As the country's middle class expands, more people are travelling overseas for their vacations and spending more. But at home the problems of poor infrastructure, a lack of suitable mid-range hotels and government lethargy are all hampering market development, writes Pia Heikkila...
"Holiday only comes once a year," says Madhulika Verma, a busy media executive from Mumbai.
Ms Verma is in high spirits because she is heading for a two-week holiday overseas: one week in Dubai, followed by a week in London.
"I have relatives in Dubai and love the place so I decided to have a stopover there and then go to Europe," she says.
Ms Verma can afford to splash out. "I'm spending about 1.5 lakh (Dh10,284) on this holiday because I've worked hard all year and really feel I deserve it," she says.
Ms Verma is one of millions of Indians who will be heading off as the country's official summer holiday season kicks off next month.
But this year, many will splash out more than before, according to research by Tripadvisor, a travel website. The study found almost 40 per cent of travellers were willing to spend more than 1 lakh on a single holiday.
And Ms Verma seems to be bang on trend as the survey found 64 per cent of Indian women were willing to go on holiday alone.
But her solo-traveller budget is considered generous in India.
"An average family spends about 50,000 rupees [Dh3,501] to 200,000 rupees depending on family size, distance of travel and duration of holiday. Families look for fun, something for everyone but also value for money," says Varun Chadha, the chief operating officer of JourneyMart.com.
Indians are known as savers rather than spenders but travel industry professionals have noticed a shift in the market recently.
"The outbound segment in India is growing rapidly and with the Indian economy booming and increasing standards of living, travel is also moving up the ladder to add an essence of luxury," says Nikhil Kumar Arora, the chief executive of Bespoke Tours.
"This trend will add a new perspective to high-end luxury travel globally with travellers opting for such extreme, unique and thrill-seeking experiences."
The shift is being driven by the country's middle class, says Deloitte, an international consultancy. "The growing size of the middle class - forecasted to exceed 600 million people in India in 2015 has led to an increase in domestic travel. In India, domestic travel increased by 15.5 per cent in 2009 and international tourism is expected to quadruple by 2015," it says in its latest recent report on global hospitality industry.
Deloitte also says total tourism expenditures in India are set hit US$40 billion (Dh146.92bn) this year.
The middle classes' growing affluence and changing lifestyles and aspirations are changing the holiday sector.
"People are taking short holidays more frequently [such as long weekends] and one long family weekend domestically or abroad depending upon the segment of traveller,"says Mr Arora.
"With increasing awareness and exposure, the move is towards quality and enriching experiences as the travellers become more discerning and demanding".
Today, Indian holidaymakers want more than just the basics. They expect new and memorable experiences while insisting their holidays offer value for money.
"Resorts have to be more tastefully created, with a focus on customisation and service. The market is getting more and more segmented in terms of price, look and feel, experience. This is a natural progression as this segment of the market matures as in the more developed countries," says Gaurav Jain, the managing director of Aamod Resorts.
Resorts in India's traditional tourism centres such as Kerala have had to up their game because of rising competition. Kumarakom Lake Resort is a business located in the idyllic backwaters of Kerala that gets a large number of non-resident Indians (NRIs) through specially assigned tour operators overseas as well as through online bookings.
"NRIs are mostly keen on experiential holidays where not just the destination but the property and its facilities are important to them when they select the place to holiday, and a majority also come over to celebrate weddings and other joyous occasions," says Shelley Thayil, the operations director of the Kumarakom resort.
So, apart from home turf, where are Indians heading?
The current economic crisis in Europe means it is cheaper to travel to the continent. Fifty-three per cent of respondents to the Tripadvisor survey say this year is the ideal time to visit European economies such as Italy, Greece and Spain and with the United Kingdom the number one destination for Indians.
At the high end of holiday offerings, the European dolce vita is what the Indian luxury vagabond wants along with unique experiences and highly tailored services.
