In a free-wheeling conversation anchored by Rattan Keswani, consultant, hotelier, and former senior at Lemon Tree Hotels, we featured M. P Bezbaruah, presently secretary general, Hotel Association of India and former secretary, Ministry of Tourism; Suman Billa, DG Tourism, Government of India; Ashish Gupta, consulting CEO of FAITH, the all-embracing tourism industry body; Ashwani Lohani, former CMD, Air India, and former chairman, Railway Board and J.B. Singh, president of InterGlobe Hotels.
Rattan Keswani: Ashish, why don’t you start from the FAITH perspective. You have the umbrella of an association representing hospitality and travel of all kinds. What do you think has changed? Let’s talk about positively or in terms of strength and the vision over the last five years.
Ashish: I think one of the biggest changes which has happened recently is the leadership which has come down from the top. And I would like to refer to an event which happened last year. The Prime Minister, he initiated a thought process saying that we need to have a Viksit Bharat Vision 2047 and I think that made us sit up; the tourism ministry got together with different industries. For tourism, we also got a chance and as you rightly said all the associations got together. So, with the government, we got down to identify what could be the vision for Indian tourism 2047, 25 years down the line. Now when the government came up with a thought process, very rightly, governments can always be conservative, they came up with a vision of 1 trillion US dollars GDP by 2047. And then they asked the industry to give its thoughts. So, we did a little bit of ambitious thinking and we suggested to the government that the US and China today are already more than a trillion dollars in tourism GDP. Now if we as the fastest growing economy in the world, fifth largest moving up to third, plan after 25 years to be $1 trillion? So that didn’t sound very encouraging. So, we suggested that why should we not look at a $3 trillion number?
Now, why $3 trillion? Why not five? Why not four? Why not two? Obviously, these are numbers. So, there are multiple reasons. The forecast for India’s GDP is approximately $30-35 trillion by 2047. And for a healthy tourism economy, India needs to have 10% of its GDP, both organized and unorganized coming from the economy. So if you look at that number calculation, you’re looking at a $3 trillion number. Just for sake of reference, pre-COVID, we were approximately, I think, $0.2 trillion, and which means, looking at a 15 times growth rate. And keeping this in mind, China and the US are already at 1 trillion dollars plus as of today. So, what does it mean? There are multiple steps. The topic of infrastructure that you rightly said. First are the headline targets. In terms of tourism inflows, pre-COVID India had approximately 10 million-10.8 million foreign tourists. I’m not counting the Indians visiting friends and relatives. The target, if we have to achieve a $3 trillion, needs to, as a country, we need to take it up by at least 10 times. That means pure genuine 100 million foreign tourists. China already has 120, 125 across all its territories. US has around 80 million as of today. Domestic tourists, India is the second largest market, 2.3 billion. We need to take that up at least 5 to 6 times. And then we need, as of now, we all know that we have very strong assets across all our tourism segments – MICE, adventure, heritage, but we don’t have market leadership anywhere in the world. So, we need to target at least 1 to 2% market leadership to achieve that.
Rattan Keswani: JB, major announcements by InterGlobe, huge amount about the airline anyway talks for itself, then the partnership that has been very robust with Accor, now you made some two major announcements into the development of the industry and the infrastructure. Tell us about the last five years and we’ll go to the next step later, and what led to what happened ten days ago (announcement of a major tie up between InterGlobe Hotels and Accor Hotels), and what is the reason for it.
J.B. Singh: I think fundamentally we at InterGlobe and it’s not something new, it’s been there for many, many years, we just have a massive, massive belief in where India’s going. And we’ve continued to be very committed towards that investment across all our businesses. The airline business could ramp up faster, equal kind of commitment on the hospitality side. I think your question around last five years, and that’s actually been very pivotal in the industry, the way we see it.
I think first of course the way the government looked at leadership at a cabinet level, I mean that itself. You’ve worked through the system for so many years trying to really push the industry. But I think the seat at the table, at the big table, was very, very important for the industry to be heard. So I think the first good fix, and there were many times we would talk about how the structure should look like and so on. So that’s a really big shift.
