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.