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  • ProMiller Team

Top factors that drive growth in tourism market

Based on IBEF’s Tourism and Hospitality Report 2021

The tourism market has undergone various changes after the advent of the internet and it is not just limited to any particular region or area but around the globe, the whole tourism industry is very different compared to what it was a decade ago. Along with the governments that are launching various initiatives, the general public is also trying to keep up with the development. India which has the third-largest economy in the world is growing at a faster pace in terms of tours and travel. It is not a tourist destination because of just one thing, there are multiple things to explore including but not limited to cultural and religious heritage, and varied natural attractions but still its share in world tourism is not comparatively small.

Tourism is one of those sectors which can benefit a country’s economy but only if proper steps are taken for promoting and developing it.

During the outbreak of the COVID-19 pandemic, many countries that were dependent on tourism for their economy suffered huge losses. Now, when the pandemic is almost over and everything is going back to normal, the tourism industry still has to take precautions and abide by the different guidelines issued by their respective governments. The tourism industry adapting to all such rules and regulations is again trying to get back to the position it was before the pandemic. In this blog, we will discuss the different factors that are responsible for the growth of the tourism market.

Rising FDI

FDI is one such way through which a country can develop its tourism sector but it is something which is little researched and tourism is an industry which requires one to be careful while managing it. Despite the epidemic, the hotel and tourism sector received a cumulative FDI inflow of US $15.89 billion between April 2000 and June 2021. FDI fosters growth by an increase in foreign exchange, local employment, increase in income and proper income distribution. Hospitality majors are entering into tie-ups to establish themselves in the competitive market.


Infrastructure is one of the core areas of tourism, without proper accommodation facilities and with the constant increase in traffic, a place cannot become a perfect tourist destination. A place should have a variety of accommodations starting from varied price ranges to different graded hotels on the basis of comfort. In this way, the government is taking some major steps and initiatives for the proper development of tourism infrastructure, as more than half of the Ministry of Tourism budget is allocated toward the development of destinations, mega projects, and rural tourism infrastructure projects. The government is promoting tourism under the Swadesh Darshan Scheme by developing several theme-based tourist circuits. The government is taking several steps for the development of maritime tourism in India, in March 2021 they announced plans to develop landmark destinations in 78 lighthouses across the coastline. This will help in the overall growth of the tourism industry.

Growing Demand

Different people participate in tourism for different purposes, for some, it may be for spending some quality time with friends or family and for some it may be a business trip. After the outbreak of the pandemic, there was a long halt until the travel started. Now there is again a rise in the number of visitors and the hospitality sector is under huge pressure to give more emphasis on the wellness and health of their visitors. Therefore, it presents a problem for this industry to strike a balance between giving guests a pleasant stay and maximizing their profit. Also, there are several niche kinds of tourism like medical tourism or eco-tourism which are expected to create more demand and by 2029 India’s tourism and hospitality sector is expected to reach $488 billion with a growth of 6.7% which will account for 9.2% of the total economy. With the growing income of the households, domestic expenditure on tourism is also expected to increase during this period.

Policy Support

In the growth and development of every sector, government schemes and organizations such as WTO (World Tourism Organization) are the ones which play major roles in promoting tourism and attracting diverse tourists across the globe. They keep their citizens informed about the recent developments through their policies. Nowadays getting approval for the construction of hotels isn’t a walk in the park. To resolve this the Ministry of Tourism has launched a web-based PSDS (Public Service Delivery System) to enable all the applicants seeking approval for hotel projects and they can also track their applications online on a real-time basis. For the government, it is crucial to take steps in these directions i.e. to go hand in hand with the Digital India initiative. The government is also planning to develop 17 iconic tourist sites in India into world-class destinations. Some of the major schemes for which funds are allocated in the Budget 2022 are Swadesh Darshan, PRASHAD, Safe tourist destinations for women, overseas promotion and publicity and many more.


Since tourism is contributing a fair part to India’s GDP, there is a need to develop all the related aspects of this sector for better and faster growth. The government is already taking various measures and the hospitality sector is coping with all the rules and regulations, there are plenty of opportunities and scope for investment in this sector. We should be one step ahead by giving special focus to the niche domains of tourism as they are expected to grow in the upcoming years.


Written by Nidhi K. for ProMiller

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