This document provides an overview and key facts about the tourism and hospitality industry in India in 2013. Some of the key points summarized are: - Foreign tourist arrivals grew 2.8% to 66.95 lacs in 2012-2013, with the US, UK, and Bangladesh being the top source countries. Foreign exchange earnings grew 19.1% to Rs. 99,594 crores. - Domestic tourist visits grew 19.9% to 1036 million in 2012. Andhra Pradesh had the highest visits with 206.8 million. - Foreign direct investment in the sector reached an all-time high of Rs. 17,777 crores in 2012-2013, a 274% increase over the

1. August, 2013
Tourism &
Hospitality, 2013
NITIN PAHILWANI
Chartered Accountant

2. Content
1.
2.
3.
4.
Overview
Indian Tourism and Hospitality
Regularity and Compliance
Hotel Transactions
Key Facts
·
66.95 Lacs FTAs in 2012-13, Growh
of 2.8%, from 65.14 Lacs.
·
` 99,594 Cr FEEs in 2012-2013,
Growth of 19.1%, from ` 83,607 Cr.
·
US$ 18.32 Bn FEEs in 2012-2013,
Growth of 5.6%, from 17.35 Bn
·
DTVs of 1036 Mn in 2012, Growth
of 19.9%, from 865 Mn in 2011.
·
` 17,777 Cr [US $ 3259 Mn] of FDI
inflows in 2012-13. Highest ever in
any financial year.
Cover Image by K. S. Sodhi [www.sodhisphotography.com]

3. Tourism
Travel & Tourism’s importance to the
wider economy of any country and it
continues to grow in 2012 as well. As
per World Travel &Tourism Council,
Its total contribution comprised 9% of
global GDP (US $6.6 trillion) and
generated over 260 million jobs, 1 in
11 of the world’s total jobs.
International tourist arrivals grew
above expectation by 5% in H1-FY
2013 compare to same period of
2012 to almost 500 million as per
latest UNWTO World Tourism
Barometer. ITAs were 1.035 billion in
2012, surpassed 1 billion for the first
time in history in 2012. Emerging
Economics regained the lead with
4.1% over advanced economics 3.6%,
with Asia and Pacific showing the
strongest results with increase of
over 7%.
On the similar line, International
tourism receipts at 1,075 USD
recorded increase of 4% growth in
real terms. America saw highest
increase of 7% followed by Asia and
Africa at 6% and 5 % respectively.
&
Hospitality
2013
Europe saw growth of 2% while
Middle East saw drop by 2%. China
ranked at the first place in tourism
source market in terms of
expenditure, followed by Germany
and the US.
In terms of job creation, one dollar
spent on Travel & Tourism is more
powerful than one dollar spent in
other sectors across most of the 20
countries. The only countries where
this is not the case are those in which
agriculture remains a significant
employer (such as China, India, and
Indonesia).
Of the increase of 66 million T&T jobs
forecast worldwide in the next 10
years, 62 percent are expected in the
Asia Pacific region, an expected
overall growth rate of 1.9 percent per
annum from 2012 to 2022. Within
the region, India and China were
directly responsible for 48 percent of
T&T jobs worldwide during 2011,
compared with 43 percent across all
other sectors of the economy
Page |1

4. Tourism
&
Hospitality
2013
Indian Tourism and Hospitality
India, a country blessed with diversity,
both in terms of culture and geography,
India has always been a fascinating
nation to tourist. Owing to its diversity
it attracts tourists from all over the
world. Tourism and Hospitality has
continued to be a critical sector for
economic development and for
sustaining employment. The Indian
economy has once again come under
cloud with key economic indicators like
Current Account Deficit (CAD) and
consumer inflation remaining above
the comfort level of the Reserve Bank
of India (RBI). And recent Food Security
Bill has widened the deficits. The Indian
Rupee has changed from ` 54.4/$ in
April 2013 to ` 66-67/$ in August 2013
resulting in more than 20 % fall. The
macroeconomic condition is expected
to delay monetary policy easing by RBI.
With depreciation in INR, Outbound
travels are now become far more
expensive which will give boast to
Domestic and Inbound travel. It
certainly has huge impact on balance
sheets overleveraged in foreign
currency loans.
Government initiatives taken to
upgrade and expand the country's
infrastructure like airports, national
highways, rail and ports already had a
positive impact on the sector. Inclusion
in definition of “Infrastructure Lending”
and changes in ECB policy by RBI is a
positive move for the sector. Many
states have come up with their state
tourism policies. The Sector generates
more inclusive growth than other
sectors and is sensitive one that is
prone to any and all events global,
regional or local.
According to the Travel and Tourism
Competiveness Report 2013 published
by the World Economic Forum, India
ranks 11th in the Asia Pacific region and
65th in World Travel and Tourism
Competiveness Index, 2013 compare to
68th in 2011
As per WTTC, The direct contribution of
Travel & Tourism to GDP, in 2012, was
` 1,919.7 billion (2.0% of total GDP)
and is forecast to rise by 7.8% p.a. from
2013-2023 to ` 4,360.6 billion. While
the total contribution of T&T to GDP, in
2012, was ` 6.385.1 billion (6.6% of
GDP) and is forecast to rise by 7.9% p.a.
from 2013-2023 to `14,722.3 billion.
Page |2

