kerala tourism trends, trade survey july 2016...background trends of tourist inflow to kerala 65% of...

Kerala Tourism Trends, Trade SurveyJuly 2016

Department of Tourism,

Govt. of Kerala

BackgroundTourism sector in Kerala:Government of Kerala announced its tourism policy in 2012 aimed at tapping the tourism potential of the State to the maximum and making Kerala a visible global brand in domestic and international markets. This was an extension of the efforts which began in the late 1980s to position Kerala among the major tourism brands in the world. Since then, more specifically since 1990, with peaks at 1992, 2002-04 and 2006-07 very high growth rates have been reported.

The state has never shown worrysome declining trends since 1990s, barring for the years with external factors like global recession and 9/11 incident. The reason for the same was the marketing strategies which highlighted the strength and unique tourism products offered by Kerala and the simultaneous investment in the infrastructure in general. The fact that for the last five years Tourism has been contributing 7-10% of the state’s GDP summarizes the importance of tourism sector in the economy of state and livelihood of the people.

Tourism-Direct, indirect/ancillary servicesThe hospitality industry contributes to the bulk of direct employment in the sector. As in 2013, there are 5349 accommodation units offering 73449 rooms, in the hotels, homestays, houseboats, lodges, guest houses and other accommodation units in Kerala. This when compared to SriLanka, a close competitor in tourism in South Asia is 3 times more. Those employed in other tourism services like tour operators, travel industry and guides, houseboat staff, tourism media, Government staff will add to the direct employment.

But the ancillary services to tourism is inconspicuous yet vast-Food and beverages, commercial establishments/shops-more prominent being jewellery, textiles, souvenirs, daily use products etc, travel insurance, amusement parks, local transportation, travel and hospitality studies, currency exchange, media and other entertainment product and services. With Kerala, stepping towards more of ‘Responsible tourism’ initiatives, even the grass root sections of the society find their role in the development of tourism sector.As per the internal survey of tourism department in 2012, 12 lakh employments in tourism sector have been assessed but this does not cover the ancillary services. WTTC has already reported the figures of 1.4 million for the year 2013 which are in tune with the figures of the department.

BackgroundTrends of Tourist inflow to Kerala65% of the tourist inflow to Kerala happens during the peak season October-March. Most of those who target the season make advance bookings on flight and accommodation units as the peak season rates tend to be very high.

Out of the foreign tourists who visit Kerala, 91% visit Kerala for either Leisure/Recreation/Holiday or Business purpose. The rest of those who visit are for education, health treatment, pilgrimage, family affairs etc. when it comes to domestic tourists, the percentages are 65 and 35% respectively. But percentage share of business tourists is high for domestic tourists.

Kerala has been pitched as a potential MICE and wedding destination and the tourism industry in Kerala has already been offering exclusive packages for MICE and Wedding settings. Increasing corporate penetration and role of wedding planners have resulted in a quick growth of these. Industry also promotes these because of the huge numbers that flow in as a part of a single booking. Less seasonality of these two segments is also believed to help our tourism economy

Trade Research 2016Turning to the reality of recent period, as regards tourism, foreign tourist arrivals have been growing at close to 20 per cent a year till 2010 with a dip in 2009. The growth of tourism has considerably decelerated since then (Table 1). It has fallen below 10 per cent since 2012 and has fallen below the national average in 2014 for the first time in recent history. The deceleration has continued into 2015. While part of the reason could be the global slowdown, the close to 20 per cent growth in foreign tourist arrivals in the neighbouring Sri Lanka suggests that Kerala is losing the competitive battle. Growth of domestic tourist visits in Kerala has always been considerably lower than the national average and that too has shown a mild deceleration in recent years. Thus, overall tourism growth has shown a perceptible fall in the last few years. Tourism contributes to about 10 per cent of the GSDP of the State as per Tourism Satellite Account computations and any deceleration will adversely affect the growth of the economy.

