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Are India's hill stations losing out?(The Economic Times (India) Via Thomson Dialog NewsEdge)The budget airlines are the new 'Lords of the Skies'. A worldwide phenomena which has changed the very dynamics of the travel trade. Not to be left behind, the getting-wealthier-and-bolder Indian is also packing his/her bag more often and heading to uncharted shores. Today, adventure tourism, wellness destinations, low-priced packages to South-East Asian countries are all collective competition. But will this then mean a potential loss for state tourism, particularly hill stations? No destination is too far or too exotic. Add an attractive, ever-so affordable price tag, and the wander lust is stoked further. So, while the Nile cruise takes pride of place in the travel itinerary of the Indian traveller, what is happening to the traditional "let's all go to the hills for a family holiday"? Are honeymooners abandoning the hills for the call of the Western shores? While, most in the industry agree that the states with the hill stations, once the only options for most domestic travellers, are facing tough competition from both within the country and outside, overall domestic tourism has been growing. Are the favourite hill spots of Shimla, Mussorie, Nainital and Ooty been left behind by the beckoning beaches of Pattaya? Are the 1829 colonial cottages of Tag's Savoy in Ooty and Oberoi's Wildflower Hall in Shimla too expensive for the Indian traveller? Or are they being replaced by the increasing number of inbound foreign travellers? Are Kerala, Goa and Rajasthan, the all-time favourites with both Indians and foreign travellers, the only ones growing? Are honeymooners abandoning the hills for the call of the Western shores? Take a look at the outbound figures: The outbound travel was 5.3 million in 2003 and 6.2 million in 2004. This year, it is expected to register a growth of more than 20 per cent and set to cross the 8 million mark. In fact, the out-bound travel segment is expected to cross 15 million by 2010 and India will become second after China in this growing segment. Against this, tourist arrivals touched 4 million in 2005, and are expected to cross 5 million in 2006. South-East Asia's figures as well as the Middle East constantly prove that Indians form a very large, important chunk of their inbound traffic. Importantly, both stay and spend have also gone up, making the Indian traveller more attractive. Yet, the news is not all bad for India. While, most in the industry agree that the states with the hill stations, once the only options for most domestic travellers, are facing tough competition from both within the country and outside, overall domestic tourism has been growing. In fact, for the big players like SOTC, "There is a whole shift in the market towards organised players and we have seen a 35% increase in our domestic tourism business," says chief operating officer, Outbound Travel, SOTC. Competition for Shimla or Ooty (which has been seeing a drop in occupancies) is coming not just from the states infrastructure problems or neighbouring states. Today, adventure tourism, wellness destinations, low-priced packages to South-East Asian countries are all collective competition. But will this then mean a potential loss for state tourism, particularly hill stations? "Business is definitely tough and competition is cut-throat even for the high-end leisure traveller," says Ketaki Narain, director, Corporate Communications, Oberoi Group. Yet for the high-end destinations, business is not yet quite affected. The key is to evolve with the market and include a spa at Wildflower, and wide-water rafting. As for Cecil, the location is still the lure. Yet, there have been new trends, like the growing Russian client who has been lured away from Nepal to Shimla or the UK traveller who loves the hills is increasing. "Today's discerning traveller has a clear idea of what comfort and excellence in service imply and is willing to pay a premium for it," says Narain. A fact, Simon Cooper, president, Ritz-Carlton, agrees fully with. "People are always seeking ultra luxury and high spenders have traditionally travelled overseas as there was no offering in this category before. With Wildflower Hall in the Himalayas, this has altered the dynamics of the market for the discerning traveller." So, all is well for the those who have money and will spend. There is no or situation for them. It is always an 'and' situation. But what about the rest? The mid-market and the masses? The ones who keep the Kalka-Shimla shift running? The ones who pack the meter gauge trains up the hills? All is not bad news here too. In fact, "Travel agents are now promoting hill stations such as Shimla and Kashmir to foreign travel groups. Of course, hill stations like Mussoorie, which do not have sufficient infrastructure like water, power and are over built, are not hot spots because they are unable to cope with the demand," says K B Kachru, country head, South-East Asia, Carlson Group. The biggest hurdle are the prices and the comparison between the short-haul foreign destinations and the hills or other domestic destinations. This has arisen because of the severe shortage of rooms, which have not been able to grow with the increasing demand. Today, the average outbound package to short haul destinations is in the range of Rs 20-30,000 per person for 4 to 5 days, whereas by the same principle an average domestic package will be more expensive by at least 30 per cent. "A smaller inventory invariably translates to higher room rates. And as this trend is likely to continue, the price conscience inbound tourism traveller is likely to shop for other country destinations," says Ajay K Bakaya, executive director, Sarovar Park Plaza. Of course, new hotel constructions have started at a brisk pace, "but the impact of any significant new supply is at least three years away," he adds. The repeat factor, a crucial monitor for tourism gauge, is what Kavi Ghei, director, TRAC Representations (India) Pvt Ltd, says, must be tracked. "Traditional tourist destinations will receive good domestic traffic because Indian options are still limited. However, what needs to be tracked is how many of them were repeat travellers, as this is one of the major yardsticks to gauge the innovativeness and popularity of the destination. Today, destinations like Manali and Shimla are seeing young 18-24 year age bracket travellers or those which are last minute. Tough competition can be expected for them next year, as a number of short-haul outbound destinations are planning to launch youth packages," he adds. Another fact which wards off possibilities of competition is that social and religious travel accounts for a large percentage of trips undertaken within India. "Also, there are people who are hard pressed for time and prefer taking short vacations within India. This has resulted in a growing emphasis on rest and relaxation, and 'wellness' and 'health' holidays. A big number of health resorts and spas have come up all over the country and they constantly woo the domestic traveller," says Rajji Rai, secretary-general, Travel Agents Association of India. Interestingly, experts see an opportunity in the outbound threat and feel this has encouraged competition among all states, vying for a section of the pie. "Each state is now upgrading its technology and programmes to suit the needs of tourists and promote friendly packages. The biggest success story has been Kerala," says Nakul Anand, divisional chief executive, Hotels, ITC Ltd. What needs to be addressed is not that there is a great demand, beyond capacity, during the peak period, but has the low season demand moved from low to shoulder and has the demand of the shoulder season moved to the peak. Further, to grab an enhanced piece of the pie, the state boards need to be far more visible, aggressive and innovative. They need to understand that the competition has changed in the new dynamic market scenario. But the Indian outbound travel, in spite of the phenomenal increase in numbers, is still at a nascent stage when compared with other global destinations. "The domestic locations will continue to see an influx of tourists - not necessarily by choice, but perforce. I believe the domestic sector can grow much faster than the outbound sector with competitive pricing and enhancement of hotel capacity," ends Ghei. Something to think about when you open the map of the world and choose your next destination. |