5. Tourism
Travel & Tourism directly and indirectly
supported 39,512,000 jobs (7.7% of
total employment). This is expected to
rise by 2.1% p.a. to 48,592,000 jobs
(8.0% of total employment) in 2013.
India’s share in International Tourist
Arrivals was 0.64%, ranked at 41st, and
12th Five year plan targets to increase
the share of ITAs to at least to 1% by
the end of 12th Plan requiring annual
growth of about 12%. Considering the
country’s potential, No. of Tourist
Arrivals are on lower side
Real Estate and Construction have
become costlier than before. With
slowing economic growth, an increase
in rooms supply and growing
competition from foreign player is
&
Hospitality
2013
hurting the Indian companies. During
last year, four listed hospitality
companies sought for Corporate Debt
Restructuring as there was mismatch in
cash flows and debt service
requirement. The Govt is considering
extending “Infra Status” to all hotels
with capex of ` 250 crores & above.
During last few years, many foreign
hotel brands forayed into India and
now even expanding into Tier-I and
Tier-II cities. Mid-Market and Budget
segment is on the charm for hoteliers
to expand. As per Indian Economic
Survey, 2013, Hotels and Restaurants
sector contributes to 1.5% share in
India’s GDP in 2011-12
Image Courtesy: K. S. Sodhi [www.sodhisphotography.com]
Page |3

6. Tourism
Hospitality
&
2013
Foreign Tourist Arrivals
contributes to almost 61% share in
2012.
During 2012-13, 66.95 lacs Foreign
Tourist Arrivals (FTAs) in India
compared to 65.14 and 59.2 lacs in
2011-12 and 2010-11 respectively,
registered the growth of 2.8% and
10% over the corresponding previous
years.
Top Source for FTAs in 2012
Malaysia, 3.0%
Australia, 3.1%
Japan, 3.3%
France, 3.7%
Foreign Tourist Arrivals (in Lacs)
70
65.14
65
60
Others, 39.5%
Germany,3.9%
Canada, 3.9%
66.95
USA, 15.8%
Sri Lanka, 4.5%
59.2
UK, 12.0%
Bangladesh,7.4%
55
Source: Ministry of Tourism, India
50
2010-11
2011-12
2012-13
Further, Events like Egypt public riots,
war situation against Syria and US
Travel warning to its citizen will divert
foreign tourist to south asian
location.
Source: Ministry of Tourism, India
US was the top source country for
India in term of FTAs in 2012 with
15.8 % share followed by UK 12.0%
and Bangladesh 7.4%. Top 10 source
countries for FTAs in India,
8
6.9
7
6
5
3.72
4
6.99
6.88
5.76
5.25
4.52
7.5
6.4
2012-13
4.56 4.15
4.32
2011-12
2010-11
3
2
April
May
June
July
Aug
Sept
Oct
Nov
Dec
Jan
Feb
Mar
Page |4

7. Tourism
&
Hospitality
2013
Foreign Exchange Earnings
During 2012-13, ` 99,594 crores of Foreign Exchange Earned (FEEs) from Tourism
in India compared to `83,607 and `66,095 crores in 2011-12 and 2010-11
respectively. This is significant growth of 19.1% and 26.50% over the
corresponding previous years. In USD terms, Foreign Exchange Earnings in 201213 from Tourism were US$ 18.32 billion compared to US$ 17.35 and US$ 14.52
billion in previous year 2011-12 and 2010-13.
120,000
17.35
18.32
14.52
100,000
80,000
60,000
40,000
20,000
-
66,096
83,607
99,594
2010-11
2011-12
20
18
16
14
12
10
8
6
4
2
0
INR
(Crores)
USD
(Billion)
2012-13
Source: Ministry of Tourism, India
Page |5

