10.3 127.3 3. both air and rail.7 4.6 2.7 144.6 162.8 20.7 1.9 13.6 -2.2 17. US$ per capita. % change y-o-y 3.7 15.0 e/f=BMI estimates/forecasts. While the rate of growth will slightly decline from 17% per year to 13% per year over the forecast period.5 2017f 6.5 Number of Hotels and establishments '000 % change 35. As such BMI expects that the number of hotels and establishments will rise over the next five years.6 -8.6 13. Source: BMI The growing popularity of India as a tourist destination.3 13.2 202.9 2. % change y-o-y Hotel rooms '000 Hotel rooms '000.5 2016f 13.8 8. nights.0 117. and the increase in transport networks.2 2015f 4.7 2.5 2011 2.8 y-o-y Average length of stay.2 2.7 -0. mean that the country is an attractive investment area of hotel groups.300 between 2012 and 2017.9 2014f 4.3 -29.6 11.1 225.0 11.3 32. 2010-2017 .India Tourism Report Q2 2013 India Domestic Hotels and Restaurants Industry Value.3 15.Continued 2010 Domestic Hotels and Restaurants 17. 2010-2017 2010 Number of Hotels and establishments '000 2.0 2013f 14.2 2.6 251. Source: BM © Business Monitor International Page 24 . the number of hotels will still almost double from approximately 3.9 11.7 181.8 12.8 27.4 2.9 2014f 14.0 e/f=BMI estimates/forecasts.8 2012e -1.9 11.6 2.

New private sector investment projects fell by a massive 60.8%. with export earnings contracting by 9. CMIE Capex. has continued to weigh upon the performance of Indian exporters. Our call for a gradual recovery in the Indian economy in the latter half of FY2012/13 (April-March) and FY2013/14 appears to be at odds with the pervasive weakness seen across recent economic data.Private Sector Project Data & Passenger Car Sales (RHS) Source: BMI.7% y-o-y in August.8% real GDP growth projections for FY2012/13 and FY2013/14 coming in well above the Bloomberg median of 5.India Tourism Report Q2 2013 Economic Analysis Economic Outlook BMI View: Despite the pervasive weakness of recent economic data.4% and 5. With this in mind.7% year-on-year (y-o-y) in Q2 FY2012/13 (JulySeptember) and.7% and 6. as the accompanying chart shows. SIAM © Business Monitor International Page 25 . Depressed EU demand. Finally. meanwhile. as illustrated by the 18. India's consumer boom has started to unwind. respectively. we are sticking to our above-consensus view on the economy. there is sufficient evidence across leading indicators to suggest that economic conditions will start to improve in the coming quarters. an increasing number of outstanding projects have been shelved indefinitely.6% y-o-y collapse in domestic passenger car sales in August. Uncomfortable Reading India . with our 5.

India Tourism Report Q2 2013

Such bearish data is difficult to ignore, as is the fact that India's fiscal and trade deficits remain near historical extremes. With this in mind, it would be all too easy to side with consensus view that recent weakness in activity indicators is a harbinger of further gloom ahead for the Indian economy. However, we believe that it is important to distinguish between indicators that lead the business cycle and those which are lagging or coincident in nature. To be sure, a host of variables which we believe exhibit a predictive quality appear to suggest a stabilisation and/or gradual improvement in India's macroeconomic conditions going forward.

Purchasing Managers Indices: India's manufacturing PMI printed 52.8 in both August and September, indicative of a growing measure of stability for the sector at a time when most PMIs across the region have sunk into contractionary territory. Encouragingly, the new export orders index rose to a four-month high of 53.8 from 49.2, rising above the 50-level for the first time since June, which could be viewed as a sign that the weaker rupee has finally started to re-ignite demand for Indian exports. Moreover, the service sector PMI, which is arguably more reflective of India's broader economy, came in at a six-month high of 55.0 in September. Both these dynamics are consistent with an eventual improvement in headline growth.

Leading The Way
India - Purchasing Managers Indices & Commercial Credit, % chg y-o-y

Source: BMI, HSBC/Markit, RBI

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India Tourism Report Q2 2013

Money Supply: Commercial credit growth has bounced back from a low of 14.2% y-o-y in March to a 10month high of 18.3% in August, and the uptrend is clearly strengthening. Anecdotally, we note that the State Bank of India and HDFC Bank have extended loans of US$6.6bn and US$1.9bn to Tata Steel and Hindalco Industries, respectively, in September - a possible sign that central bank liquidity injections are starting to have the desired effect. While we still expect non-performing assets (a classic lagging indicator) to tick higher, the pick-up in credit growth, coupled with our expectations of forthcoming monetary easing, bode well for the country's investment cycle.

Equity Market: Despite all the bearish sentiment surrounding India's macro prospects, we note that the country's benchmark Sensex equity market is making new highs. Equity market and economic performance can, of course, deviate in the near term. That said, equity investors should start to discount the outlook for earnings (and, by extension, economic growth) over the medium term. The accompanying chart shows the year-on-year change in the Sensex against industrial production growth, with the latter lagged by three months. Given the clear correlation over the past five years or so, the recent acceleration in the Sensex can be viewed favourably from a macroeconomic perspective.

Taking Stock Of Growth
India - Industrial Production Versus Sensex, % chg y-o-y

Source: BMI, MOSPI

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India Tourism Report Q2 2013

Positive Implications For Reform
We have long argued that much of India's downturn has been self-inflicted, with corruption concerns, policy paralysis and project delays combining to sap investor confidence in the country's macroeconomic prospects. It stands to reason, therefore, that the announcement of a series of economic reforms by Prime Minister Manmohan Singh in September - a move that BMI had anticipated a few months earlier - should help to galvanise investment demand (see 'The Return Of Reform', September 17 2012). While none of the announcements in themselves have led to a profound change in India's business environment, New Delhi's willingness to push through economic policies despite incurring political cost is a major positive signal for investors. Domestic companies which had been holding back capital spending may be encouraged to loosen the purse strings on a renewed belief that approvals and permits will clear government hurdles in hastier fashion. Furthermore, foreign investors who had stayed clear due to political noise are likely to return (particularly if retrospective taxation proposals on foreign companies are kicked into touch as we expect). To be sure, even before the announcement, we had seen a forceful pick up in portfolio capital. According to the Securities and Exchanges Board of India, foreign inflows totalled roughly US$13bn between January and September, one of the best year-to-date performances of recent years, and we expect inflows to remain buoyant in the coming months.

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that suggest current bearishness towards India's growth prospects is overdone. Source: BMI. As leading indicators start to filter through into coincident and lagging economic data. we would expect the consensus view to converge with our own. © Business Monitor International Page 29 .India Tourism Report Q2 2013 More Upbeat Than Most India . We disagree. led primarily by a bounce in investment activity. The consensus view is for Indian growth to remain subdued at 5. Bloomberg Staying Above Consensus We could point to several other factors.Real GDP Growth. such as the decent end to the monsoon (which should support agricultural output and rural consumption).7% this fiscal year to 6.8% in FY2012/13 and FY2013/14.8% in FY2013/14. We expect real GDP growth to rise from a projected 5. % *Consensus As Of October 2 2012.4% and 5. reflecting the mainstream view of a prolonged slump in growth going forward.

914.469.50 2012e 2013f 2014f 2015f 2016f 92.10 -4.60 32.742.8 Notes: f BMI forecasts.742.958.60 1.498.90 37. Fiscal years ending March 31 (1990=1990/91).20 38.873.475.60 13.90 1.20 37.30 43.3 6.4 Real GDP growth. INRbn 2.958.30 16.5 5. exp.546.417.716.00 11.313.10 -5. cons.10 -6. INRbn 2.40 15. INRbn 2.091.80 43.958.9 6.834.300.20 1.20 24.533.4 Imports of goods & services.4 Net exports of goods & services. % change y-o-y 3.00 20..107.568.10 34.30 62. Factor Cost.581..000.081.80 17.227.70 78.India Tourism Report Q2 2013 Table: India .574.00 -3.592.30 21. 1 GDP @ Factor Cost.958.70 20.80 33.10 70. INRbn 1.50 118.20 50.6 6.510.10 26.140.089.90 18.958.194.10 6.90 49.10 2011 82.745.4 Government final.974. 2 Fiscal years ending March 31 (2011=2011/12).10 26.30 51.20 1.752. INRbn 2.80 2010 71.4 Private final Consumption Exp.90 29.7 6.434. INRbn 2.958.50 1.398.80 29.6 -56. 3 2011=FY2011/12.50 105.10 -6.169.40 9.60 -4.10 13.4 Fixed capital formation. INRbn 2.391.246.675.616.383.615.50 7. Sources: 4 Central Statistics Organisation/BMI.70 -3.00 1.981.80 1.10 -4.10 -105. INRbn 2.5 8.185.50 133.8 6.146. Current Prices Breakdown 2009 Nominal GDP.469.692.4 Change In Stocks.30 87.40 16.266. INRbn 2.40 39.4 60.326.271.90 55. © Business Monitor International Page 30 .4 Statistical discrepancy.487.358.50 45.675.70 149.395.912.4 1.GDP by Expenditure.70 28.794.663.817.00 10.40 43.484.660.913.4 Exports of goods & services.00 1.625.20 23. f=BMI forecast.

