Category Archives: Factors of tourism demand

Air Based Adventure Tourism In India

Air Based Adventure Tourism in India

Source: Computed from Adventure Tourism of India, Ministry of Tourism, Government of India, October 2016.


What Extent We Can Rely on Tourism Forecast?

By Dripto Mukhopadhyay

In research fraternity, forecasting is always known as “Thankless Job”. The reason being it is one of the most difficult exercise since forecasts depends on large number of assumption about future over and above the assumptions involved in the econometric modelling itself. Being fortunate enough to work on forecasting relating to various sectors ranging from petroleum demand to luxury car to carbon emission, I know the amount of effort and skill goes behind any forecasting exercise, if it is a serious business. Even after that, many of the times the researcher find their forecasts off the target extensively mostly because of externalities. At times I feel that except a “Fortune Teller”, no scientific researcher ever can guarantee about the forecasts. The forecasts can change drastically because of small amount of change in any of the multiple assumptions goes into forecast because of macro-scenario in a dynamic world.

However, a researcher always wants to understand how his forecasts are matched with actual scenario after a few years of the forecasts were made. I did a forecasting for foreign tourists arrivals to India in the year 2008-09 for Indian Institute of Tourism and Travel Management (IITTM) as a consultant. The paper was published later in the “Indian Tourism Statistics”, the only government publication on tourism statistics of India. The forecasts were made from 2010 to 2014. Since recently the latest Tourism Statistics published for the year 2015 contains data for 2014, I felt like matching the accuracy of the forecasts I made in 2008.

The research paper covered 6 countries and all the regions of the world. The data used was various macro economic parameters, household disposable income and certain dummy variables relating to policy and other localised incidences like terrorism etc. The comparison between forecasts made in the year 2008 and the actual foreign tourists arrival to India. The details of the accuracy level of the forecasts is given in Table 1. Country-wise details and region-wise details are given in Table 2.

For any secondary data collected in a large scale and at a macro level, it is always considered that results are extremely accurate if lies within plus/minus 10% deviation level. An accuracy level till 85% (where the deviation is plus/minus 15%) is considered as acceptable for any valid decision making purpose. The numbers presented in Table 1 provides the details of forecast numbers from 2010 to 2014 for all countries and regions covered under the study. It suggests that 62% forecast numbers in the study is extremely accurate when compared with the actual FTA (Foreign Tourist Arrival). If we consider the acceptable limit with 85% accuracy, it goes up to 77% of the forecasted data points. Overall, this results suggest that FTA forecasts made in 2008 was fit to the expectations out of any forecasting exercise. Keeping in mind the global economic recession during end of 2008 and the continuing volatility of the global economy, these results suggests that decision making and policy making can depend on forecasts to a large extent if the methodology used is robust.

Table 1: Details of Accuracy Level of Forecasts

(Forecasts made in Year 2008 for the years 2010 to 2014)

Forecast VS Actuals

Accuracy level

% Forecast points

On target 100% correct


Highly accurate More than 90% accuracy


Acceptable Accuracy level 85% to 90%


Low on accuracy Accuracy level less than 85%


Table 2: Regions and Country of Details of Forecasts and Deviation of Actual Foreign Tourists Arrivals to India

forecast summary

Indian Tourism Sector: Urgent Need for Competition Policies and Regulatory Framework

This article has just been published in Geography and You, Volume 19, Issue 99, Nov-Dec 2016, IRIS publication.

“Climate change as well as poverty alleviation will remain central issues for the world community. Tourism is an important element in both. Governments and the private sector must place increased importance on these factors in tourism development strategies and in climate and poverty strategies. They are interdependent and must be dealt with in a holistic fashion.” – (Francesco Frangialli, UNWTO Secretary-General, Ministers’ Summit on Tourism and Climate Change in London, United Kingdom, 13 November 2007)

Current Situation in India

Unregulated tourism activities have changed the landscape of large number of tourism destinations in India beyond repair. And, perhaps, we cannot blame only the tourism stakeholders, especially, the business owners for this. Their objective in most cases remained revenue maximization and they tried to reach the same. In the process, the ecological balance of the areas is getting destroyed to a great extent leading towards environmental degradation beyond a critical limit. This situation has arisen to a large extent due to absence of regulatory framework relating to tourism industry. In fact, there is hardly any regulatory framework in place to promote of sustainable tourism as an organized sector. This regulatory framework should make sure the sustainability in terms of environment, economy and culture.

