The 267th Priority

IN 1955, when the first Planning Commission was drafting the priority list of industries, the development of lighthouses was ranked 268th. Tourism was placed just one rank above. Today, tourism is the third-largest foreign exchange earner of the country. Its importance in terms of government focus, however, still remains where it was: 267th.

The result: international tourist traffic has gone everywhere—China, Malaysia, Singapore, Italy—but India. The growth rate of foreign tourist arrivals dropped to 5.2 per cent between January and April 1997 against a growth of 10.9 per cent last year. Says Sushil Bhatt, head of Leisure Travel (inbound), Thomas Cook (India): "As it is, the summer months are a lean season for foreign tourists. Even in this period, compared to the past, this year's performance has been lower by almost 15 per cent." According to the government, last year India hosted some 2.3 million tourists and earned $3 billion (Rs 10,800 crore) in foreign exchange. Tourism and Parliamentary Affairs minister Srikant Jena told the Parliamentary Consultative Committee that in January-June 1997, while foreign tourist arrivals increased by 5.1 per cent, foreign exchange earnings from the sector increased by 11 per cent to Rs 5,082 crore.

But most travel agents and tourism industry representatives dispute this statistic. According to industry experts, the government goes by the number of visas issued, and other parameters which are not a true indication of actual tourists. "A majority of 2.3 million tourists are what we call VFRs (visiting friends and relatives). In real terms, the country has been hosting no more than a million tourists a year, including business travellers," says a senior executive of a travel agency. Warns Bhatt: "This year, the actual foreign tourist inflow may drop by over 40 per cent."

 The travel trade has attributed the overall decline to several factors, the foremost among them being that India may be overpriced compared to its neighbours—China and the southeast Asian countries. Says Bhatt: "Capacity constraints, both in air travel and accommodation, have resulted in uncompetitive prices for the foreign traveller. Lack of infrastructure and sudden changes in policies have added to the tour operators' woes." Adds Arup Sen, director (operations), Cox & Kings (India): "India is no longer a price or infrastructure-friendly destination for the foreign traveller."

He's right. Travel to India from Europe—the largest contributor to tourists in the country—is more expensive than some of the farther southeast Asia destinations. Says Dipak Deva, general manager, sales and marketing (inbound tours), Travel Corporation of India (TCI): "It's cheaper to fly from Dubai to Singapore than from India to Singapore." Adds Bhatt: "Tour operators are offering 3,500-4,000 French Franc package deals for three nights in China, while air travel alone costs 3,500 French Francs from Paris to India." No wonder China, at 26 million tourists, has the largest arrivals among the south and southeast Asian countries. And India, at 2.3 million (which figure anyway the industry does not believe) the least.

At $1,204 per arrival, India stands third in the list (see chart); in China, at $403, the tourists get the maximum value for money. Compounding the financial woes is the fact that India is generally a 10-night trip, due to sheer size, against 3 to 4-night trips to most southeast Asian countries.

THE biggest culprit hounding the Indian tourism industry, tour operators claim, is hotel prices. Not only are top grade hotels in India very expensive, there are very few rooms in the medium range to accommodate tourists. Till two years ago, five-star hotels charged the foreign traveller $150 a night. As the opening up of the economy brought in hordes of business travellers to the few metros with inadequate rooms, the hotels started hiking their rents. Today, at $325 a night, Indian hotel prices are comparable with The Waldorf, New York.

If political uncertainty and the resultant economic lull has reduced business trav-ellers, the high hotel rents have deterred other segments. And then there's technology. Says Bhatt: "Foreign business delegates find video-conferencing cheaper and are cutting down on their visits to India."

 As a result, occupancy rates in hotels have fallen by 30 to 40 per cent over the past few months. Most hotels are offering very large discounts. Agrees Sen: "It appears as if the hotel industry has killed the golden goose. In terms of hotel rooms, what you get for $170 in India will cost you less than $100 in China."

At the policy level, the ever changing taxation structure in the country has made tour operators indifferent to India. Says Deva of TCI: "Not only does each state have different taxes, we are also served with sudden tax hikes." Tour operators plan their brochures way in advance. The constantly-changing tax structures have made it difficult for them to commit—and stick—to the prices. Says Meher Bhandara, manager, TCI: "After braving the terrorism and the plague threat, the Indian tourism industry is now facing a tax threat."

 Take Cox & Kings. The UK-based company has just reprinted its India brochure—after cancelling thousands of expensive pamphlets that suddenly became outdated for the current season. While some of the southern states charge over 30 per cent as tax, the taxes for food and beverages in Mumbai, for instance, amounts to a whopping 45 per cent of the total amount. From November 1, 1996, the New Delhi administration levied a luxury tax of 10 per cent on hotels. In the pipeline is a monument tax ranging from $5 to $10 on each individual for watching a historical monument in India. "Just five monuments in a circuit would cost a tourist up to $50. How can we justify this expense if it is suddenly introduced?" asks Deva. Adds Bhatt: "To go to Agra from Delhi, taxes are to be paid at three different places at the Delhi, Haryana and Uttar Pradesh borders. On the other hand, when you travel the entire continent, you don't have to pay anything between borders."

An approach paper prepared by Asso-cham on tourism in India notes: "In aiming to make India one of the most preferred destinations within a decade, the tourism industry must achieve a high degree of coordination among the Central and state governments as well as civic authorities." Both, the states and the Department of Tourism at the Centre, have to work in close cooperation and consultation not only within themselves, but with the tourism industry in India. Says Sen of Cox & Kings: "The state tourism development corporations have to sing in harmony with the orchestra." Asks Bhatt: "Why can't we have a flat tax structure for tourists like in most other countries?"

 All this affects investment in the sector. And for the government target of receiving 5 million tourists by AD 2000 to fructify, investment also has to be encouraged in tourism infrastructure. The 1,500-odd hotels in the country will fail to provide the requisite accommodation. In a joint presentation to the government in March 1997, the Travel Agents Association of India and the Indian Association of Tour Operators have presented a charter of demands.

On June 27, a new draft policy was approved by the state tourism ministers' conference. The important task is to get tourism accepted as an instrument of development. It is necessary to create an awareness of India's charms as a tourist paradise, simultaneously address the important aspect of toning up infrastructure, and then getting down to marketing the "product" in a pragmatic and result-oriented manner. In many ways tourism can be a self-sustaining business, once a modicum of infrastructure is provided. In fact, the foreign exchange earnings from Indian tourism can pay the entire bill for its own multifaceted development costs.

It is time for all segments of the tourist trade of India Inc. to hammer out a strategy collectively, taking into account the ground realities and future demand. Even if India's market share of the global tourist traffic rises by one percentage point, the size would have doubled (see chart). Many Asian countries have marketed themselves as destinations and scored remarkable successes. As the Assocham approach paper on tourism notes: "What needs to be emphasised is that a strong political will is imperative for tourism to succeed in India." To start with, tourism needs to be brought into the concurrent list of industries. Or else the 267th priority will remain just that—a backbencher.