This study focuses on a PESTEL analysis touching on the tourism industry in India as encountered by Ginger - Smart Basics Company. PESTEL is a framework of employed in identifying key factors that drive organizational changes in the strategic environment. It entails environmental, legal, technological, social, economic and political factors.
Political violence and the public have damaged the tourism industry significantly in the past few years. However, experts within the industry argue that the damage is not long-term. Industry leaders and the government say there is much to do in rebuilding the tattered reputation of tourism. In broad daylight, the world has witnessed scores of terrorist killing masses across the city of Mumbai. Although India has been notorious for orchestrating the political violence, this recent horrific attack was primarily targeting foreigners and travelers. This attack was televised across the globe at a time of international economic slump; it contributes significantly towards the 10% fall decrease in tourist arrivals (Kamplikar, 2011).
Masses of anti-government protestors ambushed the city's main airport trapping over 400,000 travelers across the country. This came after a shocking another score of protestors led riots across Bangkok. These two incidents were significant in damaging of the international tourists arrive by 20%. Today, most tourists and travelers have still expressed fears and concerns that their visits are likely to be interrupted by India's political violence. This pattern of democratization has been associated with the closure of the main airport. Reports indicate that tourism is the backbone of Asia-Pacific economy contributing five percent to the region's economic output. In certain parts of the region, tourism assumes approximately 15% of employment. As evidenced in India, political instability and violence are expected to scare away visitors. Even though the country might, recover, this is usually at a slower pace than the recovery of any natural disaster. An analysis of the industry reveals that tourism will expand rapidly in the few coming years. However, it is crucial for the government to develop ways of preventing political violence and be fast at calming any emerging fears and concerns (Das, 2011).
Kumar (2009) argues that the economy of the service sector is the main driver of the economy in most countries. It assumes a great economic part whose importance is increasingly growing. The industry of tourism is increasingly becoming difficult to measure and define because it is fragmented and complex. Despite this, the sector is a crucial component of the international service sector. Looking at revenue, some countries are generating approximately more that 80% of global tourism activities. Tourism has expanded dramatically in the past 25 years and it appears set to follow the growth path as societies are becoming more prosperous and mobile. Statistical agencies are experiencing a challenge of obtaining better information regarding the service industry. Such information is of much importance to political analysis. The public can improve their knowledge on how the economies operate by measuring tourism. It has become impossible to measure monetary data and physical flaws associated with international tourism.
The tourism industry has adopted the latest software application that permits travelers to customize their visits depending on their preferences. Experts note that for the customized visit plans to be designed, they were forced to apply artificial techniques based on intelligence; this is a scientific approach enabling computers to solve principle problems, which can be solved by human beings. Tourists use internet via computers, laptops or phones to access websites and define their needs and preferences. This encompasses gastronomic, cultural, spending capacity, favorite hours, lifestyle and artistic preferences (Kumar, 2009).
The level of environmental quality, both man-made and natural is vital for tourism. Nevertheless, the relationship between tourism and the environment appears to be complex. It encompasses various activities, which are expected to have an adverse impact on the environment. Most of these impacts have been associated with the development of infrastructure including airports, roads, golf courses, shops, restaurants, hotels and other tourism facilities. Developments in the tourism industry can foster negative impacts, which are expected to cause gradual destruction of critical environmental resources. However, the tourism sector has the possibility of generating beneficial environmental impacts by contributing towards environmental conservation and protection. It can be used as a way of raising awareness on the values of the environment and a tool for financial protection of natural habitats as it increases their economic value (Das, 2011).
Das (2011) notes that India is primarily a sand, sea and sun destination, therefore, the major recreational activities of tourists include sea and sunbathing on the beaches. Tourists visiting India are primarily involved in practices such as beach visits, scuba diving, and glass bottom boating and snorkeling. India's tourist products rely on the coral reefs and the existing ecosystems comprising of mangroves and sea grass. However, such ecosystems are threatened by human behavior and natural causes such as increase in coastal developments, coastal pollution, global warming and over-fishing. Visitors, citizens and the tourism industry are demonstrated significant interest in managing bases of environmental resources and have an obligation of supporting this management. A degradation of the environment implies that all the parties will lose; visitors will no longer come or will be motivated to pay less and the nations stand to lose an integral source of economic benefits. This suggests that the environment will generate reduced amenity, ecological and economic benefits (Kamplikar, 2011).
The tourist traffic in India is projected to take new scale highs in the coming years. This is based on the current notable aggressive campaigns that target emerging markets. Tourism reports indicate that the new marketing strategies, coupled with ambitious plans of expanding routes have paid dividends. This has led to predictions that next year will be marked as the year of tourism in the country. Aggressive marketing approaches have been taken through the assistance of appointing creative agencies. This is likely to enable the industry to throw targeted campaigns across the international market including Australia, Europe and UK markets using a consistent feel and look. The industry intends to work with airline and trade partners for investing more in direct consumer marketing (Wirtz, 2012).
Industry sector dynamics in the country
The Indian tourism sector offers diversified products to global markets. The country has a rich history of cultural beauty, heritage, and medicine and diversified religion, which fascinates luxury travelers. In India, the tourism sector has attained a significant growth in the past 30 years. This is courtesy of expansions in both business and leisure tourism. Growing airline sector, increasing globalization, growing aspirations, rising incomes and increasing affordability, accompanied by enhanced travel related infrastructure support growth of this industry. Tourism sector holds enormous potential for the economy of India. It has the potential of providing impetus to other sectors through forward and backward linkages contributing significantly to the nation's GDP (Kumar, 2009). India's tourism and travel sector are likely to produce double revenues in 2014. This is estimated at approximately 4% of the total GDP. On the other hand, since travel and tourism industry is linked to all other economic sectors, it is expected to have a great impact that directly accounts to 9.4% of the total GDP. Personal tourism and travel has made significant contributions assuming approximately 60% of the total market, as business tourism accounts for 12%. Other related sectors include basic infrastructure, surface transport, air transport and hotels (Das, 2011).
Kumar (2009) insists that the tourism business in India has been classified into outbound tourism, domestic tourism and inbound tourism. There has been a steady increase in the number of foreign tourists arriving in the country from 2.6 million in 2009 to 5.6 million in 2011. However, in 2012, it fell to 5.4 million recording a total decline of 3.4%. Following the Mumbai terrorist attacks, India's core markets such as the UK, U.S. And Europe issued a travel ban causing slowdown. These countries deterred their citizens from travelling to India. This made most travelers to postpone holidays, which affected the inflow of tourists in India. However, Indian tourism industry made a lesser impact compared to other countries. Experts project an increase in foreign tourists because of the upcoming international events in India. This has been coupled with the sincere efforts of the Indian government in promoting the nation as a tourist destination. These factors are crucial in driving the arrival of foreign tourists in India (Kamplikar, 2011).
The Indian tourism industry has developed strategic partnerships coupled with increased use of advanced technologies. This has precipitated stiff competition across the tourism and travel industry in India. Such competition has paved way for businesses to make full use of unprecedented growth in the tourism sector. With the recovering local and global economies, travel agencies are likely to develop ways of out-performing and out-maneuvering the competition. These agencies have shown a positive shape towards becoming a strong tourism and travel competitor in the sector (Wirtz, 2012).