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The Rising Potential of Rural Tourism Market in India

Team YS
posted on 1st December 2010
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The Countryside Beckons

KCG LogoThe overall tourism industry in India has shown significant growth in the past decade. With trends like increasing levels of awareness, environmental consciousness, growing interest in heritage and culture and improved accessibility, rural tourism shows significant poise as a market opportunity. People from urban settings have a new vogue for knowledge about traditional ways of life, arts and crafts and experiencing the unexplored. Rich in traditions of culture, arts, crafts, ethnicity, cuisine and naturally scenic locale, rural India can emerge as the new hub for travellers and sightseers.

A majority of such locales that may be leveraged as tourist destinations are located in rural geographies. Thus rural tourism business models which use existing infrastructure like home-stays, farm stays or community- managed guest houses, thus also leveraging the competitive strengths of rural households, offer viable & sustainable options even at low occupancies, with high growth potential and quicker pay-back.

Despite such market differentiators, rural tourism has not picked up significantly, being plagued by issues such as information asymmetry, difficult booking and payment processes, non-availability of quality budget accommodations and quality issues. Tourists are forced to visit the few known tourist destinations, resulting in carrying capacity issues and un- reasonably high tariffs at these destinations, while many others lay vacant. This certainly is a lucrative Market Linkage opportunity; new ventures can find innovative ways to bridge the prominent gaps in the rural tourism supply chain utilizing the skills and support of the local population.

Realizing the potential of this upcoming market, IFMR Trust has invested Rs. 50 Million in the Rural Tourism Network Enterprise (RTNE). Talking about the investment, the CEO of IFMR Ventures, Ms. Deepthi Reddy said, “Rural Tourism Network Enterprise has tremendous potential for scale.  It will open up unexplored markets to a whole new segment of travellers in India. Rather than the impersonal feel of luxury resorts, which are usually located far away from local people, food and culture, RTNE offers an authentic, rural travel experience at a fraction of the cost, typically under Rs. 500 a night”.

Possible considerations for enterprises may include development of accommodation infrastructure and collaborating with franchisees or property owners, auditing and financing repair, maintenance and upgradation of existing infrastructure, hiring and training local people, providing an open information portal for customers, creating a platform for bookings, helping the rural artisans and craftsmen market their crafts, handlooms, artefacts and cuisine etc. Customers may be provided options to become stakeholders by investing in local development. Financial and non-financial assistance may be provided to help local citizens realise their entrepreneurial dreams.

Along with being a productive business opportunity, the resulting social and economic impact of such firms cannot be ignored. It inculcates generation of increased livelihood resources, jobs and opportunities for the local populace. Not only will it provide more exposure to local arts, craft and culture and rejuvenate the local economy, in-situ development will also be instrumental in reducing migration of rural people to cities.

Not only will it bring new opportunities, better infrastructure and communication facilities to the villages, but also bring the heart of India to the tourists who wish to see where true India resides.

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