Invest in Indian Tourism and Hospitality

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Foreigners can be 100% ownership in Tourism & Hospitality Business

India is a large market for travel and tourism. It offers a diverse portfolio of niche tourism products – cruises, adventure, medical, wellness, sports, MICE, eco-tourism, film, rural and religious tourism. India has been recognised as a destination for spiritual tourism for domestic and international tourists.
The launch of several branding and marketing initiatives by the Government of India such as Incredible India! and Athiti Devo Bhava have provided a focused impetus to growth. The Indian government has also released a fresh category of visa – the medical visa or M visa, to encourage medical tourism in the country.

Rising contribution to India’s GDP
⦁ Tourism in India accounts for 7.5 per cent of the GDP and is the third largest foreign exchange earner for the country
⦁ The tourism and hospitality sector’s direct contribution to GDP in 2016, is estimated to be US$47 billion
⦁ The direct contribution of travel and tourism to GDP is expected to grow at 7.2 per cent per annum, during 2015 – 25, with the contribution expected to reach US$160.2 billion by 2026

The Indian tourism and hospitality industry has emerged as one of the key drivers of growth among the services sector in India. Tourism in India has significant potential considering the rich cultural and historical heritage, variety in ecology, terrains and places of natural beauty spread across the country. Tourism is also a potentially large employment generator besides being a significant source of foreign exchange for the country.
Market Size
India’s rising middle class and increasing disposable incomes has continued to support the growth of domestic and outbound tourism.
Domestic Tourist Visits (DTVs) to the States/Union Territories (UTs) grew by 15.5 per cent y-o-y to 1.65 billion (provisional) during 2016 with the top 10 States/UTs contributing about 84.2 per cent to the total number of DTVs, as per Ministry of Tourism.
As per Ministry of Tourism, foreign tourist arrivals (FTAs) in India increased 19.5 per cent year-on-year to 630,000 in May 2017. FTAs on e-tourist visa increased 55.3 per cent year-on-year to 68,000 in May 2017.
India’s foreign exchange earnings (FEEs) through tourism increased by 32 per cent year-on-year to reach US$ 2.278 billion in April 2017, as per data from Ministry of Tourism, Government of India.
India is expected to move up five spots to be ranked among the top five business travel market globally by 2030, as business travel spending in the country is expected to treble until 2030 from US$ 30 billion in 2015. #
International hotel chains will likely increase their expansion and investment plans in India, and are expected to account for 50 per cent share in the Indian hospitality industry by 2022, from the current 44 per cent.*
The tourism and hospitality sector is among the top 10 sectors in India to attract the highest Foreign Direct Investment (FDI). During the period April 2000-March 2017, the hotel and tourism sector attracted around US$ 10.14 billion of FDI, according to the data released by Department of Industrial Policy and Promotion (DIPP).
With the rise in the number of global tourists and realising India’s potential, many companies have invested in the tourism and hospitality sector. Some of the recent investments in this sector are as follows:
⦁ MakeMyTrip raised US$ 330 million from International Ltd, Naspers Ltd and few undisclosed investors, in a bid to withstand competition in the ticketing segment.
⦁ MakeMyTrip has agreed to buy Ibibo Group’s India travel business at a deal value of US$ 720 million, thus creating India’s largest online travel firm with a value of US$ 1.8 billion, as estimated by Morgan Stanley.
⦁ Yellow Tie Hospitality Management Llp, specialising in franchise management of food and beverages firms, plans to invest up to US$ 15-20 million in five restaurant ventures of celebrity chef Mr Harpal Singh Sokhi, with the aim to have 250 outlets under these brands by 2020.
⦁ Chaudhary Group (CG) Hotels & Resorts aims to have 200 hotels operational by 2020.
⦁ DineEquity Incorporation has signed a franchisee partnership deal with food services firm Kwal’s Group, in order to enter the Indian markets with their breakfast chain IHOP.
⦁ As per industry experts, mid-hotel segment in India is expected to receive investments of Rs 6,600 crore (US$ 990 million) excluding land over next five years, with major hotel chains like Mariott, Carlson Rezidor and ITC planning to set up upscale, budget hotels in state capitals and tier-II cities.
⦁ Hyatt Hotels Corporation has outlined plans of bringing its Hyatt Centric brand to India soon along with three new hotels in Kochi, Rameswaram and Hyderabad by 2017.
⦁ Vatika Hotels Pvt Ltd has raised Rs 495 crore (US$ 74.25 million) in debt from Axis Bank Ltd to expand its hotels and quick-service restaurant chain besides its business centres.
⦁ AccorHotels, a French multinational hotel group, plans to expand its footprint in Guwahati and Kolkata by adding more 550 rooms to its portfolio of hotels in the next three years.
Government Initiatives
The Indian government has realised the country’s potential in the tourism industry and has taken several steps to make India a global tourism hub.
The Government has been making serious efforts to boost investments in tourism sector. In the hotel and tourism sector, 100 per cent FDI is allowed through the automatic route. A five-year tax holiday has been offered for 2, 3 and 4 star category hotels located around UNESCO World Heritage sites (except Delhi and Mumbai). The investment in tourism sector is expected to be US$ 12.4 billion in the 12th Five Year Plan; of these, private investments are likely to total US$ 9.2 billion.

In the Union Budget 2017-18, the Government of India announced some initiatives to give a boost to the tourism and hospitality sector such as setting up of five special tourism zones, special pilgrimage or tourism trains and worldwide launch of Incredible India campaign among others.
⦁ The Ministry of Environment, Forest and Climate Change, Government of India, is planning to revise India’s coastal regulation norms aimed at opening up the 7,500 km long coastline for developmental activities like tourism and real estate.
⦁ A Tripartite Memorandum of Understanding (MoU) was signed among the Indian Ministry of Tourism, National Projects Construction Corporation (NPCC), National Buildings Construction Corporation (NBCC) and Government of Jammu and Kashmir for the implementation of tourism projects in Jammu and Kashmir.
Road Ahead
India’s travel and tourism industry has huge growth potential. The tourism industry is also looking forward to the expansion of E-visa scheme which is expected to double the tourist inflow to India. JW Marriott plans to have 175-200 hotels in India over the next four years.
Accor Hotels India has adopted a ‘born in France, made in India’ approach to increase its properties in India, which has reached a total of 45 hotels and is expected to increase to 55 hotels by 2017.

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