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India’s role in disrupting the global travel industry: A Mint explainer

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In Short:

India, Eastern Europe, and Southeast Asia are emerging as strong sources of outbound travelers, challenging established markets. Southeast Asia’s travel spending is projected to grow by 7% annually, with India’s spending expected to grow even faster. China’s domestic travel market has surged, and it is projected to surpass the US by 2030. India’s outbound travel market is expected to grow significantly. Thailand and Malaysia have implemented visa-free entry to attract more Indian tourists. Global travel is expected to recover to pre-covid levels by the end of 2024.

The Rise of Outbound Travelers from India, Eastern Europe, and Southeast Asia

India, Eastern Europe, and Southeast Asia are emerging as significant sources of outbound holidaymakers, challenging the dominance of established markets in global travel. Among these, **India** shines with a rapidly expanding middle class that is allocating more funds towards travel adventures.

India and Southeast Asia’s Travel Spending Projections

**India** is expected to witness robust growth in outbound travel spending, with predictions indicating an increase from $176 billion in 2023 to $319 billion in 2030. Southeast Asia is also projected to see a steady growth of about 7% annually, with specific countries like Cambodia, Malaysia, and the Philippines exhibiting even higher rates of growth.

Mainstays and Emerging Markets in International Travel

The top five source markets for international travel – the US, Germany, the UK, China, and France – continue to dominate the industry. However, there is a notable transformation happening with the emergence of new groups of travelers from **Eastern Europe**, **India**, and **Southeast Asia**, according to a report by McKinsey & Co.

Impacts of Growing Outbound Travel from New Markets

While the number of outbound travelers from these emerging markets is on the rise, their purchasing power still lags behind Western European spending habits. As per the McKinsey report, South Asians spend 20% less, Eastern Europeans spend 40% less, and Southeast Asians spend 55% less on travel compared to their Western counterparts.

India’s Rapid Growth in Domestic Travel

**India** currently ranks as the sixth-largest domestic travel market based on spending, experiencing accelerated growth driven by an expanding middle class and a robust GDP growth rate. The country’s travel spending is expected to grow by 9% annually until 2030, with domestic air passenger traffic set to double by the same year.

Investments and Development in the Travel Industry

In anticipation of this surge in travel demand, **Indian** airlines and hospitality companies are making significant investments. For instance, budget airline IndiGo has placed substantial aircraft orders, and the country is witnessing the development of infrastructure to support the growing travel trends.

Global Travel Forecast and Outlook

By 2024, global travel is expected to recover to pre-covid levels, with international travel projected to reach nine billion lodging nights annually by 2030. The travel spending is estimated to reach $8.6 trillion in 2024, accounting for approximately 9% of global GDP.

Key Developments in Visa Policies and Tourism Initiatives

Countries like **Thailand** and **Malaysia** are implementing visa-free entry to attract more tourists, while destinations like South Korea, South Africa, and Turkey are gaining popularity among **Indian** travelers. These policy changes and improved connectivity are expected to drive further growth in international travel.

The Success of Thailand’s Tourism Strategies

**Thailand** has successfully attracted tourists by waiving visa requirements and launching targeted marketing campaigns, resulting in increased footfall from countries like India and China. The country’s efforts to facilitate travel among neighboring nations further enhance its appeal as a preferred destination.

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