Table 1. Foreign and Domestic Tourist Arrivals/ VisitsYear Foreign Tourist Arrivals (000) Domestic Tourist Visits (000)

India Kerala India Kerala2010 5776 (11.8) 659 (18.3) 747700 (11.8) 8595 (8.6)2011 6290 (8.9) 733 (11.2) 864530 (15.6) 9381 (9.2)2012 6577 (4.6) 794 (8.3) 1045050 (20.9) 10076 (7.4)2013 6968 (5.9) 858 (8.1) 1145280 (9.6) 10858 (7.8)2014 7679 (10.2) 923 (7.6) 1290000 (12.9) 11695 (7.7)2015 - 977 (5.9) - 12466 (6.6)

Source: Kerala Tourism Statistics- 2015; Economic Review 2015.Note: Figures in brackets are growth rates.

Moreover, the Kerala trade partners were experiencing a negative trend in the last couple of years. Recently, there were couple of media stories regarding the negative trend in the tourism sector in the State. As per these reports, the tourism industry is going through a rough phase resulting in negative growth rate for the tourism trade in the State. Various factors such as stiff competition, higher rates, excise policy etc were cited for this negative feedback.In this context, the Department of Tourism had undertaken a research among the Tourism trade partners in the State to assess the response of the players in the industry.

Trade Research 2016Research Objective• To understand and report on the trend in tourist arrivals and spend among

hotels and resorts (Three star and above) with respect to • Room days • Conferences and MICE • Events and Marriages

• To understand the reasons for the trend

Methodology• Managers / owners of hotels and resorts and tour operators in Kerala were

administered an online Questionnaire• Mails were sent to 316 members of KTM and after following up on the

telephone, responses from a total of 103 hotels / resorts were used for analysis. Similarly 148 tour operators were mailed the questionnaire and 26 responses were used for analysis.

Room Occupancy (%) at your hotel/resort across years

Q1

Reading

The steady growth in Occupancy has been arrested and a

slide has begun

50.20

51.00

51.90

54.70

53.70

47.00

48.00

49.00

50.00

51.00

52.00

53.00

54.00

55.00

56.00

2011 2012 2013 2014 2015

HOTEL, RESORTS

No. of respondents: 106

Growth % of Rooms across years

Q2

Reading

Trade is investing constituently to add to the inventory

of the destination

0.0

2.0

4.0

6.0

8.0

10.0

12.0

4.5

7.2 7.8

11.3

HOTEL, RESORTS


2012 2013 2014 2015

What percentage of your total clientele is international?

0-10 30.1

11-20 20.39

21-30 10.68

31-40 7.77

41-50 7.77

51-60 2.91

61-70 7.77

71-80 3.88

81-90 5.83

91-100 2.91

International Clientele %

% of Hotels/Resorts

Almost 40% of the properties have more than 30% international travellers

Q3

60% of the Hotel/Resort properties and dependent on Domestic travellers

HOTEL, RESORTS


Top 5 countries in terms of international arrivals in 2015

Q3

Reading

UK, Germany, USA and France continue to be the

Top 4 markets.

Saudia Arabia seems is the new entrant in the Top

5 followed by UAE at No. 6

UK17%

Germany14%

USA11%

France11%

Saudi Arabia8%

UAE7%

Malaysia5%

Australia5%

Russia4%

Italy3%

Oman3%

Switzerland2%

Canada2%

Sweden2%

Singapore2%

South Africa1%

Spain1%

Sri Lanka1%

Belgium1% Japan

1%

Maldives1%

Netharlands1%

Israel1%

HOTEL, RESORTS


Source Markets: Top Domestic Cities

Q-3

Reading

Metros other than Kolkata are the Cash Cow Markets.

Ahmedabad is the biggest non-Metro market

Mumbai20%

Bangalore17%

New Delhi17%

Chennai16%

Ahmedabad9%

Hyderabad7%

Cochin5%

Pune4%

Kolkata3%

Surat1%

Trivandrum1%

Mysore1%

Mangalore0%

HOTEL, RESORTS


Biggest Factors Contributing to the growth of Tourist Arrivals

Q6

Destination60%

Marketing Efforts

17%

Brand Value11%

Facilities11%

No Response 1%

Reading

Destination product is the overwhelming factor for

tourist arrivals; its perceived Brand Value is also a big

pull.

