PROJECT REPORT

ON

Service Industry a Boom for Tourism

Session: 2010-2013

SUBMITTED TO: - SUBMITTED BY:-

Haramb Nayk Megha Aggarwal

Asst. Professor Enrollment No.02514905010

Dept. Of Business Administration Course: BBA (T&TM) 3rd Sem.

MAHARAJA SURAJMAL INSTITUTE

(Affiliated to Guru Gobind Singh Indraprastha University)

(Recognized by UGC U/S2 (F))

C-4 JANAK PURI, NEW DELHI-58

TABLE OF CONTENT

S.no Particulars Page no

1 Introduction to service 1

2 Tourism Service 1-4

3 Performance of services sector 4-5

4 Importance of Tourism 6

5 World Tourism Statistics and Rankings 6-7

6 Most-visited countries by international tourist arrivals 7-9

7 Foreign Tourist Arrivals in India 9-12

8 Conclusion 13

9 Referrals 14

INTRODUCTION TO SERVICE

The mechanized system of development has now paved ways for social-economic transformation

which has made possible an increase in the level of disposable income. When we earn more, we

like to spend more. We take interest in utilizing our leisure time and availing the modern

amenities and facilities. These are provided by service sector. A service is an activityor benefit

that one party can offer to another and does not result in ownership of anything. Services are

intangible activities which provide want satisfaction. Each type of service is intangible and

perishable. It cannot be separated from the provider and hence while selling of services

ownership is not transferred to the buyer. Because of these decent characteristics service industry

defers from manufacturing industry. But it is helpful for the development of manufacturing

industry. In the present world the service sector is growing at a very fast rate. Services sector has

become important for many economies in the world and very important particularly for India. it

is important to accelerate the growth of industrial sector particularly manufacturing sector to

catch up with the growth of services sector and maintain a decent and stable growth of

agricultural sector. Services can be classified according to the market or the user to whom they

are offered example tourism services.

Tourism Services

Tourism has been a major social phenomenon of societies all over the world. It is driven by the

natural urge of every human being for new experiences, and the desire to be both educated and

entertained. The motivations for tourism also include religious and business interests; the spread

of education has fostered a desire to know more about different parts of the globe. The basic

human thirst for new experience and knowledge has become stronger, as communication barriers

are getting overcome by technological advances. Progress in air transport and development of

tourist facilities has encouraged people to venture beyond the boundaries.

As it is evident from economic trends in the world, the service sector is growing at a faster rate

than any other sector of economy. Consumer markets are becoming increasingly mature with

growing information input. As a result, consumer expectation are changing vary fast and creating

challenges for business. These challenges make tourism as an emerging area for attraction and

development of India. It is boom time for India's Tourism and Hospitality sector to show its

presence in global map. The emergence of India as one of the fastest growing economies in the

world during the 1990s is attributable to the rapid growth of its services sector to a great extent.

Travel & Tourism sector has emerged as one of the leading service industry generating

significant amount of employment and revenues. To encourage the growth of the sector, medical

tourism, wellness tourism, adventure tourism, cruise tourism etc have been introduced. The

growth in the sector has catalyzed fresh investments in hotels, resorts, spas, restaurants, airports,

malls etc. It has also resulted in commencement of flight operation by several foreign and

domestic airlines in new routes.

Tourism can play a crucial role in fostering economic development, particularly employment

generation. Travel and Tourism sector in India has emerged as one of the leading service

industry generating significant amount of revenues. Tourism industry has been one of the major

sources of foreign exchange earnings internationally as well.

The sector has witnessed impressive growth post the economic liberalization policy embraced by

the Government in 1992. Increased business activities and proactive policy of the Government to

showcase India as an attractive destination resulted in a higher inflow of business and leisure

tourists. Foreign Tourist Arrivals (FTAs) grew from 2.38 million in 2002 to 5.11 million in 2009.

