Inbound tourism lags, but forex earnings surge

Inbound tourism in India is still lagging behind pre-pandemic levels, with foreign tourist arrivals (FTAs) in January-June 2024 reaching 4.78 million, which is approximately 90% of the same period in 2019, according to a report by Crisil Market Intelligence and Analytics. While India’s recovery trails the global trend—where FTAs have reached 96% of pre-Covid levels in the first seven months of 2024—foreign exchange earnings (FEE) have increased, suggesting higher per-person spending by tourists.

The report highlighted that reduced demand from Bangladesh due to its current political situation, along with the suspension of direct flights from China, has impacted India’s tourism, as these two countries accounted for 27% of FTAs in 2019. Meanwhile, destinations like Qatar, Dubai, Vietnam, and Sri Lanka have exceeded their pre-Covid levels of tourist arrivals. Additionally, emerging destinations such as Azerbaijan, Georgia, and Kazakhstan are increasingly competing for tourists with aggressive campaigns.

In terms of foreign exchange earnings, the report noted a 23% rise in the first half of 2024 compared to the same period in 2019, driven by factors such as a 20% increase in five-star hotel rates and tourists opting for more premium experiences. The FEE per FTA rose from Rs 1.5 lakh in 2019 to Rs 2 lakh in the first half of 2024, indicating a shift towards higher-quality travel expenditures.

At the same time, India’s outbound tourism is growing, with a 12% increase in Indian national departures compared to pre-Covid levels in the first half of 2024. This growth is driven by rising disposable incomes, improved airline connectivity, and streamlined visa processes, along with a growing preference for unique travel experiences like wellness retreats and adventure trips.