Resort’s Marketing Efforts becomes the second most

important factor.

HOTEL, RESORTS


Biggest factor that is adversely affecting tourist arrivals

Q7

Increased Competition

32%

New Excise Policy32%

Connectivity13%

High Rates9%

Lack of Marketing8%

Others5%

No Response 1%

Reading

New Excise Policy seems to be a new big threat for the

trade.

Along with increased competition from Neighbouring

destinations

HOTEL, RESORTS


Do you Have Conference or MICE Facility?Q8

Yes70%

No30%

Reading

Majority - 70% - hotels/resorts have conference

facilities.

HOTEL, RESORTS


Average Growth Rate (%) in MICE Business

Q9

Reading

A sudden slide in 2014, which continued in 2015

2011 2012 2013 2014 2015

9.79.2 9.1

4.8

-0.6

-2

0

2

4

6

8

10

12

1 2 3 4 5

Overall

HOTEL, RESORTS


Biggest Factors Contributing to Growth of your MICE Business

Q10

Reading

MICE Infrastructure is the primary factor

But the Destination Brand and its Brand value,

together at 33% seems to be a very pull factor.

Facilities Infrastructure

41%

Destination25%

Marketing Efforts12%

Don’t Know12%

Brand Value8%

Others2%

HOTEL, RESORTS


Biggest factor that is adversely affecting your MICE business

Q11

Reading

The New Excise Policy has dented the fortunes and

scope of the MICE industry in a major way.

Respondents mentioned instances where big events

getting cancelled because of the current Excise Policy

Lack of insufficient airline Connectivity is observed as

another determining factor limiting the growth of the

MICE business.

New Excise Policy55%Connectivity

11%

Don’t Know12%


10%

Lack of Marketing7%

Others4%

High Rates1%

HOTEL, RESORTS


Suggest 3 Policy Changes, which will benefit the Tourism industry in Kerala

Q12

Reading

The industry seems to be stifled by the current Excise Policy

Rest of the Policy changes suggested are connected the tax

and infrastructure development

Change Excise Policy

68/103

Reduce Luxury Tax, & Service

Tax

37/103 28/103

Improve Destination

Infrastructure

Top 3 Policy changes suggested:

HOTEL, RESORTS


No. of International Tourists handled across years

Q1

Reading

Positive growth across years, despite a slowdown in 2013

49,743

52,844

50,242

55,615

58,742

44,000

46,000

48,000

50,000

52,000

54,000

56,000

58,000

60,000

2011 2012 2013 2014 2015

TOUR OPERATORS


No. of Domestic Tourists handled across years

Q2

Reading

The pace of growth seems to have slowed down in 2015.

2,06,813 2,24,644

2,46,096

2,78,610 2,84,304

-

50,000

1,00,000

1,50,000

2,00,000

2,50,000

3,00,000

2011 2012 2013 2014 2015

TOUR OPERATORS


Growth Rate of number of tourists handled in different years – Tour Operators

Reading

2013 – there was a general slowdown, especially a sharp

fall in the international MICE business.

2015 – has seen a sharp decline in the Domestic MICE

business, and a small decline in the International MICE

business.

2012 2013 2014 2015

6.2

-8.7

6.45.6

8.7

5.3

8.1

2.5

8.2

2.7

7.8

3

-10

-8

-6

-4

-2

0

2

4

6

8

10

- - international - - domestic - - total


Q3

TOUR OPERATORS

Biggest factor contributing to the growth in tourist arrivals

Q4

Reading

The Destination product and it’s Marketing Efforts are the

big pull factors

Destination35%

Marketing Efforts

27%

Facilities23%

Brand Value15%

TOUR OPERATORS


Adverse factors affecting the growth in tourist arrivals

Q5

Reading

Comparatively high rates seems to be the most limiting

factor

Followed by increasing competition and the current Excise

Policy, which has turned up as the a new big adverse factor.

