CAPA India inbound tourism report – Part 1: Holidaymakers represent massive growth opportunity for India

5 September, 2018

India received an estimated 16.3 million visitor arrivals in 2017, however CAPA estimates that only just over 2.5 million of them were holidaymakers. This is significantly less than many competing destinations in the region. The island of Bali, for example, sees twice as many foreign tourists as the whole of India.

For a country the size of India, with the wealth of attractions and experiences which it offers, this under-performance represents significant foregone economic value. But it also highlights the massive potential that exists.

Only around 15% of international arrivals to India are holidaymakers

There were an estimated 16.3 million international arrivals into India in 2017, of which around 6 million were Indian nationals residing overseas, returning home for a temporary visit. More than a further 2 million were Bangladeshi nationals, the vast majority of whom crossed at the land border between the countries, primarily for the purposes of VFR, trade or business. Of the remaining 8 million foreign nationals, our research indicates that around 30-35% were holidaymakers, or just over 2.5 million tourists. In comparison, VFR accounts for more than 8 million arrivals, over 50% of the total.

Estimated leisure tourist arrivals (millions) in selected Asian destinations 2016/2017

Source: CAPA India research and analysis; tourism ministry/department of respective countries; UNWTO

The majority of foreign tourist arrivals in India are from long haul source markets

In 2017, just over 8 million foreign nationals (excluding citizens of Bangladesh, who mostly crossed the border by land) arrived in India for all purposes of visit, with the US and the UK being the two largest source markets. However, Russia, China and Australia were the fastest growing over the last decade.

Foreign tourist arrivals in India from leading source markets in 2017 (all purposes of visit)

Source: CAPA India research and analysis; Ministry of Tourism India

In 2016, the majority of India's inbound tourists (60.6%) were from long haul source markets i.e. greater than six hours flights. In contrast, most of the world's leading tourism destinations receive the largest share of their visitors from short and medium haul markets.

Figure 21: Share of long, medium and short haul source markets in total FTAs - India vs. competitors' average vs. world's top 10 inbound markets' average

Source: CAPA India research and analysis; tourism ministry/department of respective countries; UNWTO

This distance puts India at a strategic disadvantage in terms of cost and ease of access and increases the number of potential destinations it competes with that lie within a similar arc. From key source markets in North America, Europe and Australia, the majority of passengers currently make at least one stop to/from India. Relatable

Proportion of traffic to/from India which travels non-stop

Source: CAPA India research and analysis; AirportIS

India's immediate neighbours do not represent significant potential in terms of inbound leisure tourism, which means that it is less well-placed to attract travellers planning short, spontaneous breaks. However, with appropriate promotion and product development there may be an opportunity to stimulate short haul traffic from the community of Western expatriates residing in the Gulf, of whom there are over 1 million with high disposable incomes. Being located just 3-4 hours away, with significant low cost capacity, often direct to secondary cities, there is an opportunity to position India as a short break destination for wellness, culture or luxury. A resident of Dubai can fly direct to Jaipur for example, for a long weekend in a palace resort, or to Cochin for an ayurvedic spa retreat.

This is an extract from the CAPA India Inbound Tourism Report, published this week, which focuses on the leisure travel segment and the steps to unlocking its growth. To request a complimentary copy of the Executive Summary visit CAPA India Inbound Tourism Report []