New Delhi, 08 January 2024: CAPA India’s recent research has highlighted that ‘international travel is suddenly the new domestic’, due to a combination of strategic developments, which we forecast will result in double-digit growth of around 15% per annum in outbound travel through to the end of the decade at least. And discretionary leisure travel is projected to grow even faster at around 19% per annum.
As a result of the growing scale and importance of the Indian outbound traveller for global destinations, tourism has the potential to increasingly intersect with geopolitics and economics. This is evident in the current controversy around remarks made by three deputy ministers in the Maldives, that were insulting towards India.
This sparked an almost immediate response by the Indian public on social media, supported by a number of high-profile celebrities, with hashtags such as #boycottmaldives trending within a matter of hours. The Maldives tourism industry would be concerned, given that India was its largest source market for tourists in 2023, accounting for 11.1% of total arrivals.
Some Indian travellers have decided to cancel travel to the Maldives, but it remains to be seen whether this trend will sustain beyond the near-term, especially given that the Maldives Government has moved swiftly to dismiss the officials that made the offending remarks.
Social media is characterised by fast news cycles, quickly moving on to the next controversy. As a result, the impact on travel may be ephemeral. Unless of course the negative sentiment escalates to a level where Indian travellers genuinely feel unwelcome in the Maldives.
Regardless of the impact on the Maldives, there is a clear winner from this controversy. Lakshadweep, and indeed other domestic destinations. The visit by the Honourable Prime Minister, Narendra Modi, to Lakshadweep last week drew attention to the beauty of the islands in a manner that they have rarely received before.
With appropriate development of infrastructure and connectivity, while ensuring due consideration to sustainability, this may mark a turning point in the emergence of Lakshadweep as a leading domestic and international destination. India has a wealth of tourist attractions such as Lakshadweep, of which many Indians are even unaware.
There is therefore tremendous potential to grow domestic travel. But it is also important not to see domestic and international travel as being mutually exclusive. The Indian travel market will be so significant in scale that it will be able to accommodate Indian as well as foreign destinations.
But the current situation does highlight how tourism can be drawn into geopolitical and economic affairs, especially in cases where a destination has significant dependence on key source markets. India will increasingly be one of those source markets.
In this case, the calls for a boycott in India have been led by public opinion. A similar popular groundswell was seen in China in relation to Thailand in 2018 (following the capsizing of a tourist vessel off the coast of Phuket in 2018) and in relation to Malaysia in 2014 (following the disappearance of Malaysia Airlines MH370).
However, there are also examples of China using tourism as a formal or semi-formal tool of bilateral leverage. Indeed, the award of ‘Approved Destination Status’ to countries (which is necessary for Chinese travellers to visit on group tours) has been an important element of its negotiations with trade partners for the last 30 years or so.
And when South Korea agreed to implement the US THAAD anti-missile system in 2017, which it said was a defensive measure against North Korea, China considered it to be aimed at itself. Amongst other moves, Chinese travel agents were prohibited from selling group tours to South Korea. The island of Jeju, where more than 80% of foreign visitors came from China, saw an immediate impact. Arrivals from China declined almost 90% year-on-year following the ban. The first Chinese cruise ship to Jeju only returned in Aug-2023, more than six years after the ban was implemented, albeit some of this hiatus was due to the pandemic.
India is the largest source market for a number of destinations, especially in its neighbourhood, including the Maldives, Sri Lanka, Nepal and Bhutan, as well as Dubai. And it ranks in the top five for several others, such as Thailand and Singapore, to name but a couple. More will join their ranks in time.
And incidents, such as that with the Maldives over the weekend, may occur with others in the future. As and when that happens, national pride and interests should always be safeguarded.
But at the same time, it will be important that all stakeholders respond in such circumstances in a measured and collected manner, to ensure that the aviation and tourism industries do not become reflexive bargaining chips.