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India Tourism Report Q3 2010 Industry Forecast Scenario Arrivals Table: Arrivals Data, 2006-2014 2006 Arrivals (‘000) Tourists (‘000) % change y-o-y 4,600 4,421 16 2007 5,081 5,150 4 2008 5,282 5,347 -6 2009 5,024 5,012 10 2010f 5,533 5,534 11 2011f 6,141 6,159 11 2012f 6,814 6,850 10 2013f 7,479 7,532 9 2014f 8,131 8,202 16 Tourist arrivals by mode of transport used (‘000) Air Road Sea 3,851 544 27 4,509 617 25 4,688 634 25 4,383 604 24 4,858 650 26 5,426 705 28 6,055 765 30 6,675 82
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  India Tourism Report Q3 2010 © Business Monitor International Ltd Page 9 Industry Forecast Scenario Arrivals Table: Arrivals Data, 2006-2014 2006 2007 2008 2009 2010f 2011f 2012f 2013f 2014f Arrivals (‘000) 4,600 5,081 5,282 5,024 5,533 6,141 6,814 7,479 8,131Tourists (‘000) 4,421 5,150 5,347 5,012 5,534 6,159 6,850 7,532 8,202% change y-o-y 16 4 -6 10 11 11 10 9 16 Tourist arrivals by mode of transport used (‘000) Air 3,851 4,509 4,688 4,383 4,858 5,426 6,055 6,675 7,284Road 544 617 634 604 650 705 765 825 884Sea 27 25 25 24 26 28 30 32 35 Tourist arrivals by purpose of trip (‘000) Leisure 4,333 5,050 5,249 4,911 5,438 6,068 6,765 7,452 8,127Business 88 99 97 100 96 91 85 79 73 f = BMI forecast. Notes: 1% difference between sum of regions and tourists, so 1% was added to regional forecasts to reach number of tourists. Visitor numbers modelled on number of tourists. Source: World Tourism Organization (UNWTO) Preliminary data released by the Indian Ministry of Tourism in January 2010 show that India’s touristindustry experienced a dismal year in 2009. Overall, arrivals totalled 5.02mn, a fall of 6% y-o-y, from the5.28mn received in 2008. Although this is a sharp fall, particularly given that pre-2008 annual growthrates were over 10%, monthly figures painted a more encouraging picture. The worst declines were inQ109, with a decline of 17.6% in January 2009. While some of this decline was related to the globaldownturn, it was primarily caused by the negative impact of the November 2008 terrorist attacks inMumbai, which targeted the popular Taj Mahal Hotel and other tourist areas, where 174 people werekilled, including nine gunmen, and over 300 were injured. This attack was one of the most serious ever totake place in India and will have a major impact on tourism in the medium term, given that Mumbai is amajor tourist hub and the most popular point of entry for foreigners visiting India.Although the Indian authorities have publicised efforts to improve security and identify the perpetrators,the perception of India as a more dangerous country will affect holiday choices, particularly by Westerntourists. Moreover, with fewer tourists choosing to holiday abroad during the global economic downturn,those that do may now be attracted to countries perceived as safer than India. While this will have littleimpact on diaspora visitors, particularly from the UK and North America, these underlying factorscontributed to a greater than expected decline in India’s tourism industry in 2009.  India Tourism Report Q3 2010 © Business Monitor International Ltd Page 10In this regard, it is perhaps encouraging that arrivals registered even minimal growth in June and July2009. Arrivals then declined during the rainy season in Q309 but picked up strongly towards the end of the year, with December registering 21.0% y-o-y growth and arrivals of 646,024. This unusually highgrowth reflected a statistical rebound from the extremely poor December 2008 figures, following theattacks in Mumbai in November.It is highly encouraging that visitor arrivals continued to grow into 2010. In Q110, visitor arrivals totalled1.5mn, up by a strong 12.8% y-o-y. Arrivals in March also showed high growth, of 12.9% y-o-y to472,000 people. It is very positive that India has maintained strong levels of visitor growth into 2010,indicating that the industry recovery is now well underway. This will have positive implications fordomestic companies in terms of earnings, with foreign earnings from tourism surging above levels of arrivals growth. In March 2010, foreign exchange earnings from tourism reached US$1.2bn, representinggrowth of 39.4% y-o-y over March 2009. As such, we believe India is beginning to return to its pre-2008growth trends, with the Commonwealth Games in October 2010 providing another boost for therecovering tourism sector. Expenditure Table: Tourist Expenditure & Economic Impact, 2006-2014 2006 2007 2008 2009e 2010f 2011f 2012f 2013f 2014f Tourist expenditure(US$mn)9,227 11,029 12,788 12,116 13,522 14,840 16,511 17,947 18,896Contribution to GDP (%) 1.0 1.0 1.1 0.9 0.8 0.7 0.7 0.6 0.6Contribution to export ofgoods (%)7.5 6.6 7.3 7.3 6.8 6.3 5.8 5.3 4.7Contribution to export ofservices (%) 12.2 12.2 12.6 11.5 10.7 9.8 9.1 8.2 7.2 Economic Impact  Direct industryemployment (‘000) 11,921 12,487 12,767 12,568 12,945 13,299 13,747 14,132 14,387Government expenditure   – individual (INRmn)* 11,926 13,038 15,679 