33 52.86 54.22 47.77 45.47 Source: BMI India Risk and Rewards Limits Of Potential Returns This is an evaluation of the sector's size and growth potential in each state.73 63.00 59.63 47.67 61.27 66.57 54. India saw an increase in arrival figures in 2012 and this is expected to continue over 2013.72 63.29 38.12 49.14 67.05 76.47 61.29 47.00 85.55 54.82 59.69 59.21 45.20 83.04 55.00 35.76 37.90 55.54 48.50 46.22 66.50 72.55 67.88 67.29 62.29 66.61 63. The © Business Monitor International Page 31 .10 67.14 42.00 80.54 76.83 63.67 63.66 54.96 50.19 74.00 61.02 44.67 53.00 46.31 36.10 51.53 64.07 66.25 46.67 22.70 61.47 65.33 50.73 67.India Tourism Report Q2 2013 Industry Risk Reward Ratings Table: Asia Tourism Risk Reward Ratings Rewards Limits of Potential Returns Hong Kong Thailand Singapore Macau Australia South Korea 73.26 60.58 83.91 56.66 60.93 39.85 49.15 Tourism Rating 74.50 Country Risk 75.50 48.02 35.13 58.93 Risks Risks to Realisation of Potential Returns 77.96 65.79 80.52 69.99 63.99 61.21 65.73 57.06 69.76 55.66 56.04 62.82 23.66 45.89 48.09 55.72 41.70 42. along with broader industry/ state characteristics that may inhibit its development.39 77.67 69.32 73.21 85.46 88.71 65.09 44.33 60.57 67.46 64.48 30. The reward ratings for tourism take into account the numbers and % growth of tourist arrivals over the past year and BMI's forecasts for future growth over 2013.50 Country Structure 63.41 Market Risks 80.50 57.77 33.00 81.97 67.00 22.89 Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 New Zealand 54.88 Taiwan Vietnam Malaysia China Japan Sri Lanka Cambodia India Laos Indonesia 60.52 77.27 70.00 72.83 55.20 Tourism Market 80.62 61.33 50.83 84.27 73.27 49.

the rated period is two years. market openness and security risks. terrorism and physical safety for expatriate workers . India has an extensive travel infrastructure however the industry needs extensive investment and improvement. The country does however have an extensive available labour pool. which integrates closely with our Country Risk service.across major states in each region. The ratings are combined to form a composite security rating to provide an overall guide to long-term trends and risks. As such India is ranked 15th out of 17 in the Asia Pacific Region. particularly when it comes to the awarding of large scale industrial projects. bureaucracy. Therefore India has a score of 46. particularly concerning Pakistan and the possibility of terrorist attacks. Limitations on foreign investment and an excess of red tape and bureaucracy also impact on India's score giving it a relatively low 56.interstate conflict. We integrate our shortterm political and economic ratings with the terrorism rating. The market risks score takes into account short term political stability and regional stability. Security Risk Analysis BMI's Security Ratings service. particularly in terms of international airport availability. legal framework. and factored in accordingly.India Tourism Report Q2 2013 overall figures for tourism receipts and hotel occupancy were similarly enhanced and offset. In all instances. giving India a Tourism Market figure of 50. BMI's proprietary country risk scores cover corruption. reflecting the need for more investment in this area. to indicate a state's vulnerability to a sustained terrorist campaign or major terrorist attack. Table: Table: Asia Pacific Regional Security Ratings State Singapore Interstate 91 Terrorism 87 Criminal 99 Composite domestic risk 93 Regional rank 1= Composite security risk 92 Ranking 1 © Business Monitor International Page 32 . with each country assigned a score out of 100. Despite its stable democracy widespread poverty combined with frequent mass political demonstrations could prove a threat to the tourist industry. India frequently experiences allegations of corruption. Risks To Realisation Of Returns This offers an evaluation of industry-specific dangers and those emanating from the state's political and economic profile that call into question the likelihood of anticipated returns being realised over the assessed time period. to impact on tourism figures. The Country Rewards score takes into account labour costs and infrastructure. Finally. India scores 47 reflecting the possibility for regional tensions. offers a comprehensive comparative analysis of security risk in three key areas . with a low score indicating a high level of risk.

ahead only of Pakistan.Continued State Australia Japan Taiwan South Korea Malaysia North Korea Vietnam China Thailand Indonesia Philippines India Pakistan Interstate 98 90 71 68 81 48 60 80 84 88 84 68 46 Terrorism 83 92 95 86 84 98 98 85 66 68 49 47 26 Criminal 92 91 79 88 69 88 71 59 71 52 40 53 37 Composite domestic risk 88 91 87 87 77 93 85 72 68 60 45 50 31 Regional rank 4 3 6= 5 8 1= 6= 9 10 11 13 12 14 Composite security risk 91 91 82 81 78 78 76 74 74 69 58 56 36 Ranking 2= 2= 4 5 6= 6= 8 9= 9= 11 12 13 14 BMI India's Security Ratings India faces many security risks. combined with the security risks mean that India is ranked 13th in the Asia Pacific region. An increase in crime. including recent high profile attacks against woman. and as the 2008 Mumbai terrorist attacks demonstrated even mainstream tourist destinations are at risk. © Business Monitor International Page 33 . and large scale political demonstrations. particularly in Kashmir and states in the north-east mean these areas are particularly volatile. widespread poverty. The majority of tourist areas are safe but border regions can be more dangerous. Active terrorist groups linked to al-Qaeda have been connected to attacks against Westerners and regional border tensions.India Tourism Report Q2 2013 Table: Asia Pacific Regional Security Ratings .

However capacity. mean that BMI expects to see substantial rises across all sectors of the tourism market. and air travel. expenditure on travel related items. New Delhi. including the number of hotels and available rooms. Table: India Key Infrastructure Development Projects Project Name International airport at Navi Mumbai (first phase) Sector Airports Value (US Capacity/Length $mn) 1950 40mn passengers Timeframe early 2012 . particularly at international airports. with high growth in GDP expected between 2010 and 2017 and accompanying increases in private consumption rates. modernisation and management of airport Airports Airports na na 2600 34 mn passengers 20092007 . as estimated by Indian Railways. Infrastructure development is limited by a lack of access to financing. with its 454 airports. The strong domestic economy.India Tourism Report Q2 2013 Market Overview India's economy is expected to continue to grow over the next few years. a poor track record of completing projects on time and in budget has impacted on the efficiency of the network and currently. Development has been stunted by a lack of regulatory reforms. as well as a lack of funding. including 15 international airports and plans in place to building close to 150 new airports by 2020. particularly concerning the acquisition of land for new airport builds. however the government is moving in the right direction and looking at news way of enabling private investors to invest in the infrastructure market. US$2. Despite limitations BMI expects to see growth of 8. The railway network is in similar need of investment. India already has an extensive travel network. despite the relatively nonconducive monetary conditions and policy inertia. Despite these limitations BMI expects the airport sub-sector to grow at an average rate of 6.8bn is needed to complete 918 railway projects. Currently the 4th largest rail network in the world.2% per annum between 2013 and 2017.1% a year between 2013 to 2017 in the rail industry. is limited and expansion is needed.2014 Status Project cost to potentially increase due to new land acquisition bill (Dec 2011) At planning stage New terminal completed Shimoga. Gulbarga Airports Indira Gandhi International Airport. This bodes well for its extensive transport network which is in need of major development if it is to meet the demands of increased inbound and outbound tourism figures.2034 © Business Monitor International Page 34 .