8. Tourism
&
Hospitality
2013
Domestic Tourist Arrivals
Domestic tourist visits have been on
an upward swing from more than a
decade. The Number of domestic
Tourist Visits to States/UTs registered
an increase of 19.87% during the year
2012 over 2011. During the year
2012, the number of domestic tourist
visits to states/UTs was 1036 million
as compared to 865 million in 2011
and 748 million in 2010.
West Bengal 2.19%
Others 15.50%
Gujarat 2.36%
Uttarakhand 2.59%
Andhra Pradesh
19.96%
Rajesthan 2.76%
Tamil Nadu
17.77%
Madhya Pradesh
5.14%
Maharashtra
6.40%
Uttar Pradesh
16.25%
Karnataka 9.08%
Andhra Pradesh has occupied the
first rank with 206.8 million DTVs in
2012, whereas Tamil Nadu, which
was at third rank in 2011, has moved
to the second place with 184.1
million. Uttar Pradesh which was at
first rank in 2011 has moved down to
third place with 168.4 millions DTVs.
Source: Ministry of Tourism, India
Domestic Tourist Arrivals will be
continued to grow further from here.
It has been driven by the rising
purchasing power of the growing
middle class and foreign travel
become costlier because of rupee
depreciation.
Page |6

9. Tourism
&
Hospitality
2013
Visa on Arrival
In January 2010, Government
introduced “Tourist Visa-on-Arrival”
Scheme for tourists from five
countries viz Japan, Finland,
Luxembourg, New Zealand and
Singapore, visiting India for tourism
purposes. From January, 2011, Govt
had extended this scheme to six more
countries namely Indonesia, Vietnam,
Cambodia, Philippines, Myanmar and
Laos. Apart from this, Union Minister
Shri K Chiranjeevi, 1St March, 2013,
has submitted a proposal to extend
Visa on Arrivals to 16 more countries.
6000
VOA by City
10000
10702
8000
6000
4000
3601
2000
2558
0
Delhi
Mumbai
Chennai
1062
Kolkata
Source: Ministry of Tourism, India
From August, 2013 VoA facility is also
started at Bangalore International
Airport (3rd Busiest Airport in the
country) apart from Mumbai, Delhi,
Chennai and Kolkata.
VOA by Country
5930
5000
4000
3248
3000
2000
1000
0
2548
2502
2033
1018
199
179
108
147
11
Source: Ministry of Tourism, India
Page |7

10. Tourism
&
Hospitality
2013
Foreign Direct Investments
Foreign Investment is freely
permitted in almost all sectors. 100%
FDI is allowed for Hospitality sector
under Automatic route.
The Hotel and Tourism Sector,
between April 2000 and June 2013,
has seen a total investment of `
33,819 Crores [US $ 6,732 mn], ranks
in at 10th positions in among all
sectors, which accounts for 3.40% of
the total FDI inflows into the country.
10,000
33,260
3,259
993
17,777
308
2010-11
Source: DIPP India
During 2012-13, FDI inflows in Hotel
and Tourism Sector increase by 274
percent over the previous year 201112.
6,631
1,000
100
4,754
1,405
48,000
44,000
40,000
36,000
32,000
28,000
24,000
20,000
16,000
12,000
8,000
4,000
-
In the last financial year 2012-13, FDI
inflows were ` 17,777 Crores [US $
3259 mn] which are highest ever in
any financial year and it accounts for
52.57% of total FDI in Hotel and
Tourism till June 2013.
10
2011-12
INR (in Cr)
2012-13
2000-2013
USD (in Mn)
Page |8

