How can India tap into the new “golden age of travel”?

Today we’re living in what we’ve come to call the “age of great change”. And that age is pushing a number of trends. One of them is the rising wealth around the world.

Let’s look at the numbers that formed the middle class a couple of years ago – about a billion people. The global ranks of the middle class have doubled over the last 20 years. And in the next 20 years, another 3 billion people will be added to the middle class. The number of high net worth households around the world increased by almost 30% in the past five years. It is believed that the number of millionaires globally will double by 2018. India alone today has over a 100 billionaires, fuelling the development of new cities with unprecedented demand for new roads, buildings, airports, residences, offices and hotels.

All of the development and change we see in the world is a consequence of that extra billion people joining the middle class.

Meanwhile, increasing interconnectivity is reshaping global business. We’ve gone from 500 million internet users in 2000 to roughly 2 billion today and are projected to hit 5 billion sometime in the next decade. There will soon be more mobile phones than there are people on the planet, and 70% of mobile searches lead to action within one hour. Technology has become pervasive, changing how people and businesses interact. From mobile devices to automated software to cloud computing, geographical boundaries are shrinking.

Great technological change is here and it’s only growing faster; and the consequences are social, economic and political. Business systems, revolutions and the way people look at and think about brands and the companies they work with are also changing.

What are some of the implications of this for our world and the future? According to Darwin, it’s not the fastest or the strongest who survive, but those who are able to adapt to change most quickly.

Influences like a rising middle class, digitalization, sustainability and new generations of consumers are key components of globalization. An ever more global marketplace has been created and this global economy is increasingly travel-intensive. We are on the cusp of a new golden age of travel. Rising wealth has meant unprecedented growth in the ranks of the world’s elite “mega-travellers”. They’re traveling more often, going farther and staying longer than ever before. New demand is creating whole new travel markets with long runways to grow. Around the world, there are more travellers going to more places than ever before.

Travel and tourism play important roles in the global economy, and their ripple effect is vast, impacting everything from retail to restaurants to recreation. Tourism represents 9% of the world’s GDP and one out of every 11 jobs, and it is growing faster than any other segment of the global economy.

Demand for travel reflects more confidence in the global economic recovery than the financial markets would suggest. New capital flows, trade routes and leisure travel trends are giving rise to new global travel patterns. Ten years ago, the Top 10 busiest airports in the world were almost exclusively transatlantic hubs. As new travel patterns emerge, travel hubs are changing, too.

The force of these changes has created massive pressure for urbanization and, as one of the fastest growing economies in the world, nowhere is this more evident than in India.

If urbanization is done right, it will create the majority of jobs and economic growth; it will also create the vast majority of taxes and revenues, lower the carbon footprint and provide an opportunity for social mobility.

I can’t think of a developed country that isn’t highly urbanized and doesn’t have well-functioning cities, so in many respects the future success of the Indian economy can be described in terms of the need to get urbanization right. If urbanization is not done right and life is disorganized, it destroys the environment. So there is a real social cost if we do not get urbanization right.

An important piece of this is airports, which have become more than just places where airplanes land and take off. They have become business centres, as they have done in Dallas and Hong Kong.

Strictly from a tourism perspective, I am intrigued by the “Incredible India” campaign. The campaign points to an increase of 10% in travel and tourism in India over the last couple of years, but this still represents a missed opportunity, or what I call a tourism deficit.

Globally, tourism accounts for about somewhere between 8%-10% GDP, but only around 7% in India, suggesting that the tourism and travel sector is somewhere below what it used to be.

I don’t like to compare China to India, because I think that casual comparisons are dangerous, if not hard to apply. But I think the benchmarks are sometimes useful to look at. China has done a great job in creating urban locations and urban planning, but it has been at the expense of heritage and liveability.

Nevertheless, China will take two to three years to develop a hotel, whereas it could take five to six years in India because of bureaucracy.

The Indian government needs to see the value of tourism as a way to create jobs. Tourism is an interesting business because it creates wealth, investment opportunities and many entry-level jobs. Tourism brings people into the global economy in a very positive way.

So open skies, better visas, lower taxes, infrastructure, airport development, all of these things play not only into the benefit of the hotel business, but also into the benefit of the blooming economy of India and how it is positioned and poised to attract global investors and travellers.

India is at an inflection point. With a stable government in place, strong market sentiment, early indications of investment in the country along with key government initiatives (100 smart cities, six new airlines), the prime minister’s call for a “Clean India” and “Digital India”, along with his new and fresh approach to diplomacy, put India into a central role globally. We have already seen a positive impact on GDP growth in the country.

From a hotel perspective, with improved infrastructure and a faster pace of urbanization, we expect more demand for hotels, and intend to be a part of the long-term growth and “good times” the prime minister has been talking about.

Author: Dilip Puri is a Managing Director, India and Regional Vice-President, South Asia, Starwood Hotels&Resorts.

Image: Women dressed in traditional attire pose as they take part in rehearsals for the “garba” dance ahead of the Navratri festival at Adalaj Stepwell, in the western Indian city of Ahmedabad September 21, 2014. REUTERS/Amit Dave