The hospitality industry is broadly compartmentalized in two segments

Tourism: The tourism sector includes medical and healthcare tourism, adventure tourism, heritage tourism,
ecotourism, rural tourism, wildlife tourism and pilgrimage tourism.

Hotels: These include business hotels, suite hotels, resort hotels, airport hotels, extended stay hotels, apartment
hotels, resort hotels, timeshare hotels, casino hotels, convention centers and conference centers.

GDP :

GDP in hotel and restaurant sector has increased to 3 times during the decade 2000-2011. It showed a gradual
increasing barring the period 2008-09 and 2009-10 as the period was marked with global economic recession.

This trend continued in the following decade especially with the introduction of e-visa for foreign tourists and with
the domestic economy improving, there are clear signs of increased domestic travel. The growth rate in room demand
(about 6%) has been consistently outpacing the supply (about 3%) growth in India for the past few years. Total
contribution by travel and hospitality sector to India’s GDP is Rs 15.24 trillion (US$ 234.03 billion) in 2017.
As per the Ministry of Tourism, In November 2017, a total of 214,000 foreign tourists arrived on e-Tourist Visa, in
comparison with 137,000 foreign tourists in October 2016, registering a growth of 56.2% over previous year.

Though the sector is marked by multiple challenges like curbs on liquor sale and the GST rollout. Demonetization and
the ban on liquor sales within 500 meters of highways had affected MICE (meeting, incentive, conference and
exhibition) activities and the food and beverages segment. Active supply pipeline — especially the hotels which are
nearing completion — is still narrow across most cities, industry growth is expected to pick up significantly starting
financial year 2019.

The 2019 outlook is premised on the following data points — continued strong growth rates in foreign tourist arrivals
(and) airline passenger movement coupled with muted supply growth. The settling down of business sectors to all the
new initiatives rolled out in 2017 and growing demand from the domestic market segment will add further impetus.
Investment :

There was a steady growth in investment in this sector, especially since 2003-04. The momentum dampened a little
during the year 2008-09, but picked up again and has shown steep growth. There was some stagnation during 2005-
2010, this was primarily because of huge investment in some other sector, especially IT and ITES.

During the period April 2000-June 2018, the hotel and tourism sector attracted around US$ 11.39 billion of FDI,
according to the data released by Department of Industrial Policy and Promotion (DIPP).

Inflation :

Price trends in real vs nominal terms (to accommodate inflation) :

Though the price at nominal prices has changed almost 2.5 times during the last two decades, it remained almost at
the same level throughout in terms of real prices with marginal variations in both sides. This helps in inferring a few
important points:

 Since the hotel prices remained almost same over the period of time in real term, it did not make a dent into the pocket
of domestic tourists because income level has also increased in commensurate to inflation rate, barring a section that
belongs to the lower income group.
 Since in most of the developed countries and many of the developing countries inflation rate is very low, it did not
make much of a difference to them especially due to the fact that dollar value has become much stronger during the
last decade.
 In purchasing power parity terms, the current hotel rates in India, in fact, are lower for most of the foreign tourists than
the same during 2000-01.

The Wholesale Price Inflation (WPI), India's benchmark indicator of price rises, averaged 7.4%, down from 8.9% in
the previous fiscal.

Government Initiatives (Fiscal Policies) :

The Indian government has realised the country’s potential in the hospitality industry and has taken several steps to
make India a global tourism hub.

Some of the major initiatives planned by the Government of India to give a boost to the tourism and hospitality sector
of India are as follows:

 100 percent FDI allowed through automatic route in hotel and tourism sector
 US$ 14.8 million was allocated for promotion & publicity of various programmes & schemes of the Tourism ministry.

 The Indian government has also taken several steps to make India a global tourism hub. The government has initiated ‘Project

Mausam’ under which it has proposed to establish cross cultural linkages and to revive historic maritime cultural and economic

ties with 39 Indian Ocean countries. Further, since April 2017, the e-tourist visa facility has been made available to citizen 161

countries. The government has introduced e-Tourist Visa (e-TV) for 161 countries as against the earlier coverage of 113

countries (source: Ministry of Tourism).

 The Government of India is working to achieve 1 per cent share in world's international tourist arrivals by 2020 and 2 per cent
share by 2025.
 Under Budget 2018-19, the government has allotted Rs 1,250 crore (US$ 183.89 million) for Integrated development of tourist
circuits under Swadesh Darshan and Pilgrimage Rejuvenation and Spiritual Augmentation Drive (PRASAD).
 Five-year income tax holidays for 2-4 star hotels established in specified districts having UNESCO-declared
'World Heritage Sites'
Employment :

The hospitality industry is a labor intensive one and India has a large concentration of English speaking individuals,
which prove as a catalyst in advancement and prosperity of the industry. Besides the regular jobs of a travel agent,
tour guide, air hostess, chef, waiter and managers other opportunities await those who are keen on taking up a job in
the sector.

The sector in India accounted for 8 per cent of the total employment opportunities generated in the country in 2017,
providing employment to around 41.6 million people during the same year. The number is expected to rise by 2 per
cent annum to 52.3 million jobs by 2028.

As per the Planning Commission, the sector creates more jobs per million rupees of investment than any other sector
of the economy. It is capable of providing employment to a wide spectrum of job seekers, from the unskilled to the
specialized, even in the remote parts of the country. The sector’s employment-generation potential has also been
highlighted by the World Travel & Tourism Council (WTTC), which says India’s travel and tourism sector is expected
to be the second-largest employer in the world, employing approximately 50 lac people, directly or indirectly by 2019.

Innovation :

Fierce competition has led to innovative ideas by hotel majors, thereby delivering impressive hospitality products and
services.

This has, in turn, also prompted them to generate new lines of revenue with creative approaches, be it by reducing
transaction costs, increasing productivity or promoting traditional Indian values.

For example : Collaboration with startups like OYO and Jostle , Social media marketing, opening platforms for
customer reviews by collaborating with platforms like Zomato.