a hotel and a hospital) Kannur International Airport PPP project. Seeking US$17mn grant for land acquisition from state government Under construction Contract awarded (June 2011) Construction to start (June 2011).5mn passengers June 2012 . Goa state Bengaluru International Airport terminal 1 expansion Kushinagar international airport.end 2012 June 2011 .2014 At tendering stage.2 na 35 37 mn passengers 45 na 2010-November 2011 2011-2015 2011- Harni airport expansion (new Airports terminal) Airport Terminal 1 expansion. Overhaul of Biju Patnaik Airport.August 2012 Completed (August 2012) 2008.Q1 2013 September 2012 - 194 17 mn passengers Airports 46 1mn passengers Cochin International Airport Airports expansion (includes a railway station and metro extension as well as leisure facilities.7 23 mn passengers 2300 20 mn passengers Timeframe Status 2008 . Bhubaneswar Cargo facility at the Delhi International Airport (DIAL) Vijayawada airport expansion.April 2013 Under construction. 191 acres of land allocated Inviting bids for contract (July 2011).7 na July 2011 November 2013 © Business Monitor International Page 35 .India Tourism Report Q2 2013 India Key Infrastructure Development Projects .3 5 mn passenger 2010- 252 1. part of Delhi International Airport Airports 77. land acquisition completed (June 2012) Project announced At planning stage Land acquisition approval received.Q1 2013 June 2011 - Air Traffic Control tower complex. Kerala Airports 24.Continued Project Name Chennai airport expansion. Orissa Airports na 255 na 194 17mn passengers na July 2011 . December 2012 completion date to be delayed by 3-4 months (June 2011) Tender may start by October 2012 (July 2012) Under construction (Dec 2011) At tendering stage. bids submitted (September 2012) At planning stage Chhatrapati Shivaji Airports International Airport (Mumbai) modernisation Mopa international airport Airports (BOT) concession. Tamil Nadu state Sector Airports Value (US Capacity/Length $mn) 50. Uttar Pradesh Airports 670 na October 2012 2016 June 2011 . Airports Bangalore Jharsuguda airport. Andhra Pradesh Airports Airports Airports 32.

Uttar Prades Airports na na April 2012 - 367 na January 2013 end-2014 na na May 2012 - Airports na na September 2012 - Mopa BOOT airport. Arunachal Pradesh Taj International Airport PPP project. seeking consultants for feasibility study (September 2012) At planning stage (August 2012) Under construction. Additionally India has 29 UNESCO World Heritage Sites and 25 bio-geographic zones. making it a prime candidate for eco-tourism.1mn preconstruction phase underway. Pathanamthitta district. and modern cities such as Mumbai.2013 Status Under construction (Nov 2011) Airports na na February 2012 - US$6. Sahar. which attracts nearly 900.India Tourism Report Q2 2013 India Key Infrastructure Development Projects . Goa Netaji Subhash Chandra Bose International Airport expansion project (includes terminal.Continued Project Name Integrated (domestic and international) terminal. The top 10 global hotel groups have extensive presence throughout India and many are planning on expanding the number of hotels in forthcoming years. On top of these attractions the country benefits from many world class beaches along 6. terminal completed (November 2012) Domestic cargo terminal. Under tendering process for project first phase (Feb 2012) Under tendering process (April 2012) Construction due to begin in early-2013 (January 2013) At planning stage (May 2012) At planning stage. second runway). particularly wildlife tourism. Andheri Chandigarh International Airport Sector Airports Value (US Capacity/Length $mn) na 10mn passengers/yr Timeframe 2008 . Airports Chhatrapati Shivaji International Airport (Mumbai) Fifth international airport PPP Airports project. Kerala Itanagar international airport PPP project. Kolkata Airports Airports 470 na 420 16mn passnegers August 2012 Late 2008 December 2012 Source: BMI Key Projects Database India has a diverse range of tourist attractions. © Business Monitor International Page 36 . Aranmula. Undoubtedly the biggest is the Taj Mahal. Chhatrapati Shivaji International Airport (Mumbai).000 foreign visitors a year.000km of coastline as well as access to the Himalayan foothills.

W. Mumbai. with a Johnson further 12 hotels under development and plans to introduce 35 properties under the Howard Johnson brand by 2017. New hotels opening in 2013 include the Crowne Plaza Noida. Marriott Marriott group has 22 hotels across 6 brands in India. catering more towards the budget traveller. ITC Starwood Wyndham Wyndham has 17 hotels in India. the Hyatt Regency Gurgaon and Hyatt Regency Ludhiana. Choice Hotels International Choice group has 28 hotels across three brands in India Quality. Mumbai and Vadadara as well as a resort in Goa. Double Tree. Sheraton. Best Western. Country Inn & Suites Carlson Rezidor Hotel Group Carlson has 63 hotels across 37 different locations in India. Courtyard. with a total of 20 Best Western hotels including business hotels and resorts. Formula 1 Mumbai and Bangalore. The Westin. These include the newly opening Ritz-Carlton Bangalore and Courtyard Bhopal. and Bangalore. Howard others in Goa. Source: BMI © Business Monitor International Page 37 . Novotel. Holiday Inn. Le Meridien. with 2 in Cochin. Clarion. Four Points. Hyatt Place Hyatt Intercontinental Hotels Group IHG has 15 hotels at 13 locations including Mumbai. Goa. Radisson. Pullman. Accor also has hotels in the mountains and developments near several international airports. and Wyndham. Hyatt Regency. at a range of locations giving it good coverage across the country. JW Marriott. Hilton. Ibis. Park Inn. As well as locations in Mercure. Ritz-Carlton. Ramada.India Tourism Report Q2 2013 Table: India Top 10 Global Hotel Groups Global Hotel Group Accor Hotels Presence in [Country] Hotel Brands present in [Country] Accor group has 21 hotels in India. Agra. The group opened 13 new hotels in 2012 and signed a deal to develop a network of 49 Park Inn hotels by 2024. Comfort Inn. The Eros. with 44 in development giving it the leading presence in India. The Four Seasons Mumbai offers luxury accommodation with business and spa facilities. Park Plaza. further hotels expected to open in 2013 in Bangalore. Grand Hyatt. Bangalore and New Dehli. group has locations in New Dehli. and mid range accommodation. Hyatt has 11 hotels in India with 2 more due to open in 2013. providing both budget Sofitel. Crowne Plaza. Four Seasons Best Western International Hilton The Hilton Group currently has 12 hotels in India. Starwood currently has 34 hotels in India but has an extensive expansion programme in place with 24 new hotels expected to open by 2016. with 2 Hampton. Park Hyatt. Best Western has hotels at 17 locations under the Best Western brand.

These include Carlson-Rezidor's plans to open a further 49 hotels by 2017.The ambitious expansion plans reflect the confidence held in the tourist market in India. with many of the top 10 global hotel brands rolling out extensive expansion projects in the country. US$bn (RHS) Notes: 1Individual Expenditure relates to investment in services with an identifiable individual consumer 1 "Ministry of Tourism" 2 "WTTC. Taj Group and Oberoi Group. '000 (LHS) India also has several large domestic hotel brands including The Indian Hotels Co Ltd. and the leading hotel groups will be seeking to take advantage of this growth. Better regulation of the travel networks. particularly foreign investment in the airline industry and management of rail improvement projects. The ITDC Ashok Group is a particularly well known brand with 33 hotels in 26 locations across India. still experiencing the after effects of the widespread credit crunch. © Business Monitor International Page 38 . The market for luxury high end travel continues to expand.000 100 10. Starwood's plans for 24 new hotels by 2016 and Wyndham's plans for 35 new hotels by 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011e 2012e 2013f 2014f 2015f 2016f 2017 200 20. 0 0 ACCOMMODATION: Hotel rooms.000 Parallel Rise Number of Hotel Rooms ('000) and Value of Hotel Industry (US$mn). the number of both inbound and outbound tourists are expected to increase by 2017.000 2017. 2000-2017f 300 30. Despite the limitations of the global economy. BMI expects to see growth in both the number of hotels and number of available rooms. BMI" Overall the tourism market in India is extremely promising and ripe for investment. will help India to take advantage of its growing attraction as the global travel destination of choice.India Tourism Report Q2 2013 As discussed in the Industry Forecast. INDUSTRY VALUE: Hotels and restaurants industry value.

Taj experienced difficulties during the economic slowdown in 2009 but revenue growth has since recovered. Five new establishments opened in 2011.India Tourism Report Q2 2013 Company Profile Taj Hotels Company Overview Taj Hotels Resorts and Palaces forms part of the Tata Group of companies. Kochi and Bentota (Sri Lanka). Bhutan. Africa. Taj aims to offer accommodation in its three main target markets: luxury. totalling INR1. Like many other hotel chains. Mauritius. The company has used the industry downturn to invest in planning new hotels. with the aim of opening another seven by 2014. Sri Lanka. The chain's flagship hotel. leisure and business. the US. the Taj Palace Hotel (New Delhi) the Taj Bengal (Kolkata). The company owns 18 international hotels in the Maldives.854bn Established: 1902 Company Details ■ Taj Group Mandlik House Mandlik Road Colaba Mumbai 400001 Tel: +91 (22) 2220 25515 ■ Key Personnel ■ ■ ■ Managing director/CEO: Raymond Bickson Chief operating officer.9mn Gross revenue (FY11/12): INR1. and the Middle East. The company offers three types of hotel: luxury. upper-upscale and upscale. the Seychelles. the Taj Mahal Palace in Mumbai. its beach resorts are at Goa. luxury hotels (India): Jyoti Narang Chief operating officer. Australia. Financial Data ■ ■ ■ Profit before tax (FY11/12): INR229.854bn in FY11/12. including the Taj Mahal hotel in New Delhi. With this expansion. Vivanta hotels: Veer Vijay Singh © Business Monitor International Page 39 . Malaysia. was the target of the November 2008 terrorist attacks. It has 112 hotels across India. The company launched a series of reconstruction works pending settlement of insurance claims. The group is looking to expand its Ginger hotels. the Taj Coromandel (Chennai) and the Taj West End (Bangalore). Meanwhile. the UK.

