Tourist arrivals recover, hope on horizon for industry

There has been a steady improvement in tourist arrivals in recent months, minimising the sharp decline that was visible earlier. In October 2009, tourist arrivals dipped by just 0.9% to 4.48 lakh numbers. This is much better than the 4.1% decline in September and 8.6% in August. Typically, the next few months will be the peak season for foreign tourist arrivals and a good season will bring relief to the tourism and travel industry.

Both airlines and hotels have been hit hard by the slump in tourist traffic. Both added to capacity during the boom years, as airlines bought or leased new aircraft and hotels went on a major expansion spree. New hotels take time to construct and by the time the new rooms came into the market, the dynamics had changed completely. Faced with lower arrivals and more rooms, hotels have dropped their rates. The government too has been trying to make India a more attractive destination, running promotional schemes, under its Incredible India campaign, with the co-operation of all industry players.

After the September 2009 quarter results, Indian Hotels told analysts that it is seeing the feel-good factor return and is seeing an improvement in occupancies across cities. Occupancies grew in the September quarter over the June quarter in the industry in leading cities, except for Goa. Foreign business travel it would appear has picked up speed while tourist traffic is still lagging. But average room rates in all cities have declined on a sequential basis, except for Kolkata.

An improvement in foreign tourist arrivals is good news for the travel and tourism industry. Indian Hotels’ share price is up by 10% from a month ago, EIH by 3% while Jet Airways is up by 8%.

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