Magazine article Journal of Services Research

Tourism and Hospitality Industry in India

Magazine article Journal of Services Research

Tourism and Hospitality Industry in India

Article excerpt


Tourism is the largest industry in the world in terms of earnings and is also the largest employer of people. That is of course if tourism is considered and classified as an industry. Total revenue directly attributable to tourism, including travel and purchases by tourists is estimated at US $ 3,300 billion. It constitutes over 13 per cent of the global GDP. What is more, global travel and tourism revenue is expected to increase to $6.3 trillion in the next decade. This industry provides direct employment to 262 million people, who constitute 10.5 per cent of the global work force. These numbers are expected to grow to 383 million by the year 2007. Tourism also accounts for 8 percent of the World's exports making it the largest internationally traded product or service. These statistics may appear to be incredible but are true. They also reflect the level of prosperity the world has reached where leisure has become a key priority. (WTO, 1997).


As a nation, if India detaches her ideology of culture from economic reality, it would than become obvious that for earning more foreign exchange, creating more employment and accelerating the rate of growth of the economy, India needs to look at the service sector in general and the hospitality industry in particular. One of India's biggest problems is to find ways to employ its ever-growing population. India had the largest number of unemployed persons in the world in 1999. Germany has about 4.5 million unemployed; the USA has 8 million unemployed. The corresponding figure for India is 38 million (Gee, 1997). Travel and Tourism directly creates employment opportunities in hotels, restaurants, airlines, travel agencies, passenger ships, and as a result of the spread effect creates jobs in industries like construction, telecommunication, manufacturing and the retail trade. Most important from India's point of view is the fact that these employment opportunities will be created in the small and medium segments of the economy and dispersed throughout the country. Even though in India, travel and tourism is still considered an elite 'five star' activity (WTO, 1998), WTO has recognised this sector for the purposes of poverty alleviation by increased job creation. It should be noted that in the global economy tourism is expected to be the leading job creator in the next decade and India would have to take serious initiatives to benefit from it.

India is a poor country and capital is in short supply, yet investments needed to create employment in the tourism industry are less than that required even by agriculture. (Sundaram, 2000) has estimated that the capital - labour ratio per million Rupee of investment at 1995-96 prices in the hotel and restaurant sector is 89 jobs as against 44.7 jobs in agriculture and 12.6 jobs in the manufacturing sector. It is apparent that the investment required to create one job in manufacturing is around Rs.79, 000 whereas in hospitality industry it is only Rs. 11,200. It should be evident from this that tourism industry holds out a great promise for the country to create additional jobs at a much lower cost and consequently ease the country's unemployment problems.

The secondary and tertiary effects of tourism also need not be underscored. The purchases of Indian goods and handicrafts by tourists, increased appreciation of our art, culture, cuisine and cultural values accrues enormous benefit to the people and the nation. The transport industry is also directly benefited by increased demand and higher usage. Considering that all of these have a multiplier effect, India can generate in excess of Rs. one trillion per annum from tourism alone in valuable foreign exchange. India ranks 46th among the world's top 60 tourism destinations, generating only 1% of the global tourism business (WTO, 1999). Given the outstanding wealth of natural resources and rich cultural heritage, a thriving business community and high levels of entrepreneurship, there are vast opportunities for India to increase this share. …

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