But then when we look at on the infra side, a lot happened in the last five years. The road expansion continued, we saw destinations that were not doing well, suddenly they just sort of returned, just skyrocketed, the whole Udaan thing and that whole commitment to get those I think it’s 120 airports, double airports in three cities, and all of that is happening. And then Viksit Bharat, as you mentioned, and many other things that are just focused around infra, mobility, both road, rail and air. That’s very, very big, and we see it across the industry, we just see how mobility is moving.
Yes, there may be questions about reduction of spending on promoting tourism overseas, but there’s absolutely enough evidence to say that domestic tourism in India is just such a huge groundswell that even if you can just cater to that, it will be something that we will be able to do that. So, coming back to your last question, what led to it, I think it was a culmination of all of this. Over the last 20-22 years, we built 30 greenfield hotels, or 6,500 quality rooms. We’ve got huge experience now on what the industry needs. And I guess we will answer that subsequently. So that’s what led to it, our experience on the ground, our successful collaboration with ACCOR for so many years. ACCOR today operates 70 and has another 30 will get up to 100 in just a few years.
Rattan Keswani: Moving on, Mr. Bezbaruah, you’ve been on two sides of the spectrum, part of the government for many, many years, now Secretary General of the largest, actually the upper upscale or luxury hotel association called HAI. What’s changed from your time within the government and the last five years with HAI? Where do you think HAI has looked at life a little more holistically than before.
M. P. Bezbaruah: You are asking a question which is dangerous for you because you can ask me to go into the whole history of what has happened and what has not happened. But let me say, and I have been saying it quite often, that last few years the greatest thing that has happened for Indian tourism is that, as Ashish was saying, that the whole approach has come from the top. It has never happened before. And so much so that when I was secretary we had a campaign to say that tourism touches everyone, tourism matters, and we used to say that everyone talks about tourism, nobody cares. And Ashwani Lohani also was part of that whole legacy, so we know. What is happening now is that the Prime Minister is giving the lead, but more important than that is that the thinking has changed and the change in the thinking has been reflected in the budget of the last three, four years. And I see that, but of course we have a lot to do to carry it forward as the Prime Minister was saying that you have to roll out the roadmap.
So that is the most important thing. But what has changed in thinking are two or three things. One is that we have to have a mission approach. That mission approach means that no ad hoc things, you have to plan everything for tourism. Tourism has to be a real industry. The second is convergence. Tourism does not happen in the Ministry of Tourism. And that was a sad experience and there was no convergence of all the players who are in tourism. Now Prime Minister has been talking about convergence and the third thing that has happened is that we are talking about destinations development, again Suman Billa also is part of that. And as a proper management, destinations are not just destinations, you manage the destination. These are some of the things which have happened.
Rattan Keswani: Mr. Billa, welcome back to the tourism department. Big cheer, very popular, DG in tourism. The government has made great strides. Hoteliers and travel operators have always complained about no infrastructure, no logistics, no transportation, for many years as being the reason for our failure. I can today talk about it, I’m no longer in the business. But it’s been phenomenal how the road development, the airport development, the concentration on zones, particularly pilgrimage. And most people, and I don’t mean anything incorrect on this, never thought that government would be able to logistically pull off an event as vast as the G20. And of course, the Ayodhya launch and the Kumbh Mela has just put us out into as being logistically brilliant with the concept.
Over and above that, what has been the driving change in five years?
Suman Billa: So, I think, five years is vital, but I think five years was also the COVID time. So it’s probably good to cast the net back to the past 10 years. And as you had mentioned, India has been the fastest growing economy in the world for over 10 years now. Now, most of the infrastructure roll out has been spectacular in India.
If you look at the quality of our roads, if you look at the quality of our airports, etc, and also the quality of our hotels, they are world-class and probably the best in the world. But I think, so these are the peaks. But if you look at the connectivity, how do you get from the airport to the hotel? And when you go to a tourist attraction or a site, there the experience is not seamless and there is a challenge there. So, I think to define the problem statement today, the problem statement is that supply is very low and demand is skyrocketing. Supply is not able to keep up with demand. So, my general estimation is that we have about a 1,80,000, branded hotel rooms in the country today and we would require three times that number by 2030. Even unbranded hotel rooms, you have about 15 lakh hotel rooms and we would again require three times that number. But supply is just not happening and there are reasons why that is not happening. We need to work on the capital structure, ease the sense of doing business, incentivize people to take that entrepreneurial position. So that is one part.
