Tuesday, March 27, 2012

>INDIAN HOTELS: Hotel Room Supply, Capital Investment and Manpower Requirement by 2021; Impact of tourism

The Impact of Tourism
Tourism is a difficult phenomenon to define, simply because it involves inter-related activities belonging to different industries. An industry typically has a “number of firms that produce similar goods and services and therefore are in competition with one another”1. Tourism then is not necessarily an industry as it constitutes airlines, hotels, restaurants, travel agencies and other attractions that do not compete with one another. Rather, they complement each other in forming a unified system of activities. A culmination of these activities interacting is what defines tourism. This is supported by the World Tourism Organization (WTO) which defines it as “the activities of persons travelling to and staying in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes not related to the exercise of an activity remunerated from within the place visited.”

While tourism has its positive and negative impacts, it is unarguably a catalyst for the socio-economic progress of a country. More so, for a developing nation, tourism acts as a key driver for the creation of jobs, enterprises, infrastructure development and foreign exchange earnings. The earnings from tourism make it one of the biggest sectors in the world. The sector’s total contribution to the worldwide gross domestic product (GDP) is estimated to be US$5,991.9 billion or 9.1% of global GDP in 2011. In India, travel and tourism contributed `3,680.4 billion or 4.5% of the country’s GDP in 20113. In addition to tourism’s revenue contribution, it also accounted for 7.5%4 of the total employment in the country in 2011. India has been a late starter as far as tourism is concerned. Post the country’s independence, the government of India focused on developing other industries, such as agriculture, irrigation, power and infrastructure. It was only in 1982, three decades ago, that the first Tourism Policy was drafted and presented in the country. However, it is only over the past two decades that tourism in India has really taken form. Table 1-1 presents the foreign exchange earnings from tourism and the sector’s total contribution to GDP from 1991 to 2011. As highlighted in the table, foreign exchange earnings and total contribution to GDP has grown by a compounded annual growth rate (CAGR) of 15.5% and 10.5% respectively over the past two decades.

To read full report: INDIAN HOTELS