India tourism has finally touched the three million arrivals mark, while domestic tourism soared to 320 million. India as a destination has made its way to the top 10 chart of Conde Nast Traveller and Lonely Planet. Arguably, the best performance so far in the history of Indian tourism.

No doubt, a momentum has been generated. But importantly, it has to go on for the sake of the industry and the country.

With its finger on the pulse of the industry, the Indian Association of Tour Operators (IATO) in its annual convention theme - Incredible India, Sustaining the Boom - has decided to discuss and deliberate on issues of infrastructure development, aviation apathy, marketing strategy and sustainable tourism.

The Incredible India campaign, launched during the tenure of Jagmohan, has started showing results, which was the result of focused marketing. It has increased the country's arrivals by 16 per cent and earning by US$ 600 million - a foreign exchange growth of 23 per cent. The figures of the first six months of 2004 show promises galore. But stiff hotel rates, high airfare, limited seat capacity, irrational road taxes make India less competitive. So, whither from here?

Smart marketing

Industry captains agree that the present times offers the best opportunity to recover its losses and set corrective measures in place to ensure that the industry never finds its back to the wall again. Partnership within the trade and between government and trade is an essential requirement. The private sector must realise that its ability to complement the government's effort by assisting in product diversification, marketing and promotion, and maximising the opportunities that information technology offers hold the key to success.

Perhaps the most important market characteristic that India should understand is that the industry has become extremely price sensitive. As Harsh Varma, regional representative for the WTO in the Asia-Pacific region, says, "Everybody connected to tourism and hospitality should understand that price sensitivity will lie at the heart of every marketing operation. Educated travellers will demand complete information and will have a greater understanding of the value for money concept. His strong knowledge and options available may mean that a few dollars can make the difference in a sale." Currently, a 6n/7d package to India costs around 30 per cent more compared to other countries in South and South-East Asia, while a premium segment hotel room is 25-35 per cent dearer. But nobody seems to be listening.

Further, if India wants to capture a larger slice of the cake, the focus needs to move from product to customer, from built heritage to creating visitor experiences, from sightseeing-based tourism to activity-based tourism and from transactions to building relationships. Today's visitor prefers some recreational activities to spice up his vacation. It has to be an experiential holiday. With shorter and more activity-packed holidays on the cards, specialisation and niche product segmenting will play an important role, while hotels and travel service providers will have to innovate specific products in order to be relevant.

"To market India effectively it is imperative to prioritise segments in key markets. There is a visible shift to domestic and regional tourism in Asia and we should shift our emphasis accordingly. The NRI community is the most significant segment in terms of propensity to respond to stimuli. Focus on this segment as the key global segment in the 25/40 age bracket. Consolidate overseas offices to create India Centres following a public private partnership model similar to the British Visitor Centre in London or Paris. Strategic promotions with non-tourism partners is a good option to leverage inadequate budgets. In fact, India should go for celebrity endorsements involving friends of India like Richard Gere, Steve Waugh and others," suggests Prem Subramaniam, head, tourism infrastructure, IDFC and former country head of Visit Britain.

Product diversification should be the other area of focus as select destinations have started showing signs of fatigue. "India has been milking the same cow for long. We should either rest the product, enhance it or change it altogether. The aim should be to reduce over dependence on these products," points out Varma. It's time to look beyond the golden triangle and market new attractions and innovative packages, agrees tour operators, but the infrastructure is often lacking.

Infrastructure planning

Accommodation infrastructure has witnessed the slowest growth - from 8,000 rooms to 80,000 rooms in 30 years. The availability of hotel rooms, 98,000 at present, is still only half the number required to host even a modest target of five million visitors. With just 2.8 million tourists in 2003, tour operators felt the crunch as they struggled to find accommodation.

The reality is that if a flight cannot land in Delhi, it does not land in Mumbai either because there is no hotel room available. And so it goes to Thailand instead.

High price of land, archaic laws of land use, complex building by-laws and absence of a single window clearance system have been the major disincentives in this sector. "A single window system is the only way to attract investment. Further we have requested the tourism ministry to influence state governments to make plots available at subsidised rates to hoteliers to encourage building value for money hotels," said Rajindra Kumar, secretary FHRAI.

