India’s Expanding Middle Class is set to Change its Tourism Sector

Overview

The middle class is already the biggest consumer group in the world. According to studies by Booking.com-McKinsey & Company and People Research on India’s Consumer Economy-India’s Citizen Environment (PRICE-ICE), respectively, the middle class, with greater purchasing power, will make up 47% of India’s population by 2030, when the country is predicted to rank fourth in the world for travel expenditure

For a while, Ayn Rand defended the bourgeoisie. “The middle class is a nation’s future; the upper classes are its past,” she famously stated. That appears to be partially, if not entirely, coming to pass. The expanding middle class in India is expected to take the wheel and influence changes to the country’s route. The middle class is already the biggest consumer group in the world. By 2030, India is predicted to rank fourth in the world for travel expenditures, and the middle class there would have made more purchases.

India is expected to spend $410 billion on travel by 2030, according to the Booking.com and McKinsey report “How India Travels.” Prior to the Covid-19 pandemic, India’s travel expenditures amounted to a mere $150 billion in 2019, the year that the tourist industry saw its greatest global year.

Another aspect of India that would draw in international tourists is its youthfulness. India has a median age of 28.2, which is over ten years lower than that of other major economies. India is among the top three outbound tourist markets with the fastest growth rates, according to the UN World tourist Organization.

PRIORITY MATTER

When selecting a destination, Indian travelers take into account several elements such as flight cost, cuisine, and local experiences; nonetheless, distance is the most important factor. According to a McKinsey report titled “From India to the World: Unleashing the Potential of India’s Tourists,” which was issued in November of last year, 70% of travelers chose nearby destinations, with the Middle East making up one-third of those choices. For the past few decades, the United Arab Emirates has topped the charts.

“The most popular outbound destinations remain largely unchanged in 2023, with the UAE, Thailand, Singapore, Indonesia, Maldives, Hong Kong, US, Nepal, UK, Canada, and Vietnam leading the chart,” says Rajesh Magow, group CEO of MakeMyTrip. Though the ranking of the top outbound destinations may shift, we don’t anticipate a significant shift in 2024.

Indian tourists make up roughly 13.6% of all foreign visitors to the United Arab Emirates between 2021 and 2023, according to Iyad Rasbey, vice-president of destination tourism development at the Ras Al Khaimah Tourism Development Authority. Ras Al Khaimah, one of the seven emirates of the United Arab Emirates, has listed India as one of its top five markets, with “over 18% year-on-year growth in visitor numbers recorded in 2023.”

With competition from well-known travel destinations like Dubai, Abu Dhabi, and Sharjah, its goal is to boost the proportion of Indian tourists to 22% by 2024. “Rooms in Ras Al Khaimah are very competitively priced when compared to other emirates,” claims Rasbey. “Projects in the works include midscale accommodations for travelers on a tight budget.”

The CEO of ixigo, Aloke Bajpai, claims that changes in visa laws—Malaysia, Thailand, Sri Lanka, and Kenya having waived their citizens’ need for a visa—fueled an increase in foreign travel by the end of 2023. Indonesia is taking the same into consideration, even though Iran and Vietnam have joined the list of nations that grant Indian citizens admission without a visa.

India surpassed South Korea, Japan, and China as the country with the greatest number of outbound tourists from Asia in 2022. Prior to COVID-19, China was the largest outbound tourism market worldwide. According to Prabuddha Sen, chief operating officer-South Asia, VFS Global, as quoted by ET in December 2023, visa applications to India increased by an astounding 140% in 2022 compared to 2021.

Any place that can successfully combine direct flights, easy visa processing, affordable airfare, a variety of lodging choices, and a wide range of experiences would be able to draw tourists from India, according to Magow.

Approximately 40% of Indian tourists drew inspiration for their trips from screens, including TV, movies, and over-the-top content. Skyscanner reported a 23% increase in monthly searches for Paris following the debut of Emily in Paris, season 3, in December 2022.