The growing number of outbound and domestic-based tourists from Asia and Latin America has provided great incentives for the tourist accommodation sector to increase the number of hotels and rooms on offer across these regions. we saw positive growth stemming from a number of factors including tourists taking advantage of a weaker euro to travel to eurozone states.9 7.1 -4. Even though underlying economic risk remains. In 2012. and competitors look set to enhance market share through pricing.5 4.1 2014f 1019.9 2017f 1170.3 6. as well as a growing middle class in Asia who have an increasing inclination to travel abroad.1 million from 2012 across BMI's tourism universe.7 4. We forecast that annual growth in international tourists arrivals will remain between 4-5% for the next five years from 2013 to 2017.1% at the end of 2013. We expect this trend to continue.1 4. over the next five years we estimate annual growth in total hotel units to be within 3-5% from 2013 to 2017. mass branding and marketing initiatives in the emerging markets.India Tourism Report Q2 2013 Global Industry Overview BMI View: The global tourist accommodation sector will greatly benefit from the rise in international tourist arrivals forecasted from 2013-2017.1 4. aesthetics by introducing wide scale renovations and.9 2016f 1121. Over the last few years financial markets have seen an inflow of capital and the tourist accommodation sector has taken advantage of this by taking the opportunity © Business Monitor International Page 40 .5 4. 2009-2017 2009 WORLD: Total Arrivals mn* WOLRD: Total Arrivals mn.1 4. international tourist arrivals are expected to grow across 2013. International Tourist Arrivals. an increase of 38.9 2010 840. Across the world the tourist accommodation sector is likely to face stiff competition.6 million tourists to 971.3% in 2012.3 2013f 971. BMI estimates that international tourist arrivals will report growth of 4. the global tourist accommodation sector will look to support the increase in number of tourists through the construction of new hotel units. % change y-o-y 783. the only fall being in 2009 due to the global economic crisis. International tourist arrivals grew by 4.9 2015f 1068. Despite the difficult global economic picture. Historically the number of tourists has been rising year on year in eight out of the ten years from 2002-2012.4 2011 894.4 BMI Growing tourist arrivals driving tourist accommodation With international tourist arrivals set to grow from 2013-2017.3 2012e 932. Table: Global Tourism Indicators.

now have 100 hotels in the country and are another 100 have been outlined. Table: global tourism indicators. BMI forecasts that annual growth in total hotel units to be between 2-2.358 or 3.2 2.099 million units in total by the end of the year. 2009-2017 2009 WORLD: Number of hotels and establishments. © Business Monitor International Page 41 .0 1149. people are more likely than ever to travel for leisure. International hotel chains Marriot International.8 1058.2 1176. Over the last few years in the Asia-Pacific region there have been many large scale hotel development projects. From 2014-2017. Historically the level of total hotel units globally has been volatile.8% from 2011. total hotel units in China and India have grown by an annual average of 12.35% in 2014.7 0. Starwood Hotels & Resorts and Hilton Worldwide have outlined expansion plans in China.6 1076.5 BMI Regionally. The tourist accommodation sector in the region is likely to capitalize on the greater number of outbound travellers from these countries and provide a greater number of hotels and facilities to offer guests. Starwood Hotels & Resorts Worldwide.6 1205. Latin America is set to perform the best.5%.7%. '000. and the rise of domestic tourism in countries such as Brazil.7%.2 2.India Tourism Report Q2 2013 to use leverage to initiate wide-ranging hotel renovations and construct new accommodation. 2010 posted an increase of 3.9% and in 2012 total units increased again by 1. hotel and establishment units.4 2. Marriot is looking to double its share of hotels within the country by 2014. Over the next five years from 2013 to 2017.1 2010 2011 2012e 2013f 2014f 2015f 2016f 2017f 1048. Over the same forecast period Brazil will see a surge in new hotel developments in preparation for the 2014 FIFA World Cup to be staged in twelve cities across the country and 2016 Olympics to take place in Rio de Janeiro.32% in 2013 and 4. This is on the back of strong rising levels of domestic tourists and international arrivals that are now attracted by the better infrastructure and facilities on offer at hotels.36% respectively over the last five years from 2012.2 2. Internationally we see the tourist accommodation sector increasing the number of hotel units across 2013 by 2. '000* WORLD: Number of hotels and establishments. with forecasted growth in total hotel units to be 4.9 3.87% and 18.2% to 1.7 2. With rising middle classes in parts of Asia such as China and India. In isolation.8 1124. in 2011 total units slowed down to 0. total hotel units increased by 153. For 2013 we forecast annual growth of 9% for China and 13% for India. High numbers of growth are dominated by the growing trend in inbound arrivals within the region.9 1011. % change y-o-y 4.9 1.5 1099. In 2012. BMI forecasts the region to grow over 4% annually.

9% in Europe from 2010.6% in North America and 1.6%. Singapore and Hong Kong remain the best with rates of 86. Africa also noted a contraction of over 6% during the same period with only Asia. In 2012. Globally occupancy rates are estimated to remain between 50-60% over the next five years from 2013 to 2017.India Tourism Report Q2 2013 Elsewhere. the lowest it has been in a decade. In other regions Europe will grow by 1. BMI forecasts strong growth in the total number of hotel rooms in Latin-America to be 5-8% annually over the next five years from 2013 to 2017. firstly by new hotel construction which will increase the global stock levels of rooms and secondly by the restructuring and renovation of existing hotel units that will provide greater rooms.5-1% annually. Across the region. In the Middle East. Falls in domestic income have led to a decrease in domestic hotel demand and a shorter length of stay by international guests have fallen under 4 nights in 2012 for the first time in ten years. Over the next five years from 2013. Overnights stays rising in Asia and Middle East At the end of 2011 total overnight stays internationally saw contractions of 1. BMI estimates that total European hotel units will show annual growth of 0. we expect this trend to continue. We expect this trend to continue and forecast average length of stay to remain under 4 nights from 2013 to 2017.37% recorded in 2011 and BMI estimates this to be around this level at the end of 2012 and going forward into 2013. This lower pace of growth is largely generated by a 0.1%. many unprofitable hotel units have been closed and others have been relocated. © Business Monitor International Page 42 . Hotel rooms also set to increase For 2013. Europe and North America. Room occupancy rates to remain steady Hotel room occupancy rates remain traditionally high in city based states and locations due to the lack of availability of new land for new hotel construction. where growing room occupation will be counteracted by growth in hotel rooms. Trends in Europe and North America remain subdued with hotels in major western cities a lot pricier than emerging market equivalents. The growth in the total number of rooms will be boosted twofold.5-2%. BMI forecasts that the total number of hotels rooms internationally will grow by 3.5% and 82. total hotel units will increase by 2. BMI estimates a bounce back in hotel construction in 2013 buoyed by a general lift in construction activity within the region.5-1.3%.5% for 2012. average length of stay in Western Europe decreased to under 4 nights. Middle East and Latin America showing growth. and estimate total hotel units will grow in the range of 0. Regionally higher occupancy rates are seen in Asia. North America by 1.1% fall in total hotel units across Western Europe for the same period. Asia by 2-5% and the Middle East by 2-5% over the same forecast horizon.