“Tourism in the Third World, as it practised today, does not benefit the majority of the people. Instead it exploits them, pollutes the environment, destroys the ecosystem, bastardises the culture, robs people of their traditional values and ways of life and subjugates women and children in the abject slavery of prostitution. In other words, it epitomises the present unjust world economic order where the few who control wealth and power dictate the terms. As such, tourism is little different from colonialism” (Srisang, 1992). To corroborate this view, the following are the ill effects of unregulated and unplanned tourism.

  • Degradation of heritage sites
  • Commodification of the sacred resources
  • Create a market for prostitution and drugs
  • Reduce biological diversity and environmental degradation
  • Destroy habitats for wildlife
  • Pollute lakes and other water bodies
  • Overuse valuable fresh water resources
  • Contribute significantly to global warming
  • Leads to loss of scenic beauty and as a result loss of tourist attraction in long term

Promoting Sustainable Tourism

To avoid this, the country must promote Sustainable Tourism practices. Butler (1993) defined sustainable tourism as “which is developed and maintained in an area (community, environment) in such a manner and at such a scale that it remains viable over an indefinite period and does not degrade or alter the environment (human or physical) in which it exists to such a degree that it prohibits the successful development and wellbeing of other activities and processes”. Hence sustainable tourism should fulfil the following:

  • Tourism industry must ensure that tourist visits will be maintained and tourism resources will retain their attractiveness indefinitely. The carrying capacity of the area needs to be kept in mind.
  • There must be no (or only minimal) adverse environmental, social and cultural impacts.
  • All these must be achieved through maintaining the principles of sustainable development.

This is crucial keeping in mind importance of tourism industry in the country. Tourism is gaining importance in India over the years in all respects. According to Ministry of Tourism, the sector contributes to 6.88% to India’s income (GDP) in the year 2012-13. In the same year, more than 12% of the country’s employment is engaged in tourism sector. Keeping these in mind, the Draft Tourism Policy document mentioned the following as key mission for the sector.

  1. To achieve a level of 1% share of the international tourists arrivals by 2016-17
  2. 1450 million domestic tourists by 2016-17
  3. Promoting sustainable tourism as priority
  4. Enhancing competitiveness of Indian tourism industry
  5. Creating world class tourism infrastructure
  6. Ensuring greater visibility for tourist facilities
  7. Augmenting human resource base in the sectorIf we look at the current scenario of tourism development, it is more in a fluidic state rather than a concrete planning. The latest Central Government policy still in practice is of 2002. A new policy was drafted in 2015. It was circulated as Draft Tourism Policy 2015 in Tourism Ministry’s official portal. However, after a certain point of time it has disappeared from the portal. There are several boards constituted to develop or promote tourism in the country, especially to attract foreign tourists, but any regulatory authority is yet to be constituted. Another key problem element is tourism is a state as well as Central subject. Apart from Central Government, various State Governments have their own tourism policies with their own perspective to promote tourism in the states. If one carefully looks at the state level policies, many of them are quite contradictory to sustainable tourism development paradigm.
  8. As it is told at the beginning, it is not easy to prepare a regulatory framework for tourism industry. The reason being tourism activities are combination of large number of sectors that cuts across all different domains of activities of common mass. As contrast to other economic sectors, direct stakeholders for tourism activities are host communities also apart from the consumers and producers. Unlike other sectors or industries, tourism directly affects entire community of a region positively as well as adversely, depending on the nature of activities. Even from governance perspective, tourism activities cut across many different departments and hence fluidic in nature. That is one of the prime reason why even being top revenue earner as well as employment generating sector, it is one of the most neglected sectors among all economic activities from policy making perspective

As can be understood easily from the above situation, there is hardly any policy that talks of regulatory and competition explicitly regarding tourism sector. Perhaps the only significant paper available on tourism legislation in India was prepared by the Indian Institute of Tourism and Travel management (IITTM) sometime in 1990s. The focus was to identify the legislative part of the tourism sector. The complexities in framing regulatory process regarding tourism industry can be well understood. A partial list of 31 legislative acts encompasses tourism industry is presented in Appendix.

