How revenge tourism is boosting prospects for India’s tourism sector post Covid

Country’s tourism industry is starting to benefit from pent-up demand, leading to a surge in domestic travel

Visitors enjoy leisure time at the Gateway of India, one of Mumbai's main tourist attractions. India’s tourism industry is projected to contribute $512bn to the country's GDP by 2028, according to a gShow more

At Mumbai’s Gateway of India, a historic monument by the Arabian Sea, visitors jostle for a good spot to take selfies and snapshots. Most of the tourists are from other parts of the country and the scene is in stark contrast to the coronavirus lockdown of 2020, when the attraction was deserted due to strict Covid curbs.

However, with restrictions largely lifted now, India’s Covid-battered tourism industry is starting to benefit from pent-up demand. This has led to a surge in domestic trips, in a phenomenon known as “revenge travel” — although international tourism in the country has yet to recover fully.

“From a time when we were literally shutting down our businesses, we've seen sort of historic highs of demand rates and occupancies,” says Vibhas Prasad, director of the Leisure Hotels Group, a luxury resort chain with 27 properties in northern India.

“So, the leisure market has bounced back pretty much across the country. I think domestic tourism will remain on a strong wicket.”

India’s tourism industry contributed $178 billion, or about 5.8 per cent, to the country’s gross domestic product in 2021, according to the World Travel & Tourism Council. This will more than double to $512 billion by 2028, according to Invest India, a government investment promotion agency. The tourism sector provides about 137 million jobs.

Due to the impact of the pandemic, only 1.54 million foreign tourists arrived in India in 2021, Ministry of Tourism data shows. That compares with 10.93 million tourists in 2019. Tourists are steadily returning, though, with estimates that India received 2.1 million foreign visitors in the first six months of this year.

Domestic tourism also took a beating during the pandemic, with local tourist visits sharply declining to 677 million in 2021 compared with 2.3 billion in 2019. Although domestic visitor numbers for this year have yet to be released, industry sources point to a huge increase in tourist numbers.

“The travel industry is getting back on its feet and is witnessing a robust recovery,” says Vikas Sharma, chief executive of Encalm Hospitality, an airport hospitality company.

“People are now keen to explore new destinations and are venturing out of their homes with a vengeance."

Demand for trips within India is also being boosted by delays in securing visas to some overseas destinations and the cost of a holiday abroad surging.

“Domestic travel has increased as international travel is becoming a hassle with various restrictions and procedures,” says Chander K Baljee, chairman and managing director at Royal Orchid Hotels, which has more than 75 properties across the country.

“Many people are not travelling due to the high fares and hotel rates across Europe and other countries. Indians are now discovering the value of domestic travel. So, in my view, domestic tourism is here to stay.”

As a result of a strong demand, Royal Orchid Hotels' net profit in the second quarter to the end of September surged fivefold in the current fiscal year, according to Mr Baljee.

The company's performance is “better than pre-Covid levels and we expect it to grow further”, he says.

“We are experiencing through-the-roof bookings across the country while some of our properties are booked out for the year,” he adds.

Reflecting a spike in domestic travel, IndiaLends, an online marketplace for loans and credit cards, says that demand for travel loans has shot up 10 times in the past year and crossed pre-pandemic levels.

In a country of about 1.4 billion people, which has an expanding middle class, the domestic travel market has huge potential for much further growth in the coming years, industry experts say.

Even before the pandemic, the numbers of international tourists were widely considered to be below India's potential given the size of the country and the vast range of attractions it offers — from forts to mountains and beaches to jungles — as well as its rich culture and cuisine.

The recovery in foreign tourist arrivals in India still has a long way to go.

“Internationally, due to the geopolitical uncertainty, we currently have guests coming in from a few countries only … this foreign travel currently contributes to only 5 per cent of our overall business,” says Nikhil Kapur, co-founder and director of Atmantan Wellness Centre, a luxury resort in Mulshi, near Mumbai.

He remains hopeful these numbers will improve in the coming months, and says that demand from Indians means that the business “has crossed all our previous benchmarks” compared to before Covid.

“While inbound international travel has picked up significantly, it still hasn’t reached pre-pandemic levels,” says Haitham Mattar, managing director, India, Middle East and Africa at IHG Hotels & Resorts, one of the world's largest hotel chains, with brands including InterContinental and Holiday Inn.

In the second quarter of 2022, the group's total revenue in India exceeded 2019 levels, while occupancy levels are up 2 per cent on 2019 levels at 75 per cent, Mr Mattar says.

“Domestic travel facilitated significant business recovery [after] Covid restrictions were lifted,” he says.

“In 2020, at the peak of the pandemic, we witnessed the lowest occupancy and revenue in the history of our industry.”

However, there are promising signs for international tourism recovery in India, analysts say.

“We believe the sector is on an upswing,” says Shobit Singhal, research analyst at Anand Rathi, a Mumbai-based stock trading and advisory company.

“Rising inbound tourism and a rise in the number of government delegations and international conferences augurs well for the sector.”

During the pandemic, many hospitality companies evolved and adapted to a shift in trends, and some are continuing to reap the rewards from this.

“We found that due to extended stays such as 'workations', our guests’ needs evolved into one for a branded homestays with standardised service,” says Ramit Sethi, founder of Seclude Luxury Homestay, which has luxury home-style boutique properties in locations including Kerala, Goa and Shimla — important tourist destinations in India.

“This was an idea we were already envisioning, which got accelerated during Covid and is a trend we've witnessed that is still in play today.”

As travel picks up, India’s airline industry is buoyant too.

“After nearly two years of navigating one of the worst crises ever faced by the industry, Indian aviation has been showing signs of strong recovery from early 2022 with a consistent upswing in demand for both domestic and international travel,” a representative for Vistara told The National.

The airline, which is a joint venture between Tata Group and Singapore Airlines, said it is expanding its domestic and international routes, recently having added the city of Jaipur in the north Indian state of Rajasthan to its network.

The country's festive and wedding season in this quarter is also helping to fuel demand.

“As the peak travel season continues, passenger traffic across our network has significantly increased, majorly driven by visiting friends and relatives, and leisure travel,” a Vistara representative said.

Such trends are boosting the outlook for the South Asian country’s tourism industry.

“India’s tourism industry is now experiencing a positive increase [and] during the second quarter of this year, our bookings at Wyndham were as high as 700 per cent, compared to the number of bookings at the same time last year,” says Nikhil Sharma, regional director for Eurasia, Wyndham Hotels and Resorts.

“This positive momentum makes us hopeful.”