Rise of the Indian tourist: travel industry pivots to next big market

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Priyanshi Duneja is one of the outward-looking Indians who represent the next big thing in travel: the emergence of her country’s middle class as a driver of the global tourism industry.

The New Delhi resident plans to take her son to Singapore next month, where they will celebrate his birthday by visiting Universal Studios, water parks and doing other “kiddie things”.

As prices in Indian destinations such as Goa have risen, foreign travel has become a more appealing option, she said. “Sometimes we are spending Rs20,000 [$240] on a domestic trip, so why not spend Rs25,000 and go abroad?”

Rising incomes, a growing middle class and burgeoning flight connections are putting more people in the world’s most populous country on the move, analysts said, echoing a decades-long trend in China.

“What you find with travel is there’s a button that gets pressed,” said Richard Clarke, Bernstein’s senior analyst for global hotels and leisure. “As soon as you hit the middle class you start travelling, and once you’ve got paid leave, that’s the trigger point to start travelling.”

By 2027, India should eclipse Australia, Canada and France to become the world’s fifth-biggest outbound tourism market, according to Bernstein. By then, Indian tourists will account for $89bn of the market value, it forecasts, more than double the $38bn recorded in 2019.

The Middle East is Indians’ top destination for outbound travel, accounting for nearly half of foreign trips, followed by south-east Asia, North America and western Europe, Bernstein said.

India is now the biggest source of holidaymakers in Dubai, ahead of neighbouring Saudi Arabia and Oman. It is the third-largest source of tourists for Thailand, according to the Tourism Authority of Thailand, which has organised roadshows in Indian cities such as Ahmedabad, Chandigarh and Lucknow in an effort to secure more visitors.

With India’s market growing and China struggling to revive outbound tourism after the pandemic, “India is taking the share of what was left by the Chinese pre-Covid”, said Paul Charles, chief executive of travel consultancy The PC Agency.

“There is no question that India’s travel market will be among the largest in the world over time,” said Elie Maalouf, chief executive of Holiday Inn and InterContinental owner IHG.

A record 115,000-plus departures are scheduled from Indian airports in September, a 9 per cent increase from a year ago, according to aviation data provider Cirium. Airlines, including India’s two biggest carriers, are planning for a tourism take-off. IndiGo Airlines and Air India ordered 500 and 470 new aircraft, respectively, last year, the two biggest orders in aviation history.

Air Canada will add 40 per cent more seat capacity for the Indian market from October. “The Indian outbound market is about large families travelling,” said Charles. “Airlines and hotels benefit from more seats and rooms being bought by a family rather than just two people travelling together.”

The impact of greater disposable income and willingness to travel will also be felt domestically. By 2027, India will be the third-biggest domestic tourism market after the US and China, Bernstein estimates — though still trailing those markets by a large margin.

With 65 hotels, India’s domestic market now accounts for 2 per cent of the global transaction volume of Accor, the hotel group behind Novotel and Sofitel. Accor chief executive Sébastien Bazin forecasts that within seven or eight years, the Indian market will match that of the US, which generates 12 per cent of global transaction volume.

For some travellers such as Duneja, higher costs at home are encouraging them to look further afield. Prices in Indian resort destinations such as Goa and Kerala have made foreign trips to nearby countries such as Vietnam, Sri Lanka, Thailand and Singapore more attractive, industry groups said.

“It’s going to work out more or less the same,” said Harjinder Singh, a Delhi-based tour operator and managing committee member of the Association of Domestic Tour Operators of India. “The mindset is, ‘I am travelling abroad, showing off’, and also, it’s equal in price, if not cheaper.”

Sana Nageshwar Rao, 72, a retired Indian civil servant, is ratcheting up the number of countries he has visited — 35 so far, most recently Egypt.

“Previously Indians didn’t used to spend money, but now they are going abroad,” said Rao. “They are cultivating the habit of spending and enjoying it with the family.”