However, at the Central or the state level, several schemes are available to promote tourism activities that enhances competition. But, there is no document that talks of a regulatory aspects which is extremely crucial for tourism sector. Unregulated tourism activities have severe adverse impact on welfare of a larger section of the host communities from biodiversity, economic and cultural point of view, while it increases welfare of the tourists (consumers) and direct service providers (sellers/producers). Therefore, a balanced competition policy with appropriate regulatory measures are needed immediately to promote tourism activities that can be win-win for every stakeholder.

Requirements within a Competition and Regulatory Framework

  1. Identifying key industries/sectors that are directly linked to tourism activities and less with day to day life of common man, for instance:
    • Hospitality sector
    • Tour operators
    • Other tourism service providers etc.
  1. To look into issues that are pro- or anti-competitive
    • Policy distortions/conflicts affecting competition (national and/or state level policies)
    • Prevailing anti-competitive practices in the tourism sector
    • Possible impacts of such policies and practices on welfare issues
      • For tourists (consumers)
      • Service providers (producers)
      • Host community
  1. Suggested measures towards regulatory and competition framework on selected sectors that are directly linked to tourism activities exclusively



List of Legislative Acts that covers tourism industry

As adopted from an unpublished research paper of Indian Institute of Tourism and Travel management (IITTM)

  1. The essential commodities act, 1955
  2. Code of criminal procedure, 1973,
  3. The airport authority of India act, 1994,
  4. The child labour (prohibition and regulation) act, 1986,
  5. The motor vehicle act, 1988,
  6. Foreign exchange regulation act, 1973,
  7. Consumer protection act, 1986,
  8. The environment (protection) act, 1986,
  9. The prevention of cruelty to animals act, 1960,
  10. The public liability insurance act, 1991,
  11. The railways act, 1989,
  12. The sarais act, 1867,
  13. The immoral traffic (prevention) act, 1956,
  14. The employers liability act, 1938,
  15. The passport act, 1967,
  16. The wild life (protection) act, 1972,
  17. The prevention of food adulteration act, 1954,
  18. The monopolies and restrictive trade practices act, 1969,
  19. Forest conservation act, 1980,
  20. The road transport corporation act, 1950,
  21. The central excise and sale act, 1950,
  22. The Indian partnership act, 1932,
  23. The urban land ceiling act, 1976,
  24. The industries (development and regulation) act, 1951,
  25. The explosives act, 1884,
  26. The Indian penal code, 1860,
  27. The water (prevention and control of pollution) act, 1974 & the air (prevention) and control of pollution act, 1981,
  28. The Indian contract act, 1872,
  29. Development authority act,
  30. Municipal act,
  31. Ancient monument (site and remains) act, 1951.



Butler, R., 1993. ‘Tourism – an evolutionary perspective’, in Nelson, J., Butler, R., and Wall, G., (eds) Tourism and Sustainable Development: Monitoring, Planning and Managing, Department of Geography, University of Waterloo, Ontario.

Srisang K. (1992) ‘Third World Tourism: The New Colonialism”, Focus, Volume 4.

Ministry of Tourism (2015): “India Tourism Statistics 2015 At A Glance”, Government of India.

UNWTO (2008): “Climate Change and Tourism – Responding to Global Challenges”, World Tourism Organization, Madrid, Spain.

WTTC (2013): “Travel and Tourism Economic Impact – India”, World Travel and Tourism Council.

Ramachandra T. V. and Shwetmala (2013): “Decentralised Carbon Footprint Analysis for Opting Climate Change Mitigation Strategies in India”, Research Paper Indian Institute of Sciences, Bangalore.

Ministry of Tourism (2011): “Sustainable Tourism Criteria for India”, Government of India.


