"Travel makes one modest. You see what a tiny place you occupy in the world.” Is how Gustave Flaubert, the nineteenth century French novelist and the exponent of literary realism, looked at travelling.
Flaubert’s concept of travelling was based on nineteenth century realism of a modern society but men have been travelling from place to place in search of food, shelter and safety right from the time they began living together. Changes in climate, dwindling food supplies and hostile invaders made people leave their homes to settle elsewhere. It was the invention of the wheel some five thousand years ago that made travel easy. The history of organised tourism is largely attributed to technological developments in transport. The more roads that are built, the more places people can drive, the more airports that open and the more places that people can fly to.
Why do people travel? People travel to learn more about the world, to challenge them or to explore new places. Travelling is a great way to get out of one’s comfort zone and experience new things. Travelling to other places gives the pleasure of experiencing different cultures and to embrace new perspectives.
Tourism is a social, cultural and economic phenomenon which entails the movement of people to countries or places outside their usual environment for personal or business/professional purposes. As the definition of tourism suggests, its traditional domains of impacts are economic, socio-cultural and environmental. The economic effects of tourism encompass improved tax revenue, personal income growth, enhanced living standards, and the creation of additional employment opportunities. Socio-cultural impacts are associated with interactions between people with different cultural backgrounds, attitudes and behaviours, and relationships to material goods. Environmental impacts can be categorized as direct effects including degradation of habitat, vegetation, air quality, bodies of water, the water table, wildlife, and changes in natural phenomena, and indirect effects, such as increased harvesting of natural resources to supply food, indirect air and water pollution..
Economic impact of tourism – global
Tourism offers great opportunities both for the emerging economies and developing countries. It creates jobs, strengthens the local economy, contributes to local infrastructure development and helps to conserve the natural environment and cultural assets and traditions, and to reduce poverty and inequality. Tourism brings with it huge economic potential for a destination that wishes to develop their tourism industry. Employment, currency exchange, imports and taxes are just a few of the ways that tourism can bring money into a destination.
In recent years, the number of travellers has increased globally at exponential rates. There are a number of reasons for this growth including improvements in technology, increases in disposable income, the growth of budget airlines and consumer desires to travel further, to new destinations..
According to World Travel & Tourism Council (WTTC) prior to Covid-19 phenomenon, travel and tourism (including its direct, indirect and induced impacts) accounted for 1 in 4 of all new jobs created across the world, 10.3% of all jobs (333 million), and 10.3% of global GDP ($9.6 trillion) in 2019. Meanwhile, international visitor spending amounted to $1.8 trillion or 6.8% of total exports.
Covid-19 played havoc to the tourism industry as most of the countries closed their borders and movement inside the country too had come to a near standstill. Things have, however, begun improving since 2022. According to the World Travel & Tourism Council’s (WTTC) 2023 Economic Impact Research (EIR) the sector is fast moving on to touch its 2019 peak, recovering by more than 95%. In 2023, the sector is forecast to reach $9.5 trillion, just 5% below 2019 pre-pandemic levels when travel was at its highest. Some 34 countries have already exceeded 2019 levels.
Another survey conducted by WTTC in collaboration with Oxford Economics also forecasts that the sector will recover to 95% of the 2019 job level. Last year, despite the economic and geopolitical difficulties, the sector’s recovery continued – growing 22% year-on-year to reach $7.7 trillion.
This recovery represented 7.6% of the global economy in 2022, the highest sector contribution since 2019; although its global GDP is still 22.9% behind its 2019 peak. From a pre-pandemic high of more than 334 million in 2019 the sector witnessed a loss of more than 70 million employment to 264 million in 2020. Following the recovery of 11 million jobs in 2021, the sector created another 21.6 million new jobs in 2022 to reach more than 295 million globally – one in 11 jobs worldwide.
Spending from overseas visitors grew by a record 82% to reach $1.1 trillion in 2022, showing that international travel is firmly back on track. The WTTC is projecting that the sector will grow its GDP contribution to $15.5 trillion by 2033 representing 11.6% of the global economy and will employ 430 million or about 12% of the working population.
Economic impact of tourism – India
With a vast area extending from the snow-covered Himalayan heights to the tropical rain forests of the south, India has a rich cultural and historical heritage, variety in ecology, terrains and places of natural beauty spread across the country. Forbes magazine ranked India as the 7th most beautiful country in its survey 'The 50 Most Beautiful Countries in The World' rankings. This provides a significant opportunity to fully exploit the potential of the tourism sector.
India being one the most popular travel destinations across the globe has resulted in the Indian tourism and hospitality industry to emerge as one of the key drivers of growth among the services sector in the country. The sector has turned into a significant economic multiplier and is becoming increasingly important as the country strives for rapid economic growth and employment creation. India is covered in beauty in all its nooks and corners. This nation's expansive landscape is decorated with the most diverse populations, cultures, and topographies. India also provides various geographical regions, world-class tourist attractions, and specialised travel services, including eco-tourism, heritage tourism, adventure tourism and medical tourism.