In addition domestic tourism is also gaining momentum. Encouraged by the spurt Government

has introduced niche tourism products like medical tourism, wellness tourism, adventure tourism

and cruise tourism. This has created new business opportunities in transport and construction

sectors. India has witnessed a flow of fresh investments in setting up luxury & budget hotels,

resorts, spa, restaurants, airports, malls and commencement of flight operations by several

foreign airlines/ domestic airlines in new routes.

Tourism is a service-intensive industry focusing on the customer’s service, experiences not only

during their stay, but also prior and subsequent to it. Since most tourism products are booked and

paid for in advance, customers have to rely on the accuracy of accessible information. However,

besides the information provided first-hand by tourism service providers, communication

technologies enable customers to share product reviews through respective websites. People with

common interests already interact through the internet using web blogs, chats, review websites

and open communities focusing on special interest tourism or certain destinations. As Holloway

noted (2004, p. 197-198)“Information and communication technology, as it is now known, has

come to play a key role in all elements of the marketing mix, and the new term recognizes the

importance of communication in the interface between a business and its customers. Electronic,

or online‟ communications have become affordable and practicable for even the smallest SMEs,

and no sector of the travel industry is unaffected by this revolution.”

Performance of services sector

The Services sector is particularly important for India for various reasons. services sector, which

made rapid strides in growth in the Indian economy over the past few years, witnessed moderate

slowdown in growth during 2008-09, owing to the contagion from the global economic

downturn. The growth in services sector has remained consistently higher than the overall

growth in the economy except for two years. More importantly, as compared with rest of the

economy, the services sector appears to have been less affected by the global financial crisis.

Despite having no direct exposure to the troubled assets in the advanced economies, the

financing, insurance, real estate and business services exhibited sluggish performance, mainly on

account of indirect effect of the financial crisis. Financial services recorded steep decline mainly

due to significant correction in the capital market, following the international trends, heightened

economic uncertainties and market expectations of a sluggish performance by the corporates.

The table No.: 01 states that the share of services in GDP is increasing relatively. This has

increased from 58.7%in 2002-03 to 60.2% in 2004-05 & from 62.0 in 2006-07 to 63.0 in 2007-

08.Trade, Hotel, Transport and Communication services share rise from 9.4% in 2002-03 to

12.8% in 2006-07 ; but declined from 12.8% in 2006-07 to 12.4% in 2007-08 . This is the

indirect effect of financial crisis. When we think about share in GDP it has increased but slowly

during these years.

Table no 1

Performance of the service sector (growth in percentage)

Sub-sector 2002-

03

2003-

04

2004-05 2005-06 2006-07 2007-08 2008-09

A Trade, Hotels,

Transport and

Communication

9.4 12.0 10.7 12.1 12.8 12.4 9.0

B Financing,

insurance,

realestate and

business services

8.0 5.6 8.7 11.4 13.8 11.7 7.8

C Community,

social and

personal services

3.9 5.4 6.9 7.0 5.7 6.8 13.1

D Construction 7.9 12.0 16.1 16.2 11.8 10.1 7.2

Shares of services

in GDP

58.7 58.9 60.2 61.1 62.0 63.0 64.5

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-090

2

4

6

8

10

12

14

16

18

ABCD

Source: Central Statistical Organization

Importance of Tourism

The importance of Tourism, as an instrument of economic development and employment

generation, particularly in remote and backward areas, has been well recognized the world over.

It is a large service industry globally in terms of gross revenue as well as foreign exchange

earnings. Tourism can play an important and effective role in achieving the growth with equity

an objective which we have set for ourselves. Tourism has the potential to grow at a high rate

and ensure consequential development of the infrastructure of the destinations. It has the capacity

to capitalize on the country's success in the services sector and provide sustainable models of

growth. Tourism sector stimulates other economic sectors like agriculture, horticulture, poultry,

handicrafts, transport, construction, etc. through its backward and forward linkages and cross-

sectoral synergies. Expenditure on tourism induces a chain of transactions requiring supply of

goods and services from the related sectors. The consumption demand, emanating from tourist

expenditure also induces more employment and generates a multiplier effect on the economy.