Is the International Tourism to India Changing Its Composition? – A Region-wise Analysis

In my last to last blog, I had shown how Foreign Tourists Arrivals (FTAs) are changing over time. The same blog also identified the pattern of the change and concluded that the revival in foreign tourists arrivals, post 2008 global recession, started since 2012 only.

However, I did not include any analysis on the origin of the FTAs to India. We find the FTA data country-wise as well as region-wise. In this blog, I present a region-wise analysis of FTAs without going into the country-wise details. These series of blogs on FTAs to India is inteded towards a bigger analysis which can finally capture changing pattern of expenditure of foreign tourists in India and how that is occuring over time. It will take me about 4 to 5 more blogs like this one to reach at point whereby I can do that analysis. As I wrote in the previous blog also, I am trying to use lesser texts with more visual presentations so that readers are not burdened with too many texts, but can have the essence clearly with visula representatuions.

The Fig 1 depicts that three top regions of origin of FTAs to India are Western Europe, North America and South Aisa. These three regions contribute to about 65% to 70% of the total FTAs to India during 2010 to 2012. The following figure also suggests that the relative ranks of the regions in terms of FTAs remined same over the period 2010 to 2012.

fig 1

Note: C & S America stands for Central and South America; NEC stands for “Not Classified Elsewhere”. The same are applicable to all graphs used in this blog. Continue reading

Tourism Scenario in India – Some Revelations

In the previous blog I wrote about foreign tourists arrivals to india and some critical concerns about those. In this blog I have shown a more complete picture regarding Indian tourism scenario, including both domestic and international, and its spatial impolications. To make this blog more reader friendly I have given more visual impressions and tried to lessen the burden of text. The latest complete data available on Indian tourism is for the year 2012. Thus, the article talked about 2012 scenario only.

In Figure 1 exhibits number of domestic tourists, foreign tourists and total tourists travelled to different Indian states. If we look carefully at the graph, we find that:

1. Toruists visits are largely concentrated in a 5/6 states. These states are Andhra Pradesh, Tamil Nadu, Uttar Pradesh, karnataka and Tamil Nadu – the top 5 states in terms of total toruists arrivals.


Figure 2 shows the distribution of domestic tourists and total tourists in Indian states. As seen in previous figure, the share shows that about 65% of the total tourists travel to these 5 states. The top ranking state is Andhra Pradesh, which accounts for 20% of the tourists. Continue reading

A Snapshot of Foreign Tourists Arrivals (FTA) in India – A Monthly Analysis from 2010 to June 2014

Tourism is one of the major compenent of foreign exchange earning for India. Since 2003, launch of Increible India campaign, India has seen a significant increase in number of foreign tourists visiting the country. Though it is still an insignificant share of total outbound torusim in the world, the scenario is encouraging over time. Even though the inbound tourism to India was hit substantially because of 2008 global recession, it recovering gradually with global economic recovery.

This particular blog has given a snpshot on how the inbound tourism has changed during last three and half years (till the latest data avaiable). the analysis provides a month-wise scnario so that seasonality involved in inbound tourism can be kept in mind while looking at the pattern.

The graph below exhibits the number of FTAs month-wise from 2010 january till 2014 June. Two important inferences can be made from this visual:

1. For this entire period FTAs have increased for every month.

2. It shows a seasonality in FTAs with peak during the winter, lean during the summer with marginal increase during the month of July.

fta numbers

The next visual exhibits the year-on-year monthly growth in FTA. The inference can be made from this graph is as follows: Continue reading

Foreign Tourists Arrivals to India Reflecting Global Economic Recovery Now

Inbound tourism to India experienced the impact of global economic recession severely starting last quarter of 2008. Though Indian economy apparently showed signs of early recovery towards the end of 2009, other countries were still fighting on how to grapple with recession. However, apart from some of the European countries and Asian countries like Japan, gradually the situation improved towards betterment. Though the countries were still struggling with slow GDP growth, unemployment and other crucial economic indicators, most of the countries started gaining the growth momentum, slowly but steadily.