The second problem statement is that if this growth has to happen, do we have enough headroom in our existing destinations to have this growth, to be able to host this growth? And I don’t think the answer to that is simple and straightforward, no. Because except if you look at a couple of destinations like say Kewadia which has been built from the ground up. We have not added any new destinations to the tourism map in the past 60 or 70 years. So I think if you have to take advantage of this demand that is there in the economy and if you want to ensure that it contributes positively to the GDP of this country and we want to double it from 5 to 10 percent, what we need to do is to create capacity and that capacity means that we will need to create new destinations and we will need to enable more private investments to come. So, there’s a lot of work that’s happening in the government to sort of frame that and there are, the current budget is also is something that leads in that direction. But I think just to go back to one point that Mr. Bezbaruah has mentioned, is about destination management because typically I think the most important part of governance that we are lacking is at the destination level. We have one at the central level, we have one at the state level. But who is putting on the thinking cap to say that if I am a destination like say, Kumarakom, what is going on in Kumarakom? , are there peak seasons where you have too many tourists coming in? How do we sort of moderate that to ensure that the experience is intact?
Rattan Keswani: I’ve been following you for many years and your podcasts in Selling Opportunity and What is India are legendary. I think they’ve been followed by over 10 to 20 million people whenever you’ve spoken. From an investor point of view, if again you could look back on the last five years while you were selling India, how would you sell hospitality India and what’s it achieved? What has India and through your good offices or people like you have achieved in the last five years which you think is a game changer.
Deepak Bagla: First, it’s not really a podcast, it’s our Standard India presentation and I must tell you the team does it much better than I do it. So, if you really want to hear the real impact, you should hear the team there doing it because they do it with the passion that it is. Of all the 61 sectors we are pushing and actually we were not selling India, we were just trying to showcase the opportunity of India. Something which was always central was tourism. All the sectors which sit there as a cause and an effect implication on GDP as a multiplier, tourism is the highest, any economy of the world. And interestingly the second one is aviation, which I just got to know little later, now of the past 10 years and I’ll take from Suman because he said 10 will be it. We spent more money on infrastructure in the past 10 years than we’ve spent in the past 67 years. Think about it. 11 trillion dollars were allocated for infrastructure spend in the past decade. The total we spent in the past 67 years was a little less than 10 trillion dollars. So, the spend is huge.
Now, let me take you to the second part. What I believe is, I think the past decade was where the building blocks were happening. Tourism is one sector, as I said, is a cause and effect of the growth of every other sector that leads to tourism, right? It’s not a standalone sector by itself. Some of them can be. As I look at it, this was the time when the building blocks were being put in place and we are soon approaching an inflection point. Inflection point, both in our domestic tourism as well as global tourism.
So, it was very interesting by the way. We had a delegation from Houston. What Houston is wanting to do as Texas was the number one economy of the US. Now they’ve been taken over by California because California IT went on and gas has come down in energy. So, Texas has become number two. Now they’re trying to reposition themselves as number one by saying they will be the wellness destination of the world. And there was a meeting with us, that was the time during the Invest India time, and they were saying how can you support us on being a wellness destination. And my first instinct was that we are actually the ‘real’ wellness destination of the world. He said, okay, let’s Google. And we were sitting in this conference room. Of the top 20 wellness destinations, not locations, but places, shops, we didn’t have a single Indian name on that. And what is interesting?
Until now, people made their fortunes by doing or making things which others wanted. Right? Think about it. The next set of fortunes will be made by doing things where people want themselves. And in that case, this room of tourism sits in the middle of it. There’s this word called STEPS, S for Sports, T for Tourism, E for Entertainment and PS as in Personal Services. These are now the new growth areas of the world where investment is going to be flowing. Look at each four of them, tourism is at the heart of them. And frankly in some of them, we guys just need to work a little.