High Rates46%


19%


Connectivity8%

Lack of Marketing4%

Others4%

TOUR OPERATORS


Do you organize Conference/Meetings

Q6

Reading

Half of the Tour Operators handle MICE and half doesn’t.

Yes50%

No50%

TOUR OPERATORS


Which is the biggest factor contributing to the growth of MICE business in Kerala

Q7

Reading

Availability of good MICE Infrastructure and Facilities seems to

be the biggest pull factor

Followed by the Destination product.

Facilities & Infrastructure

48%Destination

30%

Marketing Efforts9%

Others9%

Brand Value4%

TOUR OPERATORS


Which is the biggest factor that is adversely affecting the MICE business in Kerala

Q8

Reading

The current Excise Policy seems to be the single biggest

factor that has affected the MICE business



13%

High Rates9%

Others9%

Lack of Marketing4%

Connectivity4%

TOUR OPERATORS


Rank the Years in terms of Revenue from the business

Q9

Reading

After a steady growth period of four years the Revenues

have fallen considerably in 2015.

43

65 68 7060

0

10

20

30

40

50

60

70

80

1 2 3 4 5

TOUR OPERATORS


Suggest 3 Policy Changes, which will benefit the Tourism industry in Kerala

Q10

Reading

Almost equivocally, Tour Operators suggest a re-look at

the Excise Policy

They also look forward to Improvements in Destination

Infrastructure and there’s a strong push to ‘Ban Hartals’

Change Excise Policy

20/26 9/26 7/26

Ban Hartal

Top 3 Policy changes suggested:

Improve Destination

Infrastructure

TOUR OPERATORS


Recommendations, based on the Trends

1. Destination (product) is the key attractionThe brand - Kerala, God’s Own Country is the principal factor for arrivals, which is a healthy scenario.

2. Sudden fall in OccupancyDecline after a consistent growth is a worrying factor.

3. Big Traditional Markets doing well; new markets moving up stronglyThe new market explorations of the Department seems to have created an impact with the presence and share of Saudi Arabia and Russia.

4. Industry is investing steadily Hotels and Resorts are investing to increase the inventory and new properties are opening up.

5. Revenue from business fell in 2015A bad fall after good growth of four years. The impact becomes bigger because of the investments made.

Key Trends6. MICE is here to stayThe share of properties with MICE facilities is significant now and the principal reason for MICE business is also the availability of this infrastructure.

7. 2014-2015 saw a sharp decline in MICE businessThe consistent growth seems to have been affected big time across the last one and a half years.As against a growth rate of about 10% in the years 2011, 2012, and 2013, the growth rate was just 2% in 2014. It further declined in significant way in 2015 resulting in a negative growth in 2015. But in the five star hotels, the growth rate improved in 2014 and 2015 over the greater in the previous years.

8. Excise Policy, damaging MICE businessAlmost every trade member seems to put ‘Excise Policy’ as the key deterrent standing in the way of the growth of the MICE business. After having invested in infrastructure and marketing if the MICE business take s beating because of Excise Policy it would affect the overall Tourism prospects of the state in the coming years.

Key Trends9. Change ‘Excise Policy First’First time ever the Tourism Trade, both Tour Operators, Hotels and Resorts instead of the normal ‘Reduce Tax’ said revise the ‘Excise Policy’. This clearly points to the kind of negative impact the current Excise Policy has on the Tourism Industry in Kerala.

10. Re-look Luxury Tax*Hotels and Resorts are more concerned about the ‘tax’ factor. The same is reflected when Tour Operators cite ‘High Prices’ as a major adverse factor.

11. Improve Destination InfrastructureBetter infrastructure is again a jointly felt need.

* Govt. has already initiated a Tax Reform.

kerala tourism trends, trade survey july 2016...background trends of tourist inflow to kerala 65% of...

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