Tourism in India has come into its own as a brand India Tourism. The creation of niche tourism

products like heliport tourism, medical tourism, wellness tourism, adventure tourism, cruise

tourism and caravan tourism has served to widen the net of this sector.

World Tourism Statistics and Rankings

According to the World Tourism Organization, international tourist arrivals reached 903 million

in 2007, up 6.6 per cent on 2006. Earnings reached a record US$ 856 billion, increasing in real

terms by 5.6 per cent over 2006. Receipts from international passenger transport (i.e. visitor

exports) were estimated at US$ 165 billion, bringing the total international tourism receipts to

over US$ 1 trillion, corresponding to almost US$ 3 billion a day.

While back in 1950, the top 15 destinations absorbed 98 per cent of all international tourist

arrivals, in 1970 the proportion was 75 per cent, and this fell to 57 per cent in 2007, reflecting the

emergence of new destinations, many of them in developing countries.

Total volume of cross-border tourist travel

In 2011, there were 983 million international tourist arrivals, with a growth of 4.6% as compared

to 2010. [Citation needed] In 2012 this rose to more than 1 billion international arrivals.

Most-visited countries by international tourist arrivals

The World Tourism Organization reports the following ten countries as the most visited in terms

of the number of international travelers. In 2011, Turkey overtook the United Kingdom to

become the sixth most visited country.

Table no 2

Rank Country International

tourist

Arrivals(2011)

International

tourist

Arrivals(2010)

Change 2010

to 2011(%)

1 France 79.5 million 77.1Million +3.0

2 United States 62.3 million 59.8Million +4.2

3 China 57.6 million 55.7Million +3.4

4 Spain 56.7 million 52.7Million +7.6

5 Italy 46.1 million 43.6Million +5.7

6 Turkey 33.3 million 27.0Million +8.7

7 United Kingdom 29.2 million 28.3Million +3.2

8 Germany 28.4 million 26.9Million +5.5

9 Malaysia 24.7 million 24.6Million +0.6

10 Mexico 23.4 million 23.3Million +0.5

International tourism receipts

International tourism receipts grew to US$1.03 trillion (€740 billion) in 2011, corresponding to

an increase in real terms of 3.8% from 2010. The World Tourism Organization reports the

following countries as the top ten tourism earners for the year 2011, with the United States by far

the top earner.

Rank Country International

tourism

receipts

(2011)

1 United States $116.3 billion

2 Spain $59.9 billion

3 France $53.8 billion

4 China $48.5 billion

5 Italy $43.0 billion

6 Germany $38.8 billion

7 United Kingdom $35.9 billion

8 Australia $31.4 billion

9 Macao $27.8 billion

10 Hong Kong $27.2 billion

International tourism expenditure

The World Tourism Organization reports the following countries as the top ten biggest spenders

on international tourism for the year 2011.

Rank Country International

tourism

expenditure

(2011)

1 Germany $84.3 billion

2 United States $79.1 billion

3 China $72.6 billion

4 United Kingdom $50.6 billion

5 France $41.7 billion

6 Canada $33.0 billion

7 Russia $32.5 billion

8 Italy $28.7 billion

9 Japan $27.2 billion

10 Australia $26.9 billion

Foreign Tourist Arrivals in India

There has been a remarkable growth, in the recent years, in foreign tourist arrivals to India due to

the various efforts made by the Ministry, including promoting India through the 'Incredible India'

campaign in overseas markets. Incredible India is a multi-pronged promotional campaign

launched by the Ministry in order to position the country as a preferred tourist destination for the

travelers the world over. India's performance in tourism sector has been quite impressive. During

the period 2002 to 2009, India witnessed an increase in the Foreign Tourist Arrivals (FTAs) from

2.38 million to 5.11 million. Due to global slowdown, terrorist activities, H1N1 influenza

pandemic, etc., growth rate in FTAs during 2009 fell by 3.3 per cent. Tourism sector witnessed a

bad year all over the world. The decline in growth rate in FTAs observed in India was lower than

that observed for world (4.3%).

