2. IntroductionTourism is travel for recreational,leisure or
business purposes. TheWorld Tourism Organization definestourists as
people "traveling to andstaying in places outside their
usualenvironment for not more than oneconsecutive year for leisure,
businessand other purposes". 3. 1. Tourism brings in large amounts
of income inpayment for goods and services available,accounting for
30% of the worlds exports ofservices, and 6% of overall exports of
goods andservices.2. According to World Tourism
Organizationestimates, India will lead in South Asia with
8.9million arrivals by 2020.3. India is poised to emerge as the 2nd
fastestgrowing (8.8%) tourism economy in the world over2005-14
according to the World Travel & Tourism 4. Keyplayers 5.
(Indian TourismIndustry) 6. Porters Five Forces: Tourism Industry
Industry Rivalry : Highly Fragmented Industry with Intense Rivalry
Highly Fragmented Industry. Organized players would barely have
15-20% of the marketplace Most of organized players are present in
metros & mini- metros Large disposable incomes in towns like
Lucknow, Jaipur, Coimbatore etc. serviced by family run unorganized
players Industry rivalry is intense but not cut throat Rivalry
Intense because of low switching costs, low levels of product
differentiation, perishability of products diversity of rivals
Rivalry is not cut throat since exit barriers are not high, fixed
costs are not high, market growth is good 7. Threat of Substitutes:
Low Threat of Substitutes, as travel moves up the list of household
priorities Lot of Possible Substitutes , Threat of Substitution low
India is witnessing a growth of discretionary spend as % ofincome
from 30% in 2005 to around 70% by 2025. Travel , being
adiscretionary spend poised to gain. Travel has moved up the list
of household spendingpriorities Unlikely to be substituted by a
durable purchase or investments Education & Recreation will
occupy 9% share of wallet in 2025as compared to 5% now. 8. Buyer
Power: While buyers are fragmented, their diminishing brand loyalty
and ability to switch (for most products) gives them reasonable
buying power Buyers are fragmented Diverse retail buyer and
corporate buyer profiles Switching costs for buyers is not high as
brand loyalty islow/diminishing Credible threat of backward
integration Buyers can directly buy from suppliers (hotels,
airlines etc) Luxury segment is brand conscious to and willing to
pay apremium for great experience and service quality 9. Supplier
Power: Supplier usually sell commodityproducts . Concentration
& ability to sell directgives power to suppliers like airlines.
Othersuppliers are fragmented Forward integration by suppliers like
airlines sellingdirect Attempts by suppliers to sell packages and
complexitineraries not very successful While suppliers concentrated
in some areas likedomestic airlines, there is widespread
fragmentation inhotels, tour operators, car rentals etc. There is
no significant cost to switch suppliers andproducts like airlines,
car etc. are fairly commoditized Travel agency cannot typically
buyout suppliers likeairlines 10. Barriers to Entry & Exit :
While entry and exit barriers are low, difficult to build scale
because of lack of ready distribution channels Government
regulation of direct FDI in retail restricts entry of foreign
retailers There are low level of proprietary travel knowledge and
asset specificity. This makes it relatively easier for new players
to enter industry and does not provoke very aggressive rivalry from
existing players Low minimum efficient level allow entry of small
startups, however significant scale is necessary to negotiate
profitable deals Due to a fragmented market , travel agencies do
not have access to ready distribution channels Online channel is
growing at a rapid rate but is primarily selling air and rail 11.
