India: Tourism Industry Not Utilizing Its Opportunity

Ashley Nault - Oct 25, 2010
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The Indian government aimed to make the Delhi 2010 Commonwealth Games (3-14 October) an opportunity to show the world the progress it had made and also boost tourism, in the same vein as China did with the Beijing Olympic Games. If they'd met their goal, the chairman of the Organising Committee stated that the Delhi Commonwealth Games 2010 would have been the best Commonwealth Games ever.

However, things took a very different turn and the Indian government is accused of inefficiency and corruption. At the time of writing, the participation of several countries hangs in the balance due to the poor state of the facilities and safety concerns.


Missed Opportunity

The travel and tourism industry is a significant contributor to India's GDP and the government is increasingly supporting its development through investment in infrastructure, promotions and tourism-friendly legislation. In 2009, tourism expenditure accounted for almost 4% of GDP.

Delhi's 2010 Commonwealth Games were considered to be an important opportunity for tourism development both in terms of increased tourism flows that they expected to attract and also showcase the attractiveness of the country to tourists and the world.

Among the measures taken by the government in preparation for the Games were more favourable legislation for foreign direct investments in tourism, the approval of visa-on-arrival regulations (on a pilot basis), the implementation of the Incredible India Bed and Breakfast/Homestay Scheme (in order to strengthen the travel accommodation offer of the area of Delhi) and the introduction of a law against the harassment of tourists in the country.

Corruption Scandals

The organisation of the event was extremely costly for India with an estimated US$6 billion invested in new infrastructure. However, it was also a huge waste of money due to the high level of corruption denounced by the Indian press, as well as by governmental bodies.

The Central Vigilance Commission (CVC), a government watchdog agency of the Indian government, revealed irregularities in 16 Commonwealth Games projects, resulting in large gains for contractors and the delivery of poor infrastructure.

Controversial Prospects

Inbound arrivals to India recorded a 3% decline in 2009 due to the global economic crisis and to terrorism concerns following the Mumbai terror attacks the previous year.

Prospects for the next five years appeared to be more positive at the beginning of 2010 following the end of the global downturn and due to expected fast growing arrivals from Japan, Latin America and the Middle East. Positive forecasts were supported also by significant investment in promotional activities by the Indian government in emerging markets, in particular.

The success of the 2010 Commonwealth Games was, however, integral to this promotional strategy. The bad publicity surrounding the games, with safety and security concerns running high, is causing the opposite effect. The controversy is expected to have a negative impact on tourism to India in 2010 with demand not providing the anticipated spike.

The front page headlines and image of the collapsed footbridge outside the main stadium that were beamed around the world will be hard to overcome in the run up to the Games. The lasting legacy of the event is something the country will have to tackle after the Games are over as it attempts to rebuild its global brand image. It also bears a useful lesson for all countries lined up for high profile sporting events – and those seeking to do so – from London, Glasgow, Rio, Sochi to Doha.



By Angelo Rossini (Travel and Tourism Analyst, Euromonitor International)

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