Rattan Keswani: Ashwani ji, you were part of the Railway Board, Air India amongst many other stalwart positions, much has happened with the railways, a lot has happened with airports, but if you could pick a single theme between those two because that affects all of us, what was the inflection point from your side?
Ashwani Lohani: The common theme between these two sectors is increasing the capacity. In the aviation sector, we increased the capacity by building more airports, bigger airports, better airports, because the number of tourists actually who can fly between, from foreign country to India, directly depends on the number of air seats between India and the rest of the world. And in the railways also, railways also realized that while in the last 70 odd years, the number of trains, number of passengers have gone up considerably, but the track has not gone up to that extent. I think the passengers went up by about 20 times, track has gone up by about 30 percent. There is a lot of congestion on the tracks, so they are also focused on increasing capacity. So, building tracks as far as railways is concerned and looking at airports as far as aviation is concerned. So, both these are getting a lot of focus from the government and that will make a lot of improvement.
Rattan Keswani: So, if we were to jump to the second chapter, Suman ji, I’m going to put you on the spot because a lot of people in this room asked me to. But it’s linked up to what I’m going to say here. You said very correctly that there is enough demand. But actually, there is not so much supply. And if you were to take all the announcements by the industry together, and if all non-branded hotels become branded hotels, it still doesn’t satisfy the demand. So therefore, it means that we are on a golden period of sorts, because this mismatch would always cause business to happen. On the other hand, the industry keeps complaining about the fact that the government of India has reduced their attention or marketing spend towards bringing in the inbound customer. And from what I’ve read in multiple places, the answer is, but there’s enough to play with internally, and there’s enough to do with the other segments that you’ve played with. So is it temporary, this, let’s just call it, lull on holding back on marketing internationally? Because the numbers that all of you gave on getting that together is actually 10 times what you would need in the future from the international market. But like he said, you are not creating so much capacity.
So is the government’s lack of delivery, as you explained, is the problem or the people are the problem? So how would you address them on that one?
Suman Billa: So of course, the issue today is that most of the people in this room, all the hoteliers are very smart because their room rentals are high, their occupancy rates are high, nobody is complaining. The only guys who are complaining are the inbound tour operators because it is pinching them. And their voice is not so much so nobody I think is actually going to the top of the table to say that look this is something that we need to do. But it has a real risk. That is if you exit the international market it is going to take you ten times as much effort to get back in. And every year you’re not there, you’re actually pushing yourself back, making it more difficult for yourself.
But I think, and to be fair, I think it is also time for us to start looking at this whole promotion and publicity piece differently. And traditionally, how have we done? Is that we have created content and we have used advertising as a means to place that. The world is at a very different place now. It has changed a lot. Today, there is a lot of content, that there are thousands and millions of content creators who are creating, which also works for India. The challenge for us is how do we harness that content and how do we put it in a framework where it works for us?
For me, the idea is no longer about creating these, when I did the Incredible India version too, we created these five creatives and then we got CNN, BBC and all of them and then MarketWise and YouTube. So I think the game has completely changed now. The game has turned digital, it’s on social media, it’s on influencers. So and I don’t think we have been lagging in the sense the government and the industry are also lagging in the sense that we have not been able to re-envision what is the framework in which we want to play. And I think the Honorable Prime Minister is fairly straightforward because he thinks that, look, the world has moved on and this is where you need to go. And I think this is something that we will work on. And we hope that by the next season we should be able to come back strong on this. But we have to build this from the ground up. It’s going to take time.
But we can begin in that direction and I’m sure that we will be able to come back very strongly because we should drop the legacy that we have and build on where the future lies.
Rattan Keswani: So, friends, give Mr. Billa a cheer. You have been complaining for year and a half. He just promised you action in the right way and not in the classical way as it used to be done. So, coming back, let’s reverse it again. One opportunity now with what we talked about, the positives and just, short answer that FAITH and all the constituents of FAITH missed the boat on or should have looked at it differently and holistically over the last five years too. We’ve talked about the positive, which was the one thing that now you look back saying oops missed the beat. From your side what would it be?