Implications of Analysis on DistributionImplications of Porter
Analysis forDistributionWhile buyers are fragmented, their
diminishing brand loyalty and ability to switch (for most products)
gives them reasonable buying power Companies that thrive will not
just meet travellersneeds, but also please their tastes and
sensibilities and do it for lessSupplier usually sell commodity
products . Most suppliers are fragmented. Multi-linked channels and
product offerings continue to proliferate The explosion of product
offerings and channelscontinues to erode profit margins and
fragmentmarkets 12. Distribution Strategy Imperative Strategic
Imperative : To serve thissegment, Travel Agencies must drive
outcosts and build efficiencies Build on products that fit well
with core competencies and create customer delight To out source
low-cost, off-the-shelf packages for frequent destinations
Improving technology and sharing routine functions with other
players Leveraging data to increase accuracy, build volume or
purchase bulk inventory at discount 13. PEST
AnalysisPoliticalEconomical Foreign Exchange Rate Elasticity of
Demand Efficiency of Economy Business Cycle 14. Social Different
languages, cultures, traditions, cuisines Respect &
entertaiment of guests embedded inculture itselfTechnological
Increasing role of web & internet Facilitates Online Booking
Efficiency of Economy Providing customers with easy payment
facilityvia online and use of credit cards and wi-fi facilityon the
go, easy recharge of mobile phones etc. 15. United
KingdomNewsletter 16. Quick Facts 17. Top Countries (Revenue from
Tourism)International tourismRan UNWTO Countryreceipts kRegion
(2011)North1 United States$116.3 billionAmerica2 Spain Europe $59.9
billion3 FranceEurope $53.8 billion4 China Asia $48.5 billion5
Italy Europe $43.0 billion6 Germany Europe $38.8 billion7 United
Kingdom Europe$35.9 billion8 Australia Oceania$31.4 billion9 Macao
(China) Asia $27.8 billionHong10Asia $27.2 billion 18. Top
countries in international touristRank Country UNWTO
arrivalsInational Inational Change Regiontourist Arrival tourist
Arrival2010(2011)(2010) to2011 1 FranceEurope79.5 million77.1
million+3.0% 2 United North62.3 million 59.8 million +4.2%
StatesAmerica 3 ChinaAsia 57.6 million55.7 million+3.4% 4 Spain
Europe56.7 million52.7 million+7.6% 5ItalyEurope46.1 million43.6
million+5.7% 6 TurkeyEurope29.3 million27.0 million+8.7% 7
UnitedEurope29.2 million28.3 million+3.2%Kingdom 8GermanyEurope28.4
million26.9 million+5.5% 9MalaysiaAsia 24.7 million 24.6 million
+0.6% 10Mexico North23.4 million23.3 million+0.5% America 19.
International tourism expenditureRank CountryUNWTO
RegionInternationaltourismexpenditure(2011)1 Germany Europe
$84.3billion2 United StatesNorth America$79.1billion3
ChinaAsia$72.6billion4 United KingdomEurope$50.6billion5
FranceEurope $41.7billion 20. Most-visited cities by international
tourist arrivalsRankCityCountryInternationa l Visitors (mn)1 Paris
France (EU)15.62 LondonUnited Kingdom 15.2(EU)3 Antalya Turkey
10.54 New YorkUSA10.3City5 Singapore Singapore9.26 Kuala
Indonesia9.0Lumpur7 Hong Kong Hong Kong8.78 Dubai UAE8.19
IstanbulTurkey 8.110Bangkok Thailand 7.2 21. About 5.92% of the
countrys GDP comes from tourismand it provides employment to over
9.24% of thecountrys workforce. For every INR 1 million of
investment, the number ofjobs created is as follows: Industry 18
Agriculture 45 Travel & Tourism 78100 percent FDI in developing
tourism infrastructurein India: According to a WTTC report, Indias
travel andtourism industry will directly contribute INR 3,345
billion(USD 61 billion) tothe GDP by 2019, allowing 100% foreign
directinvestment in hotel infrastructure development. This
willprove to be a major growth driver for the industry. 22.
Comparative tax rates between India and neighboring countries 23.
Emerging new products in Tourism1. Golf tourism2. Education
Tourism3. Domestic Tourism4. Luxury Trains5. Wedding6.
Eco-Tourism7. Tea Tourism8. Sports Tourism9. Medical Tourism 24.
Challenges1. Lack of proper infrastructure2. Human resources3.
Service levels4. Lack of adequate marketing andpromotion5.
Taxation6. Security7. Regulatory issues 25. StrategiesProduct
development-Customised servicesSpecific location oriented
packages.Low cost packages.Web and E-commerceRising users of
internetEstablish, attract and facilitate sporting,recreational,
cultural and other major events