"Customisation is to the level of providing concierge services to deliver the clients' luggage, suggesting stays at high-end boutique hotels, reservations at Michelin-star restaurants and offering vineyard visits and other sightseeing experiences en route. Besides these, spa holidays, adventure sports, high-end shopping trips, culinary tours, wine trails and cruise tourism is rapidly gaining acceptance in the market," says Mr Arora.
But problems for the hospitality sector do exist and domestically the country is still fine-tuning its strategy to become a top tourist destination for both international and domestic travellers alike.
"The challenges in the market are mainly poor infrastructure and access to existing and potential tourist spots - being able to reach the destination in a pleasant and cost-effective manner is the most important missing link today," says Jain.
Mid-range hotels are still missing in India - mostly it is either luxury or no-frills. And there is no real rating system available in the country, which means hoteliers can claim their establishment is five-star when it may be anything but.
"With the lack of any effective regulation and in the absence of any genuine and credible alternative rating agency, the dependability of information is a cause of worry," says Mr Jain.
The industry needs to constantly come up with something new to attract both domestic and overseas travellers.
"Innovative product development is taking place at a slower pace in the market. It is also critical to identify and tie up with premium service providers and tour operators. While the volume of business is small, the margins are large making it an attractive segment," says Mr Arora.
Rising property prices in popular places are creating new opportunities outside the key destinations.
"Steep rise in real estate prices has made it very difficult for new investments to be viable within the existing tourist destinations.
Hence the need to develop new destinations and/or look for options away from the core tourist areas," says Mr Jain.
Like with every sector in India, government could do more to help the travel business.
"This industry probably touches more government departments than any other, the government apathy and interference and lack of clear policy guidelines and regulation makes this industry's progress more haphazard and well below the true potential," says Mr Jain.
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
RESULTS
%3Cp%3E%3Cstrong%3E9pm%3A%20Maiden%20(PA)%20Dh70%2C000%20(Dirt)%202%2C000m%3C%2Fstrong%3E%3Cbr%3EWinner%3A%20Mubhir%20Al%20Ain%2C%20Antonio%20Fresu%20(jockey)%2C%20Ahmed%20Al%20Mehairbi%20(trainer)%3Cbr%3E%3Cstrong%3E9.30pm%3A%20Handicap%20(TB)%20Dh70%2C000%20(D)%202%2C000m%3C%2Fstrong%3E%3Cbr%3EWinner%3A%20Exciting%20Days%2C%20Oscar%20Chavez%2C%20Doug%20Watson%3Cbr%3E%3Cstrong%3E10pm%3A%20Al%20Ain%20Cup%20%E2%80%93%20Prestige%20(PA)%20Dh100%2C000%20(D)%202%2C000m%3C%2Fstrong%3E%3Cbr%3EWinner%3A%20Suny%20Du%20Loup%2C%20Marcelino%20Rodrigues%2C%20Hamad%20Al%20Marar%3Cbr%3E%3Cstrong%3E10.30pm%3A%20Maiden%20(PA)%20Dh70%2C000%20(D)%201%2C800m%3C%2Fstrong%3E%3Cbr%3EWinner%3A%20Jafar%20Des%20Arnets%2C%20Oscar%20Chavez%2C%20Ahmed%20Al%20Mehairbi%3Cbr%3E%3Cstrong%3E11pm%3A%20Wathba%20Stallions%20Cup%20%E2%80%93%20Handicap%20(PA)%20Dh70%2C000%20(D)%201%2C600m%3C%2Fstrong%3E%3Cbr%3EWinner%3A%20Taj%20Al%20Izz%2C%20Richard%20Mullen%2C%20Ibrahim%20Al%20Hadhrami%3Cbr%3E%3Cstrong%3E11.30pm%3A%20Maiden%20(PA)%20Dh70%2C000%20(D)%201%2C400m%3C%2Fstrong%3E%3Cbr%3EWinner%3A%20Majdy%2C%20Antonio%20Fresu%2C%20Jean%20de%20Roualle%3Cbr%3E%3Cstrong%3E12am%3A%20Maiden%20(PA)%20Dh70%2C000%20(D)%201%2C400m%3C%2Fstrong%3E%3Cbr%3EWinner%3A%20Hamloola%2C%20Sam%20Hitchcott%2C%20Salem%20Al%20Ketbi%3C%2Fp%3E%0A