Narayaganj. Krasnaya Polyana Glasgow Nanjing Incheon FIFA World Cup UEFA Super Cup Ryder Cup Winter Olympics Commonwealth Games Youth games (Summer) Asian Games Football Football Golf Mixed Mixed Mixed Mixed © Business Monitor International Page 43 . Recife. This in turn will lead to a situation of over capacity in the tourist accommodation sector which may result in losses if hotel rooms are left unoccupied. Brasilia. These regions will benefit from the growing number of tourist arrivals from neighbouring nations. and by 3.8% in Asia over the same period. Port Elizabeth. Rajshahi. Brasilia. 2013-2022 Year 2013 2013 Country Russia South Africa City/Cities Moscow Rustenburg. weakness in Western Europe will be more than counteracted by strong growth in overnight stays within the Middle East and Asia. Event IAAF World Championship Athletics Africa Cup of Nations Sport Mixed Football 2013 2013 2013 2013 2013 2014 Unconfirmed but short list is: Fortaleza. Belo Horizonte. Overnight stays in Middle East will grow by 9% in 2013. Table: Global Sporting Calendar. Brazil Rio de Janeiro Myanmar Sweden Czech republic England Bangladesh Naypidaw Malmo Prague London Dhaka. Salvador. BMI forecasts total overnight stays to grow at over 3% annually from 2013 to 2017. Durban. Khulna. Sao Paolo. Cuiba. Belo Horizonte. FIFA Confederations Cup Asia Games Eurovision Song Contest UEFA Super Cup UEFA Champions League Final 2020 World Cup Football Mixed Singing Football Football Cricket 2014 2014 2014 2014 2014 2014 2014 Manaus. Chittagong. Gleneagles Sochi. If macroeconomic fundamentals are to improve this will translate into an increase in international tourist arrivals and provide greater incentive for further tourist accommodation construction. Porto Brazil Alegre Wales Scotland Russia Scotland China South Korea Cardiff Auchterarder. Rio de Janeiro. Fortaleza. Nelspruit. Johannesburg. Tourist accommodation sector remains sensitive to economic fundamentals To take stock. Recife. Sylhet. Curitiba. there still remains significant underlying risk to the tourist accommodation sector.India Tourism Report Q2 2013 Globally. Natal. Salvador. any impending global economic slowdown that constricts disposable income will lead to a reduction in future international tourist arrivals.

Samara. Winnipeg. Montreal. Lyon. Saransk. Yokohama. Fes. Agadir Tibilisi Not Decided Melbourne. Toyota. Ottawa. London. Sochi. Sendai Sheboygan Not Decided Event UEFA Champions League Final Cricket World Cup Sport Cricket 2015 2015 2015 2015 2015 2015 2015 2016 2016 2016 2016 2016 2017 2017 2017 England Canada Canada Morocco Georgia Singapore Australia France Brazil India USA Norway Libya England Russia Rugby World Cup FIFA Women's World Cup Pan American Games Africa Cup of Nations UEFA Super Cup Asian Games Asia Cup UEFA Euro Olympics 2020 World Cup Ryder Cup Youth Games (Winter) Africa Cup of Nations IAAF World Championship Athletics FIFA Confederations Cup Rugby Football Mixed Football Football Mixed Football Football Mixed Cricket Golf Mixed Football Mixed Football 2018 2018 2018 2018 2019 2019 2020 2021 Russia South Korea Australia France England & Wales Japan USA Qatar FIFA World Cup Winter Olympics Commonwealth Games Ryder Cup Cricket World Cup Rugby World Cup Ryder Cup FIFA Confederations Cup Football Mixed Mixed Golf Cricket Rugby Golf Football © Business Monitor International Page 44 . Paris. New Castle. Lille. Osaka. and Moncton Toronto Casablanca.India Tourism Report Q2 2013 Global Sporting Calendar. Marrakesh. Nice. Bristol. Brighton. Derbyy. Southampton. Nizhny Novgorod. Manchester. Krasnodar. Rabat. Sochi. Volgograd. Coventry. Birmingham. Milton Keynes. Yekaterinburg Pyeongchang Gold Coast City Paris Not Decided Tokyo.Continued Year 2014 2015 Country Portugal Australia and New Zealand City/Cities Lisbon Not Decided Cardiff. St-Etienne Rio de Janeiro Not Decided Chaska Lillehammer Not Decided London Moscow. Tangier. Saint Petersburg. Kazhan. Yaroslavl. Sunderland Vancouver. Leicester. 2013-2022 . Edmonton. Leeds. Rostov-on-Don. Toulouse. Sapporo. Fukuoka. Kazan. St Petersburg Kaliningrad. Marseille. Kobe. Bourdeaux. Gloucester. Sydney Brisbane Canberra Lens. Moscow.

Ash-Shamal. Umm Salar. Al Rayyan Event FIFA World Cup Sport Football Source: BMI Key Projects Database © Business Monitor International Page 45 . Al Wakrah. 2013-2022 .India Tourism Report Q2 2013 Global Sporting Calendar. Doha.Continued Year 2022 Country Qatar City/Cities Al-Khor.

6 -0.4 2.1 2.India Tourism Report Q2 2013 Global Assumptions Global Macroeconomic Assumptions Our global real GDP growth forecasts remain steady.2 2.4 1.0 3.4 2.8 0.00 0.6 3.0 3.7 1. 2. most notably the US and China.50 0.2 5.4 1. Nonetheless.1 1. Table: Global Assumptions 2011 Real GDP Growth (%) US Eurozone Japan China World 1.1 3.7 2.3 2.5 2.0 3.2 2.0 2.3 2.00 0.5 1.7 3.4 1.7 0.1 1.5 2.6 -0.1 1.5 7.8 3.5 2. We believe that 2013 is likely to see improved economic activity.6 9.7 3.1 5. at 2.8 3.7 1. Despite these amendments.10 0.2 6.3 Interest Rates (eop) Fed Funds Rate ECB Refinancing Rate Japan Overnight Call Rate 0.1 2.4% in 2014 and 2015.7 0.1 2.50 © Business Monitor International Page 46 .8 2.2 2.00 0.1 6.1 0.9 1.50 0.3 2.1 0.10 0.8 3.9 1.3 2. we have upwardly revised growth estimates and forecasts for a few key states.9 2.1 2.5% in 2012.1 2012f 2013f 2014f 2015f 2016f 2017f 2.50 0.00 1.00 0.1 5.8 2.9 1.4 0. while emerging market performance will be mixed.6 4. Developed states still have a long way to go before recovering pre-crisis output levels.00 0.5 2.9% in 2013 and 3.25 2.9 7.50 0.5 1.1 1.10 0. our core global outlook remains relatively unchanged.00 0.3 2.10 1.50 0.7 3.10 0.5 Consumer Inflation (ave) US Eurozone Japan China World 3.00 1. with cyclical indicators beginning to indicate that the near-recessionary conditions seen in mid-2012 are abating.2 -0.9 3.25 1.

00 Source: BMI With the global economy only likely to slowly pick up momentum.00 6. and we continue to expect the next funds rate hike in 2016.25 75.10 102.75 6. we believe that the further enactment of expansionary monetary and fiscal policy is almost guaranteed. The Fed also set out explicit quantitative targets that must be reached before monetary policy is tightened.25 6. and we expect budget proceedings to come to the fore in Q113. marking a substantial expansion of the Fed's balance sheet by around a third. the decisions announced by the Federal Reserve (Fed) on December 12 changed the game for monetary policy once again.00 99.34 1.60 1.00 95.00 6.20 76.74 6.Continued 2011 Exchange Rates (ave) US$/EUR JPY/US$ CNY/US$ 1. particularly in developed states where economic slack remains significant.to two-year inflation outlook remains below 2. and see scope for the party to exert influence over the appointment of the next BoJ governor.05 110.5% and the one. with US$40bn accounted for by QE3.52 111. we expect the newly elected LDP government to keep pressure on the central bank to increase money supply further.15 99. © Business Monitor International Page 47 .00 93.India Tourism Report Q2 2013 Global Assumptions . Our view on US rate policy is not substantially changed by the newly created explicit targets.00 93.46 2012f 2013f 2014f 2015f 2016f 2017f 1. In the US. beginning in January 2013. the growth of the Fed's balance sheet will accelerate to US$85bn/month.40 1.39 79.00 6.20 82.60 1. so will keep rates at near-zero levels 'at least as long' as the unemployment rate remains above 6.25 96.5%.27 79. however.60 Oil Prices (ave) OPEC Basket (US$/bbl) Brent Crude (US$/bbl) 107. further stimulus is desirable. The Fed will now purchase an additional US$45bn per month in 'longer-term' treasury securities.20 84.30 96.55 1.05 107.00 96. Japan and the US are set to up the ante on this front in the new year. Although we believe that the Bank of Japan (BoJ) is likely to expand its asset purchases at its next few meetings.00 6. Given the state of the Japanese economy. meaning that.20 98. we now expect to see at least US$1trn in asset purchases until early 2014.20 78.