What India now needs is more four and three star category and value for money properties because out of around one lakh rooms, barely 25 per cent are in the mid-market category. Development of service apartments, holiday villages and camping sites are the other options. Understanding the necessity to offer clean hygienic accommodation with basic modern facilities, The Taj group launched IndiOne. But we need more such budget hotel projects.

Commenting on how to meet the challenge of shortage of rooms through cost-effective way, Subramaniam says, "To increase accommodation inventory usage of heritage circuit houses, forest lodges, PWD bungalows and other buildings (currently occupied by government offices) should be encouraged by changing reservation systems and blackout dates. Similarly, the State Bhavans in Delhi can be utilised. Upgrading facilities at ashrams, dharamshalas, camping sites can also meet the crunch. Under a long-term plan, tourism zones should be earmarked near proposed convention centres, existing and new attractions, central business districts and community centres specifically for accommodation and recreational facilities. Industrial areas in disuse, docklands, land with railways, defence, degraded forests should be regenerated on a public-private partnership model."

Improving connectivity

It is seen that wherever the GDP per person is very high, the number of air trips is high as well, barring the case of India. On the demand side a rise is imminent because people will have more spending power with economic development. But the bottleneck exists on the supply side because of infrastructure pitfalls, regulatory constraints or government surcharge.

As a result of demand outstripping supply, the foreign airlines do not bother to promote India in their respective countries, let alone rationalising fare structure. The fare differential from London to India compared to any other destination of same distance is often to the tune of US$ 350. Airlines attribute it to high operational cost.

According to Saroj Datta, executive director Jet Airways, domestic airlines are interested in providing greater connectivity but there has to be a limited minimum potential. "Domestic aviation is not viable in India because the yield per customer is the lowest in the world. ATF costs, landing and parking charges are among most expensive in the world. Surprisingly, domestic airfares devoid of government surcharge remain below existing inflation levels.

On the positive side, with the concept of low cost carriers gradually gaining ground, broader changes to overall airline operations, leading to a more sustainable service and operating formula is imminent. Entry of four new low cost carriers only indicates a future boom in domestic air travel.

However, one thing is certain if we aim to achieve the target of five million international tourists and 10 million domestic tourists annually, there is a desperate need to improve our airports. . The Kochi airport is the finest example of what private sector initiative can do. There is no denying that substantial fund and foreign technical know-how are needed to implement changes. Hiking FDI limit to 49 per cent is a welcome step, but the government needs to act fast (read forget red-tapism) to bring the money and expertise in.

In order to make aviation grow, the government must initiate reform on the supply end. "India's planned aviation infrastructure approach should combine construction of new facilities at Delhi and Mumbai, which afford hub activities, immediately creating one large airline by combining Air India with an existing domestic carrier, as well as forming a supporting tier that allows other Indian carriers to fly anywhere with a transparent process of allocation of routes and rights. A truly open global environment is unlikely to emerge in the near future so India must use this time to create a very strong base," says Gautam Chadha, managing director, Tirun Marketing.

Sustaining Tourism

Increasing evidence shows that an integrated approach to tourism planning and management is now required to achieve that type of responsible tourism, which sustains the well being of the land, culture, environment and biodiversity of the place being visited. There is a joint responsibility of all stakeholders in the experience - such as the client, travel service providers, the host communities, the government - so that tourism should enhance rather than erode the peoples' livelihood and environment.

"Most of our fragile regions like the National Parks, hill stations like Mussourie and tourist spots like Agra have taken a beating with lop sided construction, poor civic amenities, lack of garbage collection and disposal etc. Ranthambhor is a classic example. Hotels were allowed to come up in the area ignoring its capacity to take tourism. Now, it gets 70-80 jeep loads of visitor daily, though only 40 jeeps can operate," points out Mandip Singh Soin of Ibex Expeditions, who has long been an advocate of sustainable tourism.

Thinking of it, a prudent approach would be to target high-value, top-spending foreign tourists and tap our domestic base unless India's infrastructure is ready to handle large volume. On the other hand, product diversification will help to sustain interest about India, while spreading the sector's socio-economic benefits to many parts of the country and many layers of the local society.