Sky high: Despite hurdles, the travel and hospitality industry soars in 2023

Spiritual tourism rapidly gained momentum in India with religious destinations seeing record visitations in 2023. Image: Shutterstock

“It was a landmark year for tourism given it was the first full year of business after Covid-19,” says Ashish Gupta, consulting CEO of the Federation of Associations in Indian Tourism and Hospitality (FAITH). Although factors such as GoFirst’s insolvency, the war in Ukraine, the emerging conflict in the Middle East, and the tense India-Canada relations, along with increasing inflation and fuel prices, have impacted the industry adversely, travel demand remained resilient, showing no signs of decline.

Recent independent reports by online travel aggregators and travel companies state that Indian travellers took an average of 2.9 vacations in 2023, up from 2.5 vacations in 2022. Additionally, the average per-trip spending of Indian travellers increased up to 20 percent in 2023 compared to previous years.

"The travel industry is currently experiencing an unprecedented peak in gross booking value (GBV). All major sectors, including air, hotel, bus, and train, have not only rebounded but have surpassed pre-pandemic GBV levels," says Karthick Prabu, the head of strategy at Cleartrip.

Among some of the highlights that worked for the industry were the G20 summit hosted in India, the IPL, and the cricket World Cup, which kept occupancies and average room rates on a high, according to FAITH’s Gupta.

Trending in 2023

Leisure travel firmly established its dominance, commanding both domestic and international travel, informs Prabu. The allure of visa-free travel options provided by countries such as Malaysia, Sri Lanka, Thailand, and Kenya fuelled a growing demand for outbound travel, he says.

The total outbound tourist departure for the first 10 months of 2023 stood at 22.6 million, surpassing the 17.5 million number for the same period last year. Additionally, the country saw 7.2 million foreign tourist arrivals during the first 10 months of 2023 against 4.6 million visitors during a similar period in 2022, informs Ashish Sidhra, cofounder of Alike.io, a creator economy-based platform for travel bookings.

“The gradual easing of international travel restrictions, the introduction of flexible visa policies, and the G20 conference went a long way in promoting India as a top global destination for foreign tourists,” says Sidhra.

Among the other trends that were noticed in the year was flexibility evolving into a non-negotiable expectation. To thrive, businesses needed to rapidly adapt to offering solutions such as NCEMI (no cost equated monthly installment) and Buy Now Pay Later.

Spiritual tourism rapidly gained momentum with religious destinations seeing record visitations. According to the year-end booking data by hospitality chain Oyo, Puri secured the top spot as the most-booked spiritual destination with Amritsar, Varanasi, and Haridwar following suit. “We believe the spiritual tourism industry could see a tenfold increase in tourism by 2024, making Ayodhya a global spiritual centre akin to Vatican City and Mecca," says a spokesperson from Oyo.

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Sustainability also took centrestage, with a significant focus on eco-friendly practices and sustainable tourism, reflecting a growing global consciousness about environmental impact, feels Sarbendra Sarkar, founder and managing director of Cygnett Hotels and Resorts. Simultaneously, rapid technological innovations, especially in artificial intelligence and virtual reality, reshaped guest experiences, challenging traditional service models, he adds. “Technology played a pivotal role, as the integration of digital tools became essential for creating personalised guest experiences and streamlining operational efficiency.”

Consumers also became more willing to invest in unique encounters, seeking diverse and quicker experiences, says Vishal Kamat, executive director of Kamat Hotels India Ltd. “The support from travellers, bloggers, and the pervasive influence of social media has heightened the desire to explore intriguing aspects that were previously known but are now highlighted through constant visual exposure,” says Kamat. “Notably, there's a rise in family-oriented travel experiences and an increasing presence of solo female travellers enjoying group outings, indicating enduring behavioural shifts in travel preferences that are likely here to stay.”

The misses

While the outbound travel soared, the inbound numbers have still not reached 2019-2020 levels, says Rajiv Mehra, the president of the Indian Association of Tour Operators (IATO). “Many factors such as the government raising the TCS rates on foreign travel, and geopolitical conflicts impacted the tourist flow during the season,” he adds.

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Some other big challenges the industry continues to face are supply chain issues, especially in the airline sector. “Constrained global supply chains, especially for technical components like aircraft engines, have forced airline companies to ground a large proportion of their fleets. This reduction in plane inventory has led to capacity constraints, delays, cancellations, and increased flight costs for the consumer, frustrating the travellers,” says Sidhra of Alike.io. “Surprisingly, it has led to many intriguing cases where it is cheaper for an Indian traveller to go for an international trip than travel to a domestic destination.”  

Therefore, 2024 needs to see an aggressive push for marketing India on a global platform.