Ashish Gupta: I think as someone rightly said, the world has changed. Pre-COVID, consumers used to travel very differently. And over a period of COVID, the whole mechanism of the way consumers traveled, took the decisions of traveling and the frequency of travel changed. So, I think what, as he rightly said, the industry missed the bus on understanding this trend and repositioning the country onto those markets. Very simple example, the East Asian, and I’ll just stop at that, tourism market is approximately 150 billion dollars inbound. Even if, and that’s a short-haul market, our share, unlike all the global markets, our short-haul share is just around 30-35%. Globally, if you look at the US or the Europe, it’s around 70%. That’s why they are more resilient. Now, our short-haul share is just around 30-35%, if you take Bangladesh out. If we were to have tapped, as he rightly said, tapped, looked at this opportunity of the changing face of travel and tapped the East Asian market, even if 10% of that would have been tapped. The needle would have moved.
The point you made of $11 trillion? I’m sure you’re aware, we are the country which spends a maximum as a percentage of GDP on infrastructure, around 3.4%, even more than the US, which is a market leader, which is around 2%. So, what we missed the bus on is creation of specific tourism segments. There is a lot of core infrastructure which is happening. Tourism specific infrastructure unfortunately could not find a place. The tracking of the market, changing our positioning and ensuring that we get a fair share of the portfolio of this huge number yesterday, today, and even for tomorrow is not there.
Rattan Keswani: J.B. any one little oops moment over the last five years and now that you look back?
J.B. Singh: I think it’s been okay for us for five years, but I think as an industry, I’ll probably go back to 2013-14 when I came into hospitality to build and develop hotels. One of the first things that really caught my eye was that the industry, as they were appealing to the government, they had completely missed the developer’s view. It was always a very operator-driven view. And there was absolutely no mention on land use, there was mention of licensing, that was always a big balloon up there, but there was no mention on land use and how expensive setback ratios make hotel development, how expensive just meeting parking norms make hotel development, and those car parks are lying empty all the time. That we found as a company, and we were institutional developers, we found there was no voice, access to capital, etc. So, we tried to address it by working with WTTC and so on and published some white papers which we have circulated around and maybe we’ll send you a copy also, sir, we’ve been putting it around different versions. That we thought was a big miss because that was the one that needed the maximum amount of capital.
Rattan Keswani: Mr. Bezbaruah, for HAI now, because now that’s your present piece, what did HAI miss, if at all, if you were to look in the rearview mirror?
M. P. Bezbaruah: I think before that can I come back to an inbound that someone had mentioned. One of the things that we have to look into is the market. We depended or expected quite a lot from the G20 countries, which comprise about 50 to 60 percent of our inbound travel here. Why that did not happen is something we have to look into very seriously, because we did so much for G20 here, giving them exposure to all over the country. But coming back to the hotels, what we feel is that we have not been able to convince that the supply side is very weak now. Whatever expansion has taken place is not new investment. And there again issues of land, issues of licenses. WTTC has shown that you will need pre-operating 30-35 licenses. Those things have not changed. Now we have changed so much. The world has changed so much. Why are we not changing the incentive of infrastructure status for the hotel industry?
Rattan Keswani: Mr. Bagla, I’ll come back to you. Sir, from your side, what do you think in Indian hospitality and travel may have missed the beat on? Amongst all the good things that happened with the government?
Deepak Bagla: Rattan and I’ll take off from where Mr. Billa is doing, which is the perception building part of it. I personally think and we’ve not really done it well at all. Actually, we are very poor at it, collectively as a nation telling our story. There is so much happening in India and there is so much which has already happened and in fact, it’s surprising even when you have heads of states coming from overseas and you look at their personal briefing sheets, they are missing out completely on the level of activity which has happened in India and the transformation which is happening. And I know we are in that part of the world history and human history where it’s never been as noisy as it is today, right? The chatter today everywhere. We’ve just not been able to manage that part well.
