1. 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
2. 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
3. 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
4. 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
5. 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.
6. Table no 1
Performance of the service sector (growth in percentage)
Sub-sector 2002- 2003- 2004-05 2005-06 2006-07 2007-08 2008-09
03 04
A Trade, Hotels, 9.4 12.0 10.7 12.1 12.8 12.4 9.0
Transport and
Communication
B Financing, 8.0 5.6 8.7 11.4 13.8 11.7 7.8
insurance,
realestate and
business services
C Community, 3.9 5.4 6.9 7.0 5.7 6.8 13.1
social and
personal services
D Construction 7.9 12.0 16.1 16.2 11.8 10.1 7.2
Shares of services 58.7 58.9 60.2 61.1 62.0 63.0 64.5
in GDP
18
16
14
12
10 A
B
8
C
6 D
4
2
0
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
Source: Central Statistical Organization
7. 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.
8. 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 International Change 2010
tourist tourist to 2011(%)
Arrivals(2011) Arrivals(2010)
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.
9. 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
10. 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 $26.9 billion
Foreign Tourist Arrivals in India
There has been a remarkable growth, in the recent years, in foreign tourist arrivals to India due to
the various efforts made by the Ministry, including promoting India through the 'Incredible India'
campaign in overseas markets. Incredible India is a multi-pronged promotional campaign
launched by the Ministry in order to position the country as a preferred tourist destination for the
travelers the world over. India's performance in tourism sector has been quite impressive. During
the period 2002 to 2009, India witnessed an increase in the Foreign Tourist Arrivals (FTAs) from
2.38 million to 5.11 million. Due to global slowdown, terrorist activities, H1N1 influenza
pandemic, etc., growth rate in FTAs during 2009 fell by 3.3 per cent. Tourism sector witnessed a
bad year all over the world. The decline in growth rate in FTAs observed in India was lower than
that observed for world (4.3%).
11. Foregin Tourist Arrivals (FTAs) in India, 1997-2012
Year FAs in India(in millions) Percentage change over
previous year
1997 2.37 3.8
1998 2.36 -0.7
1999 2.48 5.2
2000 2.65 6.7
2001 2.54 -4.2
2002 2.38 -6.2
2003 2.73 14.3
2004 3.46 26.8
2005 3.92 13.3
2006 4.45 13.5
2007 5.08 14.3
2008 5.28 4.0
2009 5.17 -2.2
2010 5.78 11.8
2011(p) 6.29 8.9
2012( Jan –June )(p) 3.24 7.4@
(p) Provisional, @ Growth rate over Jan – June, 2011.
Source: (i) Bureau of immigration, govt. India, for 1997-2010
(ii) Ministry of Tourism, govt. of India, for 2011 & 2012
12. Foreign Exchange Earnings (FEE) (in US$ 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
13. 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.
14. 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.