Indian tourism industry that saw a significant change since beginning of the decade 2000 was hit dearly because of the global economic recession. A sudden dip was observed in inbound tourists to India. And, this was true for every originating country where from tourists visited India. It was expected that the scenario should start changing in a year or two. This was especially true from the perspective of various stakeholders within tourism industry, especially the core ones like hotels, tour operators etc. The hotel prices were slashed significantly with various discounts and incentives on face of recession coupled with fierce competition because of entry of new international as well as smaller domestic players.

However, the scenario did not turn like that. Though economies started moving upwards in most of the countries, especially the developed ones, the impacts were not felt instantly. Anyone worked on tourism demand forecasting for inbound tourists knows that two crucial variables explain substantial part of data variation in tourists’ arrivals to any country. These are income in the originating country (expressed in terms of GDP) and lag of tourist arrivals, i.e., the number of tourists arrived during previous year or so. All other parameters like cost comparison, distance to travel, law and order including terrorist activities etc. do play their role, but to a much lesser extent. But this time, the demand system behaved in a slightly different manner. There was a lag effect that played a crucial role in the system. Increase in income in the originating countries did not show its influence immediately. A look at the data will ensure the explanation in a meaningful manner.

Table 1: Foreign Tourist Arrivals (FTA) in ‘000
 Month 2009 2010 2011 2012 2013 2014
Jan 481 569 624 681 699 720
Feb 490 552 636 677 688 738
Mar 442 512 550 623 640 669
Apr 348 372 438 452 452 504
May 305 332 355 372 384 421
Jun 352 385 412 432 444 492

We find two important points from Table 1 as given above. The data is given for first 6 months of each year starting from 2009 so that no confusion is created regarding the trend. Primarily this is because of the fact that data for 2014 is available till the month of June. So, data for rest of the months for other years may create a noise in the pattern where 2014 data plays a crucial role. The second important reason is Indian tourism is marked with significant periodicity or seasonality which I have mentioned in several of my previous blogs as well as have been clearly established by many research papers. Inclusion of data for other years and not for 2014, may create a problem to identify the proper signals because of seasonality factor.

Two important trends appear from the above data are:

  • In case of each month number of tourists have increased in every year
  • FTA in each month is highest in 2014

These two points simply corroborates the discussion we have previously that there is a slow and steady increase in FTA. To avoid the clutter, I have presented this trend 2012 onward in Figure 1 below. The graph shows clearly that recognizing the seasonality with the crest in Jan-Feb and the trough occurs in May, every year the number of tourists visiting India has increase every year. But does this portray the entire story? The answer is NO. It is too simplistic a conclusion to be made and could have been easily concluded that with economic revival, India’s inbound tourism has also seen an immediate impact.


To prove this particular point, let us have a look at the Figure 2 and Figure 3. These two visuals exhibit growth rates in FTA to India and absolute change in growth rate in the same. If one carefully looks at these two visuals, a few points sharply indicate why the change in tourism behaviour did not start during end of 2010 when the world economy stated looking upwards.

Slide2 Slide3

  • In Figure 2, growth rates, year-on-year basis, in almost every month declined since 2009 to 2013. The representing growth rates during 2012-13 is the bottom most line and all other years follow a sequence in decline except February and April during 2011-12
  • While looking at this point one needs to remember that the base number has increased as the year increases; so it growth rates will always have an edge if it belongs to earlier years
  • In Figure 3, the absolute change in growth rates (Y-O-Y basis) are presented. This is similar to “first difference” that we normally consider in econometric modelling which plays crucial role in any trend analysis.
  • The graph shows that the absolute change in growth also behave almost in similar manner to that we identified in case of growth rates. The red line, which represents absolute change between 2012-13 and 2013-14, appears at the top.

This trend clearly suggests that though apparently it looked like that the inbound tourists arrivals to India has recovered the hit from global recession since 2010, the actual recovery has started only in 2014 January onward. Till then it was more of a falsified trend that might create a wrong perception regarding the recovery of the Indian tourism in terms of foreign tourists’ arrivals. This has significant implications for policy making as well as for core stakeholders in the industry. Also, while forecasting FTA, one needs to look into carefully at the variable behaviours. It is quite possible that lag effect might be much higher than generally though of.