India realised the importance of tourism right from its independence but its development began only after the 1980s when the government took some important initiatives. The Indian government released its first tourism policy in 1982. The goal of the policy was to advance sustainable tourism as a tool for social and economic inclusion and advance India's reputation as a nation with a proud past, a thriving present, and a promising future.
India has not looked back since and tourism has become an important contributor to economic growth. “The outlook for the next decade is looking very positive with India accounting for one in five of all new Travel & Tourism jobs globally," stated Julia Simpson, President and CEO of the WTTC (World Travel and Tourism Council) recently. Research conducted by the WTTC shows that the travel and tourism sector’s contribution to the Indian economy could surpass pre-pandemic levels in 2023, with a year-on-year growth of 20.7%.
The forecast from the WTTC’s latest Economic Impact Report (EIR), shows the sector’s contribution to the nation’s economy could reach almost ₹15.9 trillion ($215 billion) in 2022 – 1% above 2019 levels. Employment levels are set to grow to almost 35 million with an 8.3% growth this year.
Over the next decade, the sector is expected to grow at an average of 7.8% annually, compared to 6.7% of India's overall economy, to reach almost ₹33.8 trillion ( $457 billion) – representing 7.2% of the total economy.
The forecast also reveals the sector is expected to create over 24 million jobs over the next decade, averaging more than 2.4 million new jobs every year. The sector also supported more than 40 million jobs in 2019, falling to just over 29 million in 2020, when the pandemic devastated the sector. Following the significant decline in 2020, the global tourism body’s latest EIR report reveals that 2021 saw the beginning of the recovery for the country’s travel and tourism sector.
In 2021 tourism’s contribution to GDP climbed 43.6% year on year, to reach ₹13.2 trillion (U.S $178 billion). While the sector also saw a recovery of just about three million jobs, representing a positive rise of 10.2% to more than 32 million, this is still eight million fewer jobs than that of 2019.
The sector’s contribution to the economy and employment could have been higher if it were not for the impact of the Omicron variant, which led to the recovery faltering around the world, with many countries reinstating severe travel restrictions
According to India’s ministry of tourism, the tourism industry accounts for about five percent of the country's gross domestic product (GDP). And although tourism’s share in GDP had fallen drastically to only 1.06% in 2020-21 following travel restrictions across the world due to Covid-19, there are reports that its share has been gaining steadily after the lifting of lockdown. Likewise, the employment in the sector that was down to 12.91% of the country’s total employment in 2020-21 from 14.87% in 2018-19 too has been rising.
That Indian tourism sector is poised for a rebound is evident from the sharp rise in foreign tourist arrivals in 2023. According to the Union tourism minister during January-April 2023 166% more foreign tourists arrived in India compared to the corresponding period of 2022.
In fact, the growth of foreign tourist arrivals in 2022 over the previous year was even higher when 6.19 million people visited India in 2022 against 1.52 million in 2021. And it will not be an over-optimism to predict the country will touch or even surpass its previous record of foreign tourist arrivals of 10.93 million in 2019.
In 2022, the top five source markets for foreign tourist arrivals in India were the United States, Bangladesh, the United Kingdom, Australia and Canada. Together they accounted for 63% of total foreign tourist arrivals in India.
The movement of domestic tourists too has gained momentum after the opening of the communication system. The number of domestic tourists has gone up by 155% last year over 2021 and is all set to surpass its record of 2321.93 million set in 2019.
Tourism is not only a world’s leading service sector but is also a leading foreign exchange earner across the world. Tourism continues to play an important role as a foreign exchange earner for India. According to the government's provisional estimates, the foreign exchange earnings from tourism in the country increased by 107% from ₹65,070 crore in 2021 to ₹1,34,543 crore in 2022.
However, despite more than doubling the forex earnings in 2022 over 2021, the actual forex earning was far below that of 2019. Tourism sector earned a record foreign exchange of `2,16,467 crore in 2019; the year before the coronavirus pandemic struck the world.
However, despite a healthy growth in foreign tourist arrivals India has only a small representation in the international tourist map. India ranks 17th and has a share of only1.54% in international tourist arrivals in the world in 2021. France tops the list with 10.61% share followed by Spain with 6.84% share.
The tourism sector was probably among the worst hit sectors during the coronavirus pandemic. Many businesses in the tourism sector's perimeter have lost key employees and significant clients, and progress has stagnated. And although domestic tourism as well as foreign tourist arrivals have been on the rise, they are still way below the pre-pandemic days. The amount of money put into the tourism industry is at a record low. If not now, the tourist industry in this nation will ever be appreciated for what it does. Despite being responsible for 15% of all employment, more than 5% of India's GDP, bulk of the country's large indirect taxes and significant foreign exchange earnings the tourism sector hardly gets a mention in the Budget speech.