Rattan Keswani: Anybody who hasn’t seen his presentations or his team’s presentations or the larger part of Invest India, I would really recommend you go back to your social media. They are brilliant on how to tell the story of India and what people are missing out. I find them very fascinating. So, for you sir, Air India, railway board, lots happening on both parts. Where do you believe Indian tourism missed the beat if it did over the last five years? Which it could have looked at better microscopically.
Ashwani Lohani: See there are, if we look at infrastructure, you can divide into two parts. One is major infrastructure – tracks, airports, hotels, big infrastructure. Second is minor infrastructure. Big infrastructure is not only a requirement of tourism, it’s a requirement of the nation as such. And various ministries, various departments are taking care of that, or will have to take care of that. But what we have not been able to provide is basic things like clean toilets. You travel on the highways, the toilet becomes a very, very major issue. We have failed in providing clean toilets. I don’t think that is so difficult to do that.
We have failed in providing adequate number of good quality signage and interpretation boards. Why can’t we plaster the entire country with signages and interpretation boards, why can’t we pick up some say 50 or 100 tourist destinations and look at them holistically, itemize what are the different works which are required to be done to make them absolutely world class tourist friendly. We have missed the bus in these small things which could have been provided, should have been provided, they are very, very important.
Rattan Keswani: If I may just give a bit of my personal overview, laundry list. I think the industry realized very late about their role in skilling and they pushed into it after the Prime Minister’s announcements that they actually took it very seriously, when they should have seen the need any which ways for the industry, if not just for India at large. You are right, whether it’s safety, security, cleanliness, facilities, and access for older people, differently-abled people. I think we are very poor, barring maybe within the hotel buildings. Even most of the airports are quite terrible. And that’s why you see the wheelchair piece because we’ve got travelators that go 50 meters and then the older person has to walk, which they can’t do.
Suman ji, back to you, with all that’s happened and all that you’re hearing, what would you say, is there a way that the tourism department could be the main pivot? Just like the Singapore Tourism Promotion Board or the Irish Tourism Promotion Board, they are the decision makers even on investment, in infrastructure decisions as it involves the entire community and the country. Is there a way to structure that for the future?
Suman Billa: So I think you’ve actually come to the root of what needs to be done. So, I think a long time back, Mr. Kurian of Amul once said, what would be the impact on Indian agriculture if the Ministry of Agriculture were to be bombed out of existence? No, it’s polemics, but I think it’s thought provoking because I think you should actually start from that premise, from first principles, on how do we build a structure which works for the country, irrespective of the bureaucracy or the industry, and how can we bring things together. If we have a task before us, and the Honorable Prime Minister had said a few days ago, that we have to increase our GDP contribution from the tourism sector from 5 to 10 percent. So, what is it that you are going to do to sort of make that work?
So, a lot of work has to be done by the government, but a lot of work has to be done by the industry too. For the longest time, I think for almost a year, I have been saying that, the issues that you have mentioned on rationalizing building norms, which can add 25 to 30 percent of efficiency for hotel buildings, of where is the shoe-pinching in terms of the clearances that you need to get from the states. The government is ready. We spoke to DPIIT and they said we’ll be happy to include that as a chapter within the Ease of Doing Business framework, but you give it to us. The industry should also start looking a little bit beyond its nose and say that, let’s commit some time and effort in bringing this together for common good.
Similarly on the infrastructure status that you again mentioned. And it is not that nobody understands the potential of what the tourism sector does, but for them it is about allocative efficiency. So they think that if we put this onto the hospitality industry, all the money which needs to go to the airports, roads, etc. will probably get diverted into the hotel industry. But for every time the Ministry of Tourism makes the case, it’s equally important for the industry also to sort of make that case. So, we made a good beginning now, at least with these 50 destinations in the budget, there is infrastructure irrespective of size, but that’s not going to solve the problem. I think we should be able to show some progress in these 50 destinations and then make a case for it to be made more widespread all across the country. So, I think the fundamental principle is that, as he said, tourism is not something that is driven by the ministry alone. We need several sister ministries; we need the state governments and we need the industry. But I think the catalyzing role that the ministry needs to play will only happen when both the industry and ministry act in concert.