16,967 18,433 19,687 21,364 23,147 25,011Government expenditure– individual (US$mn)* 278 294 340 368 400 427 464 503 543Government expenditure– collective (INRmn) † 27,352 29,913 35,968 38,930 42,294 45,173 49,021 53,112 57,391Government expenditure– collective (US$mn) †  638 675 781 845 918 981 1,064 1,153 1,246 e/f = BMI estimate/forecast. Notes: * Individual expenditure relates to investment in services with an identifiable individual consumer. †  Collective expenditure relates to investment in services that cannot be assigned to a particular group of tourists. Source: World Travel & Tourism Council   India Tourism Report Q3 2010 © Business Monitor International Ltd Page 11 Inbound Tourism  Table: Tourists Arrivals By Region, 2006-2014 2006 2007 2008 2009e 2010f 2011f 2012f 2013f 2014f Africa (‘000) 137 154 166 172 183 198 217 235 255% change y-o-y 5.00 12.03 7.70 3.69 6.31 8.56 9.28 8.70 8.42North America (‘000) 873 952 990 878 983 1,058 1,151 1,246 1,345% change y-o-y 13.59 9.01 4.03 -11.37 11.96 7.71 8.77 8.20 7.96Latin America (‘000) 39 50 53 53 55 60 64 69 75% change y-o-y 8.88 27.87 7.44 0.47 3.57 7.78 7.81 7.70 8.06Asia Pacific (‘000) 1,611 1,820 1,954 1,992 2,162 2,349 2,578 2,820 3,069% change y-o-y 12.92 12.96 7.38 1.94 8.54 8.65 9.74 9.38 8.83Europe (‘000) 1,662 2,071 2,069 1,800 2,029 2,363 2,700 3,014 3,302% change y-o-y 15.85 24.55 -0.10 -12.97 12.70 16.49 14.24 11.63 9.55Middle East (‘000) 98 104 115 117 123 130 140 148 156% change y-o-y 13.87 5.65 10.89 1.04 5.20 6.14 7.47 5.77 5.67 e/f = BMI estimate/forecast. Source: UNWTO, Ministry of Tourism  Table: Tourist Arrivals By Country, 2006-2014 (‘000) 2006 2007 2008 2009e 2010f 2011f 2012f 2013f 2014f UK 734 919 932 786 907 1,051 1,214 1,380 1,505US 697 755 790 699 786 843 912 984 1,060Canada 177 197 201 179 196 215 239 262 285France 175 230 255 201 223 247 276 307 337Germany 157 208 232 140 170 206 229 256 286Sri Lanka 155 167 180 187 200 215 231 249 267Japan 119 132 127 92 101 105 112 119 126Australia 110 154 162 168 190 213 240 273 301Malaysia 107 119 129 126 135 146 160 176 192South Korea 71 76 81 81 92 99 109 120 132 e/f = BMI estimate/forecast. Source: UNWTO, Ministry of Tourism   India Tourism Report Q3 2010 © Business Monitor International Ltd Page 12We expect the US and the UK to remain India’s most important sources of visitors, although theeconomic slowdown in both countries means that total arrivals from both slowed during 2009, althoughthey are set to pick up in 2010.Tourism plays an important role within the Indian economy. It is the third largest generator of foreignexchange earnings, and the World Travel & Tourism Council (WTTC) believes that tourism willcontribute 8.6% to GDP in 2010. The WTTC forecast total demand for Indian tourism to grow by 6.7% in2010 but then by an annual rate of 8.5% between 2010 and 2020. However, it is not a sector that has beenprioritised by the Indian authorities.Travel operators complain that the country’s capacity is not sufficient to fulfil its potential in attractingvisitors. Frequently criticisms include the complexity of the taxation structure for the sector and the lack of international airports – a major issue given India’s size and population. A lack of hotel rooms isanother major obstacle for India to overcome ( see Market Overview – Hospitality ). Tourist Attractions  India’s biggest tourist attraction remains the Taj Mahal, which attracts nearly 900,000 foreign visitors ayear, while the desert state of Rajasthan, the foothills of the Himalayas and the sandy beaches of Goa arealso very popular. Overall, India offers one of the most diverse ranges of tourism anywhere in the world.The country has 26 world heritage sites and 25 bio-geographic zones, which makes it a prime candidatefor ecotourism.The country also has 6,000km of coastline and several world class beaches. India also has varied wildlifeand many people come to ride the nation’s extensive rail network. Lonely Planet ranks India among thetop five travel destinations in the world.By 2014, we anticipate that the number of foreign visitor arrivals will be over 8mn. We anticipate thatvisitor arrival growth will remain pretty robust, expanding at a rate of 5.5-8.0% y-o-y during 2010-2030,following a dip in 2009, and receiving a boost from the Commonwealth Games in New Delhi in 2010.Given rising government support for the sector – and assuming improvement in relations with Pakistan – BMI predicts that the tourism sector will become an increasingly important contributor to the Indianeconomy over the coming years. Focus On Kerala Among India’s 28 states, the southern state of Kerala is among the most popular among tourists. One of its major attractions is its climate, which is moderate for most of the year, with two rainy seasons. Thestate also has some of the most beautiful and extensive beaches in India, with a number of high-end beachresorts located within easy distance of the two main airports, Cochin (Kochi) and Trivandrum.
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