Tourism arrivals to reach pre-pandemic levels by 2024

Economist Intelligence Unit (EIU) recently released its Tourism in 2023 report. This report assesses the growth prospects, top risks and key trends facing the sector next year. The report finds that global tourism arrivals will increase by 30 per cent in 2023, following growth of 60 per cent in 2022, but will remain below pre-pandemic levels.

Ana Nicholls, director of industry analysis, EIU, says: "The tourism industry saw a strong recovery during 2022, and we expect that to continue in 2023, particularly if China starts lifting its zero-covid policy as expected. But the industry certainly won't be immune to the economic slowdown. Costs have already risen sharply for fuel, electricity, food and staffing, and companies will have to pass those costs onto consumers who are already hurting from the higher cost of living. As a result, EIU has pushed back its forecast for a full recovery in international arrivals. We now don't expect them to get back to 2019 levels until 2024, although the Middle East is one region that will be ahead of the curve." The economic downturn, sanctions on Russia and, above all, China's zero-covid strategy will be among the factors weighing on the industry. Hotels, restaurants and airports will struggle to cope with labour shortages, wage demands, and high food and energy prices. Even so, international airlines are expected to return to profitability, benefiting from continued pent-up demand. The impact of climate change on the industry will become more apparent, with high temperatures, water shortages and floods forcing tourism destinations to take action.

Visa has joined hands with PATA (Pacific Asia Travel Association) for the 'Asia Pacific Destination Forecasts 2022-2024: India report'. In the report, it was shared that PATA has estimated that India will witness 13.34 million inbound tourists by 2024, marking an increase of around 22 per cent as compared to the pre-pandemic year 2019. The WTTC's report expects continued gains to Asia-Pacific's travel industry in 2023, followed by another year of positive growth in 2024. By 2025, it estimates, travel revenue will contribute 32 per cent more to the region's GDP than it did before the pandemic - a number that far exceeds every other regions, except that of the Middle East (30 per cent).

The report also forecast that tourists travelling to India will increase year-on-year between 2022 and 2024, starting with 4.1 million in 2022, doubling in 2023 to 8.5 million and reaching 13.34 million in 2024.

Meanwhile, Asia is projected to remain the dominant source region over the forecast period, while Europe and the Americas, the second and third major suppliers of visitor numbers into India, are projected to have visitor share contractions. The report also found that as states like Kerala, Madhya Pradesh, Goa and Rajasthan are investing in tourism promotional activities, including campaigns on TV and in print media, such investments may pique the interest of potential international visitors as the pandemic situation eases within India and globally.

As the government is set to present the union budget for FY24 on 1 February, 2023, PHD Chamber of Commerce and Industry has suggested the government to declare industry status to tourism sector and set up a corpus fund for tourism infrastructure to underwrite their national industry status by compensating states for any losses. The Chamber in its recommendations also requested to create a provision for income tax set off for Indians for holidays and conducting conferences and exhibitions within India.

Supporting the demand of the MICE industry in the country, the Chamber suggested creation of a global bidding fund for bidding starting with a corpus of Rs 100 crore to enable Indian companies to bid for meetings, incentives, conferences and events. Currently rooms priced up to Rs 7,500 per day attract a GST of 12 per cent and those above Rs 7,500 a day come under the 18 per cent tax slab. "The 18 per cent GST category for hotels with room rates of more than Rs 7,500 ($100) must be abolished and merged with the 12 per cent GST category. Gradually, GST should be brought down further, below 10 per cent with full set-offs in line with global trends," the industry body said in their pre-budget expectations.

"To fast-track investments, it is recommended to establish a centralised approval system for most common approvals, licenses and permits on an e-approvals basis. These should be granted within a pre-defined frame or deemed to be approved," it said. The industry body urged the Centre to make a provision for one country-one road tax for tourist transportation to encourage seamless road travel across India.