1 4.4 3.0 2.50 1.94 1.89 1.2 5.28 12.00 1.8 4.00 2.27 79.0 4.9 2014f 3.15 12.00 51.40 1.73 © Business Monitor International Page 48 . ave RUB/US$.44 29.7 4.25 75.1 6.2000/EUR projection for 2014.41 1.60 32.2 3.80 32.2 6.78 2014f 6. ave INR/US$.00 2.125.80 2013f 6.100.2500/EUR from a previous forecast of US$1.1 3.50 1.60 Table: Emerging Market Exchange Rates 2011 China South Korea India Brazil Mexico Russia Turkey CNY/US$.6 7. Table: Global & Regional Real GDP Growth.1 2013f 2.74 0.6 4.39 79. ave JPY/US$. ave MXN/US$.4 5.0 6.68 12.3 5.07 1.00 52. % chg y-o-y 2011 World Developed States Emerging Markets Asia Ex-Japan Latin America Emerging Europe Sub-Saharan Africa Middle East & North Africa 3.9 2012f 2.8 4.170.34 1.03 1.India Tourism Report Q2 2013 Meanwhile.61 2012f 1.9 5.68 1.05 31.5 1.72 1. ave 1.8 Table: Developed Market Exchange Rates 2011 Eurozone Japan Switzerland UK US$/EUR. while maintaining our US$1. ave 6.108. we have slightly raised our average forecast for 2013 to US$1.58 2014f 1.2200/ EUR.7 6.05 46.0 3.68 2012f 6.75 1. Our long-term expectation for euro weakness versus the dollar is unaffected by this near-term revision.57 2013f 1.0 3.96 13. ave US$/GBP.55 1.9 1.46 1. ave KRW/US$.00 53.20 76.0 5.4 1.2 4. given the push higher in the euro-dollar exchange rate towards the end of 2012. ave CHF/US$.1 1.00 0.00 1.1 3. ave BRL/US$. ave TRY/US$.

20 9.7 2.7 -0.8 2. % chg y-o-y .4 1.4% from 0.2 2.4 2012f 1.5 1.4 0.5 1.5 1. which in turn can be attributed to an unexpected surge in business inventories and national defence spending.3 2.1 1.0% forecast we set out at the beginning of the year.7 1.5 2.00 Source: BMI Developed States Our developed state aggregate growth estimate for 2012 has risen to 1. Meanwhile.9 G7 Eurozone EU-27 1.3% from 1.0 3.6 2.7 © Business Monitor International Page 49 .0%.00 9.Continued South Africa ZAR/US$.7% quarter-on-quarter annualised). Table: Developed States.2 0. owing mainly to a downgrade in the Italy projection to -0.0 2013f 1.2 -0.6 1.1 1.9%.5% previously.4% for 2013. The 2012 upgrade is due to a change in our US real GDP growth estimate for that year.3 2014f 1.4 1.6 1.0 1. ave 7.0 -0. we have downgraded other growth forecasts for both 2012 and 2013.5 0.0% from a previous forecast of 0.9 1. including those of Austria. Our 2013 growth forecast for the eurozone has slipped slightly to 0.9 1. This is mainly due to the stronger-than-expected real GDP growth figure for Q312 (2.0 1.India Tourism Report Q2 2013 Global & Regional Real GDP Growth. Real GDP Growth Forecasts 2011 Developed States Aggregate Growth 1.5 0.7 1.2% from 0.2% from the 2.4 -0. Our general outlook for a slow and erratic growth path for the US economy therefore remains in place.26 8. Sweden and the UK.5 Selected Developed States Australia Austria Belgium Canada Denmark 2. which has been revised up to 2. while it has fallen to 1.

0 2. we remain below the consensus estimate of 8.4 -2.4 1.8 1.6 1.4 2.9 -0.9 1.5 -3.7 2012f -0.6 0.6 1.5 Source: BMI Emerging Markets Emerging markets (EMs) are estimated to have grown by 4.2 0.1 2014f 1.6 -1.Continued 2011 Finland France Germany Ireland Italy Japan Netherlands Norway Portugal Spain Sweden Switzerland UK UK 2.2 1. Table: Emerging Markets.9 2.5 1.8 3.7% in real terms in 2012. and a number of leading and coincident indicators suggest that this is now well in play.9 1.6 0. Despite this upward revision.9 2.7 0.1 0.4 0.5% (from our previous forecast of 7. and we forecast a slight acceleration in growth in 2013 to 5.6 2.9 0. we have modestly downgraded the 2013 outlook for some major EM economies.1 0. We have been calling for a cyclical bounce in Chinese growth for a couple of months.6 1.5 -2.3 0.5 1.2 0. the Czech Republic.7 -0.2 1.1%).3 0.1% and believe that the current growth momentum is likely to fade towards the middle of 2013.5 2.8 3. Real GDP Growth Forecasts © Business Monitor International Page 50 .5 -0. including Turkey. While our aggregate regional forecasts are relatively steady.1 1. Real GDP Growth Forecasts .India Tourism Report Q2 2013 Developed States.2 2013f 0.5 -1.3 0.4 -0.0 1. Poland.1 3.4 1.1 -1.0 2.6 0.8 1. Owing to the strength in the recent rebound in economic data and upside risks to the external economy.2 1.3 -0.0%.2 0. we have upgraded China's real GDP growth forecast for 2013 to 7. Brazil and India.0 1.

0 2014f 5.8 7.4 3.9 6.1 6.1 5.8 5.1 4.0 0.6 6.2 3.8 South Africa Nigeria Saudi Arabia UAE Egypt 3.9 2.0 3.1 4.7 6.2 6.5 3.0 4.2 4.0 3.6 3.0 5.7 Middle East Sub-Saharan Africa 3.8 1.0 China Hong Kong India* Indonesia Malaysia Singapore South Korea Taiwan Thailand 9.4 7.1 7.2 6.0 4.1 7.0 4.3 7.3 6.2 Emerging Asia 7.7 3.4 3.2 1.9 4.6 4.5 5.4 2.8 5.2 3.0 3.6 2012f 4.0 Russia Turkey 4.1 4.1 3.7 3.6 5.4 Emerging Europe 4.2 3.9 3.7 2013f 5.7 Argentina Brazil Mexico 8.9 3.5 6.4 4.3 5.3 3.5 3.3 8.2 1.2 4.6 6.7 1.0 © Business Monitor International Page 51 .4 3.6 3.2 2.0 6.5 6.8 2.6 3.5 3.0 0.9 1.6 4.5 2.9 0.1 Latin America 4.7 3.Continued 2011 Emerging Markets Aggregate Growth 5.6 5.3 2.7 3.5 4.4 4.2 5.1 4.4 7. Real GDP Growth Forecasts .4 2.0 3.India Tourism Report Q2 2013 Emerging Markets.5 3.6 4.9 2.7 4.1 4.9 4.4 6.

0 6.3 3.5 China 7.2 -1.1 3. we remain below consensus on China.7 Table: Global & Regional Real GDP Growth.0 5.5 3.5 1. Real GDP Growth Forecasts .5 0.9 1.2 6. Japan and India.9 2.0 3.India Tourism Report Q2 2013 Emerging Markets.6 3.2 3.5 Russia 3.1 7. Table: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS (%) US 2012 Bloomberg Consensus BMI 2013 Bloomberg Consensus BMI 2.7 7.7 0.1 2013f 2.7 6.1 0.4 -0.5 1.9 2014f 3. Bloomberg © Business Monitor International Page 52 .7 0.2 4. according to the Bloomberg survey of analysts.1 3.1 4.3 2012f -1.8 4.4 1.4 3.2 Source: BMI. though we are slightly more optimistic on the US. For 2013.1 Eurozone -0.9 1.6 4. Japan and Russia.0 3.9 5.1 1.4 3.8 3.1 6.7 0.2 2.9 2012f 2.7 8.8 6.3 2014f 1.5 1.7 5.4 Japan 1.6 7.2 5.Continued 2011 Czech Republic Hungary Poland *Fiscal years ending March 31 (2011 = 2010/11) 1.3 5.4 5.0 2.2 2.0 4.9 Brazil 1.8 4.0 3. % chg y-o-y 2011 World Developed States Emerging Markets Asia Ex-Japan Latin America Emerging Europe Sub-Saharan Africa Middle East & North Africa 3.0 2.8 Source: BMI We are below consensus on growth in 2012 for the eurozone.7 4.3 2013f 0.4 India N/A 5.2 2. the eurozone.2 2.7 4.

with cyclical indicators beginning to indicate that the nearrecessionary conditions seen in mid-2012 are abating. and the world's major central banks kicking off unprecedented quantities of asset purchases. The US fiscal cliff remains the big worry in the near-term. if not necessarily a 'grand bargain'. even though we continue to see a long-term decline in China's growth story as its economy rebalances. with monetary easing already showing some signs of traction. following a year in which it appeared that the world economy could strike recession at any time given a major policy error. we remain modestly bullish on risk assets. Going For Gold US . We believe that 2013 is likely to see improved economic activity. and a number of leading and coincident indicators suggest that this is now well in play. we have been calling for a cyclical bounce in Chinese growth for a couple of months. Therefore for the next 2-3 quarters we © Business Monitor International Page 53 .Monetary Base Projections And Gold Price Importantly. but we are optimistic that at least a temporary postponement of the fiscal tightening will be achieved. Reflation will be a major theme in 2013. Macro Outlook A once-cloudy global macro outlook is becoming increasingly clear.India Tourism Report Q2 2013 Global Asset Class Strategy With global economic activity set to pick up in 2013.