Foregin Tourist Arrivals (FTAs) in India, 1997-2012

Year FAs in India(in millions) Percentage change over

previous year

1997 2.37 3.8

1998 2.36 -0.7

1999 2.48 5.2

2000 2.65 6.7

2001 2.54 -4.2

2002 2.38 -6.2

2003 2.73 14.3

2004 3.46 26.8

2005 3.92 13.3

2006 4.45 13.5

2007 5.08 14.3

2008 5.28 4.0

2009 5.17 -2.2

2010 5.78 11.8

2011(p) 6.29 8.9

2012( Jan –June )(p) 3.24 7.4@

(p) Provisional, @ Growth rate over Jan – June, 2011.

Source: (i) Bureau of immigration, govt. India, for 1997-2010

(ii) Ministry of Tourism, govt. of India, for 2011 & 2012

Foreign Exchange Earnings (FEE) (in US$ Million) from tourism in India, 1997-2012

# Advance Estimates, @ Growth Rate over Jan – June, 2011

Source: i) Reserve Bank Of India, for 1997 to 2009

ii) Ministry of Tourism, Govt. of India, for 2010, 2011 & 2012

Tourism has become a popular global leisure activity. In 2011, there were over 983 million

international tourist arrivals worldwide, representing a growth of 4.6% when compared to 940

million in 2010. International tourism receipts (the travel item of the balance of payments) grew

to US$1.03 trillion (€740 billion) in 2011, corresponding to an increase in real terms of 3.8%

from 2010. In 2011, international travel demand continued to recover from the losses resulting

from the late-2000s recession, where tourism suffered a strong slowdown from the second half of

2008 through the end of 2009. After a 5% increase in the first half of 2008, growth in

international tourist arrivals moved into negative territory in the second half of 2008, and ended

up only 2% for the year, compared to a 7% increase in 2007. The negative trend intensified

during 2009, exacerbated in some countries due to the outbreak of theH1N1 influenza virus,

resulting in a worldwide decline of 4.2% in 2009 to 880 million international tourists’ arrivals,

and a 5.7% decline in international tourism receipts.

Conclusion

Tourism is a dynamic and growing worldwide industry, People with different abilities and older

persons are now becoming a growing group of consumers of travel, sports and other leisure-

oriented products and services. In order to develop tourism in India in a systematic manner, the

potential of this group should be tapped properly. Tourism development can be a major engine of

economic growth and through it unemployment and poverty eradication is possible in sustainable

manner.

It is a service-intensive industry that is dependent on the quality of customer’s service

experiences and their consequent assessments of satisfaction or dissatisfaction. From a demand

perspective, the new tourist is increasingly well informed, more quality sensitive, and more

willing to quickly react towards shifts in the tourism market following postings on tourism rating

websites. Hence, the perceived service product quality emerges as the crucial factor in the pre-

purchase phase of tourism products From a supply perspective, the constant and effective

improvement of service quality provides an opportunity in particular for the small- and medium-

sized structured tourism industry to compete with larger competitors. The adoption of a so-called

„service orientation‟ by tourism businesses has thus become of increasing interest in recent years

as a crucial factor in the enhancement of profit, growth, customer satisfaction, customer loyalty,

and satisfaction. However, destinations generally consist of multiple services often referred to as

service packages or bundles, which render service orientation more difficult to perform.

Referrals

http://www.isrj.net/UploadedData/72.pdf http://www.imrbint.com/index.php?

option=com_content&view=article&Itemid=6&id=126:travel-a-tourism

http://www.incometaxresearch.com/doc/paper.pdf http://www.wto.org/english/tratop_e/serv_e/tourism_e/

tourism_e.htm http://en.wikipedia.org/wiki/Tourism http://tourism.gov.in/writereaddata/CMSPagePicture/file/

marketresearch/INDIATOURISMSTATICS(ENGLISH).pdf http://www2.unwto.org