Results
4pm: Al Bastakiya – Listed (TB) $150,000 (Dirt) 1,900m; Winner: Panadol, Mickael Barzalona (jockey), Salem bin Ghadayer (trainer)
4.35pm: Dubai City Of Gold – Group 2 (TB) $228,000 (Turf) 2,410m; Winner: Walton Street, William Buick, Charlie Appleby
5.10pm: Mahab Al Shimaal – Group 3 (TB) $228,000 (D) 1,200m; Winner: Canvassed, Pat Dobbs, Doug Watson
5.45pm: Burj Nahaar – Group 3 (TB) $228,000 (D) 1,600m; Winner: Midnight Sands, Pat Dobbs, Doug Watson
6.20pm: Jebel Hatta – Group 1 (TB) $260,000 (T) 1,800m; Winner: Lord Glitters, Daniel Tudhope, David O’Meara
6.55pm: Al Maktoum Challenge Round-1 – Group 1 (TB) $390,000 (D) 2,000m; Winner: Salute The Soldier, Adrie de Vries, Fawzi Nass
7.30pm: Nad Al Sheba – Group 3 (TB) $228,000 (T) 1,200m; Winner: Final Song, Frankie Dettori, Saeed bin Suroor
Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
The White Lotus: Season three
Creator: Mike White
Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell
Rating: 4.5/5
THE LOWDOWN
Romeo Akbar Walter
Rating: 2/5 stars
Produced by: Dharma Productions, Azure Entertainment
Directed by: Robby Grewal
Cast: John Abraham, Mouni Roy, Jackie Shroff and Sikandar Kher
Specs
Engine: Duel electric motors
Power: 659hp
Torque: 1075Nm
On sale: Available for pre-order now
Price: On request
Salah in numbers
€39 million: Liverpool agreed a fee, including add-ons, in the region of €39m (nearly Dh176m) to sign Salah from Roma last year. The exchange rate at the time meant that cost the Reds £34.3m - a bargain given his performances since.
13: The 25-year-old player was not a complete stranger to the Premier League when he arrived at Liverpool this summer. However, during his previous stint at Chelsea, he made just 13 Premier League appearances, seven of which were off the bench, and scored only twice.
57: It was in the 57th minute of his Liverpool bow when Salah opened his account for the Reds in the 3-3 draw with Watford back in August. The Egyptian prodded the ball over the line from close range after latching onto Roberto Firmino's attempted lob.
7: Salah's best scoring streak of the season occurred between an FA Cup tie against West Brom on January 27 and a Premier League win over Newcastle on March 3. He scored for seven games running in all competitions and struck twice against Tottenham.
3: This season Salah became the first player in Premier League history to win the player of the month award three times during a term. He was voted as the division's best player in November, February and March.
40: Salah joined Roger Hunt and Ian Rush as the only players in Liverpool's history to have scored 40 times in a single season when he headed home against Bournemouth at Anfield earlier this month.
30: The goal against Bournemouth ensured the Egyptian achieved another milestone in becoming the first African player to score 30 times across one Premier League campaign.
8: As well as his fine form in England, Salah has also scored eight times in the tournament phase of this season's Champions League. Only Real Madrid's Cristiano Ronaldo, with 15 to his credit, has found the net more often in the group stages and knockout rounds of Europe's premier club competition.
Kalra's feat
- Becomes fifth batsman to score century in U19 final
- Becomes second Indian to score century in U19 final after Unmukt Chand in 2012
- Scored 122 in youth Test on tour of England
- Bought by Delhi Daredevils for base price of two million Indian rupees (Dh115,000) in 2018 IPL auction
MATCH INFO
Manchester City 1 Chelsea 0
De Bruyne (70')
Man of the Match: Kevin de Bruyne (Manchester City)