9% real global GDP growth in 2013.5% in 2012. © Business Monitor International Page 54 . However. BMI Both of these views have served us well for the better part of two years. but not a marquee year for economic expansion. The Reflation Trade US .S&P 500 Forward P/E And 10-Year Inflation Breakevens Source: Macrobond. a rise from 2. Bloomberg.India Tourism Report Q2 2013 are relatively sanguine if not particularly effusive on global growth prospects. but now both look like they have stalled. Equities We continue to see upside for global equities in general. as more solid economic footing and reflationary expectations improve multiples and help underpin corporate profitability. This is encapsulated in our forecast of 2. we are adopting a neutral stance on two long-standing relative equity views: US over European equities. and Developed over Emerging Market equities.

we are compelled to go neutral given the heavy weighting of China (for which we have a multi-month bullish view) in the MSCI EM.India Tourism Report Q2 2013 Going Neutral Ratios of MSCI World Over EM and MSCI US Over Europe Ex-UK Source: Bloomberg. particularly in emerging markets. © Business Monitor International Page 55 . which we adopted in Q410 and has moved 17% in our favour since that time. Despite our loss of conviction on these particular relative value ideas. with middling US growth. is historically associated with a weaker dollar. while we believe that the fundamental story is much stronger in the US over the coming quarters. with the 15% price-to-book premium for EM in November 2010 having flipped to an 8% discount presently (near 2008 crash levels). BMI For the US over Europe. Currencies We remain bearish the US dollar amid increasing levels of Fed asset purchases. we believe that on a total return basis. we believe that the potential upturn in EM and eurozone equities bodes well for global stocks in general. Furthermore. For DM over EM. the dollar is set to underperform versus a broad mix of higher-yield currencies. much of that differential is already priced into the market. A general risk-on global recovery environment. Overall. the EM risk plus overvaluation story has ebbed significantly.

However.Broad Trade-Weighted Dollar Index Source: Federal Reserve.800/oz area will continue to present significant upside resistance. we still do not see major gains ahead for fixed income from these levels.further bolstered by monetary expansion elsewhere in the world -. Looking at US 10-year Treasury yields.India Tourism Report Q2 2013 Dollar Weakness US . which should keep a lid on long-end yields. Gold does not look particularly strong technically in the short run. we see an incipient uptrend forming.0% level from 1. and the US$1. © Business Monitor International Page 56 . but we expect a move to the US$2.is likely to underpin prices (see first chart). and a further US$1trn in asset purchases by the Fed through to 2014 . BMI Gold remains our favourite way to play the global monetary expansion story. Fixed Income Further monetary easing is on the cards worldwide. and it is one of the few commodities upon which we have a bullish view going into 2013.000/oz area at some stage next year. suggesting that our view for a move to the 2.7% pre-QE3 remains in place. Gold has performed well during times of Federal Reserve balance sheet expansion.

India Tourism Report Q2 2013 Yield Means EM Debt Still Has Some Appeal JPMorgan EMBI Plus Sovereign Spread (bps) Source: Bloomberg © Business Monitor International Page 57 .

India Tourism Report Q2 2013 Demographic Forecast Demographic analysis is a key pillar of BMI's macroeconomic and industry forecasting model. Not only is the total population of a country a key variable in consumer demand. Source: World Bank. UN. BMI © Business Monitor International Page 58 . but an understanding of the demographic profile is key to understanding issues ranging from future population trends to productivity growth and government spending requirements.

973 61.224.181 55.955 2015f 1.240 20.203 86.869 103.972 111.502 115.046 81.313 71.019 109.111 25.140.099 62.898 126.484 124.561 82.644 121.080 58.568 108.548 101.172 112.387 78.433 110.762 117.786 35.636 96.043 14.633 2005 1.468 36.785 121.865 94.785 16.351 128.310 122.066 49.397 120.298 19.496 66.942 61.979 123.429 9.529 37.203 100.850 106.073 2020f 1.730 40.606 23.738 27.480 35.385 23.868 15.522 79.574 75.776 22.608 10. Table: India's Population By Age Group.206 125.354 2010 1.017 123.614 127.053.992 17.917 10.149 12.306 84.027 15.103 121.916 108.221 127.094 77.India Tourism Report Q2 2013 The accompanying charts detail India's population pyramid for 2011.663 121.273 104.948 52.362 25.742 76.239 123.022 88. BMI © Business Monitor International Page 59 .598 67.881 86.529 79.124 57.012 67.863 48.875 73.620 2000 1. total 0-4 years 5-9 years 10-14 years 15-19 years 20-24 years 25-29 years 30-34 years 35-39 years 40-44 years 45-49 years 50-54 years 55-59 years 60-64 years 65-69 years 70-74 years 75+ years 873.728 42.759 64.451 18.282 53.701 58.090 116.386. UN.727 46.980 91.253 126.728 119.103 87.107 33.310 28.934 49.753 32.139 1995 964.528 23.972 25.463 55.871 52. the change in the structure of the population between 2011 and 2050 and the total population between 1990 and 2050.055 31.369 114.142 f = BMI forecast.247 30.046 38. as well as life expectancy.909 125.012 99.258.588 116.791 28.651 59.037 41.687 19.198 27.858 21.596 118.135 18.747 20.985 122.622 120.294 68.381 93.601 125.490 70.486 125.834 2012f 1. 1990-2020 ('000) 1990 Population. The tables show key datapoints from all of these charts.619 122.070 97.799 12.513 9. in addition to important metrics including the dependency ratio and the urban/rural split.308.043 126. Source: World Bank.280 122.186 98.566 69.

71 8.07 10.45 7.02 7.27 2. Source: World Bank.03 4.35 6.75 9.64 1.25 9.16 3.85 10.India Tourism Report Q2 2013 Table: India's Population By Age Group.72 1.62 9.74 5.02 5.01 9. BMI © Business Monitor International Page 60 .05 1995 13.03 3.63 2.90 7.98 11.29 1.45 10.09 10.16 9.33 8.56 7.30 10.98 2.93 2.89 2.63 7.13 9.20 2005 11.31 6.90 9.95 2.94 3.73 9.01 3.36 1.30 4.35 5.50 4.80 6.42 6.60 3.83 9.89 6.45 2.04 8.04 7.66 10.94 2.51 8.26 8.09 1.11 6.28 9.50 2.21 1.41 9.32 1. 1990-2020 (% of total) 1990 0-4 years 5-9 years 10-14 years 15-19 years 20-24 years 25-29 years 30-34 years 35-39 years 40-44 years 45-49 years 50-54 years 55-59 years 60-64 years 65-69 years 70-74 years 75+ years 13.17 7.92 1.42 5.60 7. UN.35 2010 10.12 10.96 f = BMI forecast.68 4.96 1.33 4.82 1.49 1.06 8.03 9.37 3.21 9.54 2012f 10.09 5.10 2000 11.11 8.63 11.60 5.61 11.30 9.45 10.00 1.13 2.15 6.67 2015f 9.65 1.09 4.63 9.62 5.44 1.74 4.35 8.43 1.06 9.67 1.29 8.45 1.15 6.10 8.75 4.72 6.02 12.44 1.90 12.16 1.22 5.57 4.24 11.80 5.56 2.82 2.24 3.71 1.24 4.55 3.13 1.12 7.76 2020f 9.83 8.77 6.

