Tourist traffic pick-up to benefit industry

India’s travel and tourism market in 2011 is seeing healthy demand, going by the numbers being put out by the Ministry of Tourism.

In September, foreign tourist arrivals rose by 8.7% to 4.01 lakh numbers, and as we head into the main tourist season, the Indian tourism industry is set to end 2011 on a high note.

Spending by foreign tourists, labelled as foreign exchange earnings by the government, rose by 23% in rupee terms and by 19% in dollar terms in September, over the year ago period.

In the early part of the year, a strong rupee affected the earnings of the industry, but September saw a sudden weakening of the rupee against the dollar, which will benefit the trade in the peak tourist season ahead. This is visible in the year to date earnings, which rose by 16.6% in rupee terms, while they increased by 18.7% in dollar terms.

The rise in inbound tourism should benefit key players such as hotels, airlines and other intermediaries. Hotels will be the more visible beneficiaries, though significant additions to capacity in the past few years may cap their ability to increase room rates significantly.

Indian Hotels’ share is down by 14% in the past three months, while EIH is up by 2% in the same period. The fall may be attributable to the general slump in markets and the effect of the global macro-economic situation on Indian Hotels’ overseas properties. EIH may be seeing interest from investors who expect Reliance to increase its stake to under 25%, after the recent takeover regulations were notified, which has revised the public offer trigger from 15% to 25%.

Foreign Tourist Arrivals, source:
Ministry of Tourism.

Foreign Tourist Arrivals

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