11. Tourism
&
Hospitality
2013
Regularity and Compliance
There were various regularity and
compliance changes happened during
last year.
Tourism Policies
Tourism policies give benefits like
concessional land allotment, Capital
Investment subsidy, exemptions
/reimbursement in Stamp Duty,
various state level tax exemptions
and other incentives. States like
Madhya Pradesh, Kerala and Orissa
came up with their new tourism
policy.
In July, 2012, Ministry of Tourism has
revised the Hotel Classification
Guidelines. Hotel Project must apply
for Classification within 3 Months of
commencing operations.
Inclusion in Priority Sector
Lending
The Reserve Bank of India (RBI) has
already de-linked credit for hotel
projects from Commercial Real Estate
(CRE). For the purpose of
Harmonizing the definition of
“Infrastructure Lending”, RBI on 20th
November, 2012 include three star or
higher category classified hotels
located outside cities with population
of more than 1 million in the
Definition of Infrastructure Lending.
This would enable the hotel industry
to avail financial assistance more
easily and relatively lower interest
rate.
According to the Federation of Hotel
and Restaurant Associations of India
(FHRAI), 95 percent of the hotels
were outside the ambit of this
provision. The Government is
considering extending the
“infrastructure status” to all hotels
with capital expenditure of ` 250
crores and above.
External Commercial
Borrowing (ECB)
ECB is already allowed in Hotel sector
up to US $ 200 million. Now, Indian
companies in the hotel sector (with
total project cost of INR 250 crore or
more), irrespective of geographical
location, avail ECB’s for repayment of
Rupee Loans availed of from the
domestic banking system and/or
fresh rupee capital expenditure
under automatic route subject
Page |9

12. Tourism
to 75 percent of average annual
export earnings realized during the
past three financial year or 50
percent of the highest foreign
exchange earnings realized in any of
the immediate past three financial
years, whichever is higher.
Inclusion in Service Tax
From July, 2012, Hotel
Accommodation and Restaurants
have come under the ambit of service
&
Hospitality
2013
tax apart from state regulated luxury
tax and VAT. Earlier, Service Tax does
not apply to air conditioned
restaurants that do not serve liquor.
The distinction is now removed and
Government proposes to levy service
tax on all air conditioned restaurants
in this budget. These moves have
hurt the industry sentiments. Issue of
rationalization of taxes has been
raised by the industry and the
government at various levels but no
conclusive steps taken.
Image Courtesy: K. S. Sodhi [www.sodhisphotography.com]
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13. Tourism
&
Hospitality
2013
Hotel Transactions
Pure real estate players who were
forayed in Hotels and Resort few
years back are selling non-core assets
to trim off its pilled debt burden.
Transaction of Aman Resort and
Adone Hotels and Hospitality by DLF
Group were in the news. Debt burden
is also hurting even to pure
hospitality players. During last year,
few renowned hospitality players
have restructured the Debt. Some of
player has put their properties on
sale. Companies are now following
“Asset Light Mode” for expansion. On
the one hand valuation seems
somewhat reasonable there is still
price gap between buyer and seller.
This is clearly evident from the count
of transactions.
While Indian Hospitality space is keen
interest for Foreign Hotel brands and
Investors. On the other side, Indian
firms too have their eyes on
international hotel properties. Sahara
Group had acquired Plaza Hotel New
York and Indian Hotels have made an
attempt for Orient Express Hotels.
Here are some of the Hotel and M&A Transactions
Samhi Hotels
Ashram
Road, 67 Crores
Ahmedabad
Fleur Hotel
Clarion Hotel
Whitefield,
64 Crores
Bangalore
Sahara India
Park Plaza
USA
$ 575 mn
Mahal Hotels and Chennai Hotel and Chennai
500 Crores
Esteem Housing
Residential Project
Square Four H&I Adone Hotels and Kolkatta
567 Crore
and Avani Projects Hospitality Ltd
Samhi Hotels
Formula 1, Accor
15 Properties in Undisclosed
various location
Mahindra
Royal Courts
Jailsalmer
Undisclosed
Holidays & Resort
Mahindra
Holidays & Resort
Hotel Royal Orchid
Mac
Suites
Boutique
Bangkok
Undisclosed
104 Keys
130 Keys
230 Keys
400 Keys
100% stake from
DLF Group
60%
Stake
in
various properties
100% stake in
Divine
Heritage
hotels
49%
stake
in
Infinity Hospitality
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14. Tourism
&
Hospitality
2013
Nitin Pahilwani
Chartered Accountant
Email: ntpahilwani@yahoo.com / ntpahilwani@gmail.com
http://in.linkedin.com/in/ntpahilwani
The information contained herein is of general nature and is not intended to address the
circumstances of any particular individual or entity. Although I endeavor to provide accurate
and timely information, there can be no guarantee that such information is accurate as of the
date it is received or that will continue to accurate in future. No one should act on such
information without appropriate professional advice after a thorough examination of the
particular situation.
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