627 6.374 8.959.1 734.5 573.220.1 434.587 7.410. UN.7 314.116 9.0 818.397.739 58. total. 3 15-64.5 87.899 2020f 50. % of total working age population.0 69.9 64.India Tourism Report Q2 2013 Table: India's Key Population Ratios.7 364. 1990-2020 1990 Dependent ratio.077 65.144 2000 63. '000 8 33.846 40.4 72.8 716.659 6.272 65.747 7.558.4 68.1 390.5 74.046 65.3 71.614.792.512. '000 1995 2000 2005 2010 2012f 2015f 2020f 25.8 376. 2 0>15 plus 65+.2 6 Dependent population.5 922.5 352.3 52.7 28. total. 1990-2020 1990 Urban population.294. BMI Table: India's Rural And Urban Population.7 857. % of total Rural population.8 371.6 27.5 Pensionable population.9 375. % of total Urban population.331 2015f 52.3 385. Source: World Bank.4 66.145. '000 4 Youth population.771 59.9 281.5 789.4 374.7 413.7 684.5 26.626.3 367.384.249 2010 55. 4 15-64.8 365. % of total working age 1 2 1995 68.7 464.715 61. as % of total population.823. UN.0 30.6 60.8 440.8 860.274 45.7 376. % of total working age 7 Pensionable population.6 31.2 70.391 51.9 44.366 61. '000 331.5 Source: World Bank. BMI © Business Monitor International Page 61 .5 632. '000 Rural population.278 2012f 53.3 509.3 464.6 38. 7 65+. 6 0>15.3 247.1 643.947 71.063 66.532 56.0 922. total.0 872. 5 0>15. 8 65+.5 73.865 64. % of total Active population.230.652 62.3 780.1 423.5 216.750 47. as % of total working age population.7 30.2 894. % of total working age population.404 7.437. % of total working age 5 Youth population.080 f = BMI forecast.6 33. 1 0>15 plus 65+.8 410.0 447. '000 3 Active population.785 6.3 70.888.581 2005 59.948 43.

the regulatory environment and specific areas of legislation. for example a deep macroeconomic recession. and the development of the tourism industry in neighbouring markets that are potential competitors. changes in general societal trends. BMI selects the best model according to various different criteria and tests. Experience. Adjusted R2 takes degrees of freedom into account Testing the directional movement and magnitude of coefficients Hypothesis testing to ensure co-efficients are significant (normally t-test and/or P-value) All results are assessed to alleviate issues related to auto-correlation and multi-co-linearity ■ ■ ■ BMI uses the selected best model to perform forecasting. but is not exclusive to: significant hotel industry expansion plans. expertise and knowledge of industry data and trends ensures that analysts spot structural breaks. in each case being determined. such as the log-linear model. During periods of 'industry shock'. It must be remembered that human intervention plays a necessary and desirable role in all of BMI's industry forecasting. dramatic changes in consumption levels of tourist visitors. by the prevailing features of the industry data being examined. Within the Tourism industry. BMI uses a 'general-to-specific' method. turning points and seasonal features where a purely mechanical forecasting process would not. BMI mainly uses a linear model. changes in security levels of tourist destinations. dummy variables are used to determine the level of impact on the tourism industry. are used when necessary. anomalous data. including.India Tourism Report Q2 2013 Methodology How We Generate Our Industry Forecasts BMI's industry forecasts are generated using the best-practice techniques of time-series modelling and causal regression modelling. but not exclusive to: ■ R2 tests explanatory power. new economic and political developments that may affect government tourism expenditure. The precise form of model we use varies from industry to industry. but simple non-linear models. this intervention might include. BMI mainly uses OLS estimators and in order to avoid relying on subjective views we encourage the use of objective views. as per standard practice. movements in currencies effecting tourist exchange rates. Definitions: © Business Monitor International Page 62 . Effective forecasting depends on appropriately-selected regression models.

Example of Inbound Arrivals model: (Inbound Arrivals)t = β0 + β1*(Consumption levels of visiting tourists)t + β2*(Exchange rate movements between visiting country and domestic country)t + εt BMI's outbound departure data is generated from BMI's tourism universe of inbound forecasts where each inbound arrival from country x constitutes an outbound departure from country x. without a quid pro quo. tourism ministries. Other Tourism Models Data such as accommodation. Data are in current U. except in cases where these are so important as to justify a separate classification. Excluded is the international carriage of travellers. dollars. the traveller or provided.India Tourism Report Q2 2013 International tourism receipts for travel items are expenditures by international inbound visitors in the reporting economy.S. national statistical providers and central banks. These receipts should include any other prepayment made for goods or services received in the destination country. Travel items can include such things as sun cream and other common travel accessories etc. Data from other countries non-existing in the BMI universe have also been collected and forecasted separately to improve the accuracy of forecasts. which is covered in passenger travel items. tourism expenditure and tourism receipts has been modelled against country specific macro-economic variables taking into account BMI's country risk views and where applicable results of BMI's Global Tourism Model. For example. transport. employment. for the traveller to use or give away. inbound tourist arrivals to the USA from the UK constitutes outbound departures from the UK to the USA in specified year. © Business Monitor International Page 63 . This data has then been carefully aggregated according to country specific requirements to form total departure data. industry values. This data is then forecasted on private consumption levels of tourists which also take into account disposable income levels and currency movements to reflect changes in tourist exchange rates. or on behalf of. The goods and services are purchased by. Global Tourism Model BMI collects inbound tourist arrivals from national sources such as governmental departments. This has then be carefully modelled for each specific inbound country and then carefully aggregated according to country specific requirements to be used in forecasting total arrivals data. They also may include receipts from same-day visitors.

Secondly. we attempt. tourist departures. Risk Rated Evaluation of industry-specific dangers and those emanating from the state's political/economic profile that call into question the likelihood of anticipated returns being realised over the assessed time period. we use BMI's proprietary Country Risk Ratings (CRR) to ensure that only the aspects most relevant to the industry have been included.India Tourism Report Q2 2013 Example of Tourism Transport Model: ■ Air transport passengers carried. Overall.offers an industry-leading insight into the prospects and risks for companies across the globe. Overall. mn. the rating uses two subjectively-measured indicators.which integrates with those of all industries covered by BMI . Conceptually. we seek accurately to capture the operational dangers to companies operating in this industry globally. Finally. and over 41 separate indicators/datasets. © Business Monitor International Page 64 . the ratings system is divided into two distinct areas: Limits Of Potential Returns An evaluation of the sector's size and growth potential in each state. Firstly. the ratings system . Indicators The following indicators have been used. and also broader industry/state characteristics that may inhibit its development. Risks To Realisation Of Returns An evaluation of industry-specific dangers and those emanating from the state's political and economic profile that call into question the likelihood of anticipated returns being realised over the assessed time period. '000)t + εt Business Environment Ratings Methodology BMI's approach to Tourism Risk and Reward Ratings is threefold. to identify objective indicators that may serve as proxies for indicators previously evaluated on a subjective basis. where possible. out-bound)t = β0 + β1*( Total Out-bound.

This indicates average tourist spending per visitor. Hotel occupancy. % 5 year average forecasted growth rate in tourism receipts. Poor power/water/ transport infrastructure serve as bottlenecks to sector development Labour Costs Rating from CRR to denote cost of labour. the bigger is the tourism industry within that country. Higher the number. Indicates whether we expect industry revenue to grow. the bigger the market potentials. The larger the amount the greater the opportunities available. Tourism Receipts Growth. International. tourism receipts. High costs will hinder international competitiveness and vice versa © Business Monitor International Page 65 . Indicates whether we expect industry size to grow. % Gives a measure of success of the hotel industry. <glocur> Arrivals growth. Country rewards Physical Infrastructure Rating from BMI's CRR. International tourism receipts per vistor. Higher the number the more revenue hotels are likely to generate. % 5 year average forecasted growth rate in tourist arrivals. The larger the number.India Tourism Report Q2 2013 Table: Tourism Risk/Reward Ratings Indicators Indicator Tourism Rewards Rationale Tourist Arrivals ('000) Gives an indication of market size. % of GDP Size of the tourism industry within the country with respects to GDP.

India Tourism Report Q2 2013 Table: Tourism Risk/Reward Ratings Indicators Risks Market Risks Stability of Exposed Region Rating from CRR. to denote risk of additional illegal costs/possibility of opacity in tendering/ business operations affecting companies' ability to compete Bureaucracy Rating from CRR to denote ease of conducting business in the state Subjective rating from CRR. the principal cause of economic crises. Such a crisis will complicate long-term planning by suggesting risk of growth volatility and cutting access to investment funding domestically. to denote strength of legal institutions in each state. Country Risk Legal Framework Rating from CRR. to denote predictability of openness to foreign investment trade Subjective evaluation against BMI-defined criteria. Market Openness Security Risk Source: BMI © Business Monitor International Page 66 . The tourism industry is especially vulnerable to security risks. Security of investment can be a key risk in some emerging markets Corruption Rating from CRR. to denote vulnerability to external shock. Short-term Political Stability Changes in political and economic policies can have an effect on the levels of government expenditure as well as regulation within the industry.

national tourist boards. and statistics from the United Nations Statistical Databases (UNSD . tourism and commerce ministries. UN affiliates and The World Bank. Consequently. the following weighting has been adopted. government departments. local industry governing-bodies and associations. national statistics providers.India Tourism Report Q2 2013 Table: Tourism Risk/Reward Ratings Indicators Weighting Given the number of indicators/datasets used. Table: Weighting Of Components Component Limits of potential returns Tourism Sector Country Rewards Risks to realisation of returns Market risks Country risk Source: BMI Weighting 70 60 40 30 45 55 Sources BMI uses the following sources in the compilation of data and analysis for its range of Tourism reports: national statistics offices.UNData). it would be wholly inappropriate to give all subcomponents equal weight. © Business Monitor International Page 67 . central banks.

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