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PATA TRAVEL MART 2006

Maturing India outbound reveals new niches

REPORT-HONG KONG-PATA TRAVEL MART 2006: India is one of the fastest growing outbound travel markets in the world: 6.2 million international trips in 2004 (16% more than 2003) and preliminary international estimates for…

REPORT-HONG KONG-PATA TRAVEL MART 2006: India is one of the fastest growing outbound travel markets in the world: 6.2 million international trips in 2004 (16% more than 2003) and preliminary international estimates for 2005 point to another year of strong double-digit growth, to almost 7.2 million.

Indian outbound travel to Asia Pacific destinations, for which PATA`s Strategic Intelligence Centre already has 2005 figures, grew 20% last year and has been growing 9.8% per year on average since 2001. There were 2.9 million Indian trips to Asia Pacific destinations in 2005.

With a population of more than 1.1 billion and GDP growth of more than 8% per annum, the country offers enormous potential for future growth in outbound travel, said The Travel Business Partnership`s Editorial Director Ms Nancy Cockerell. And as it reveals clear opportunities for market segmentation and niches, the market is already showing signs of maturing.

Ms Cockerell moderated the PATA Travel Mart 2006 India Outbound luncheon workshop today (September 15) at AsiaWorld-Expo in Hong Kong. She was joined on an interactive panel by Abercrombie & Kent India Managing Director Mr Vikram Madhok and Creative Travel Director of Operations Mr Rohit Kohli.

Mr Kohli predicted that by 2008, Indians will spend more than US$4 billion on travel alone.

India`s increasingly affluent middle class already numbers 300 million and is growing rapidly. At the same time, its per capita income is increasing by around 5% a year, and its per capita expenditure is rising twice as fast.

Ms Cockerell said: India`s middle classes are moving into the `cash rich/time poor` bracket and are starting to demand improved quality on their trips.

She added: While business travel still dominates outbound volumes, holiday and VFR trips are growing more quickly as travel moves up the list of household spending priorities.

Agents, who handle 60% of travel bookings in India, have been forced by falling airline commission revenues to focus on value-added services and the leisure market, according to Mr Kohli. This has further stimulated growth in outbound leisure travel.

Holidaymaking has also been stimulated by more liberal exchange controls and improved availability of credit, according to Ms Cockerell, who added: One of the main attractions of the Indian outbound travel market is that Indians are very big spenders.

The average Indian visitor in Singapore, for example, spends US$1,500 over five to seven days, she said. This makes the Indian leisure traveller a highly valuable proposition.

She added: This is increasingly being recognised by foreign tourist offices, some of whom have simplified visa procedures for Indian tourists.

Australia, for example, has enjoyed 33% growth in Indian arrivals in the first half of 2006 thanks to the launch a programme in India that allows preferred travel agents to recommend visa approvals.

However, high-end luxury remains a relatively small segment of the leisure market, according to Mr Madhok, who added: It is bound to grow in proportion to the growing number of US$ millionaires in the country – now numbering some 1 million.

Ms Cockerell said: Everybody has been getting excited by China, but India is a much more interesting market. China remains a relatively controlled and regulated market, whereas Indians are already free to travel wherever, whenever and however they wish.

She added: Compared with the Chinese, Indians have a higher level of travel experience and speak much better English. And the Indian travel market is already showing signs of `maturing` as it undertakes more repeat travel and moves into niche markets.

While estimates suggest that Asia Pacific and the Middle East attract more than two thirds of total Indian outbound trips, Indian travellers are increasingly looking beyond the established destinations.

Ms Cockerell said: A lot of Indians travel to Thailand, for example. But there is prestige attached to going somewhere off the beaten track, such as Koh Samui or Chiang Mai instead of Bangkok.

Cruising is also emerging as a popular holiday option among Indians, according to Ms Cockerell, who predicted that India will become the second largest market for cruises after Australia.

She said: In 1999, when Star Cruises entered the Indian market, it had 10,800 customers in its first year. Estimates suggest that by 2008 approximately 30,000 Indians per year will go on a cruise.

Drivers of India outbound

  • Large flow of travellers fluent in English and comfortable with international travel
  • Growing economy and foreign investment
  • Air transport liberalisation – more Indian airlines and more foreign carriers adding new services or increasing frequencies
  • Increasing number of destination tourist boards setting up offices and expanding their market representation in different cities
  • Increased investment by Indians living abroad
  • `Look East` policy – a desire to boost trade and travel relations with China (PRC) and North and Southeast Asia
  • Growing number of multinationals investing in India, leading to more outbound travel for conventions, incentives and business travel
  • The marketing impact of Bollywood movies shot abroad
  • Greater segmentation in the market – stronger demand for travel among families, young people, women and seniors
  • Growing demand for niche travel products, such as honeymoon and cruises
Co-Founder & Managing Editor - TravelDailyNews Media Network

Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.

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