Recreation is currently one of the most exciting sectors in India. The industry is still at an early stage of development. But with the increasing entry of some of the more established Indian entrepreneurs and corporate housed, the industry could be worth USD 1.06 billion per annum within the next 2 - 3 years. The recreation industry is already worth USD 213 million per annum. Industry experts agree that the sector has a great potential. Leisure consultants are experiencing a boom in demand for their services. Cultural attitudes within India are changing. The increasing incidence of Cable TV is exposing the population to a wider range of recreation pursuits. And the idea of an annual family holiday to the home village is being overtaken by more frequent weekend visits to recreation facilities within and around the cities.
The current size of the consumer market for the recreation and amusement sector is estimated at 25-30 million. This reflects a middle upper class with a monthly disposable income in excess of USD 106. But with a population of 1 billion, 30% of which is under 20 years, and economic growth set to continue at 6% per annum, the number of consumers can only increase. The sector is developing throughout India but the major projects are planned in the metropolitan cities, their suburbs and other major cities in western and northern India. The major cities in southern states like Hyderabad, Bangalore, Mysore, Cochin and Tiruvananthapuram are also showing increased activity. However, projects in eastern India are limited to Kolkata in West Bengal and Bhubneshwar in Orissa.
Industry sources estimate the current size of the amusement park market as USD 85 million per annum. This estimated to grow to USD 287 million by 2003. The face of the industry is changing with a boom in single site operations. There are currently 55 major amusement and water parks in India.
Family Entertainment Centers (FECs)
A typical FEC comprises a mix of bowling lanes, billiards and snooker tables, go-karts, video, laser and virtual reality games, mechanized rides, jukes boxes, big-screen projected TV, multiplexes, net-browsing terminals, shopping malls and food ad beverages outlets. A number of corporate groups are investing large sums in FECs. There are currently 200 FECs in India. Similarly the FEC sector will grow very rapidly. The number is expected to double in the next three years with investment increasing for USD 64 million to USD 425 million.
Experience over last five years confirms that Indian consumers react favourably to international concepts of convenience shopping and customer service. The retail sector is evolving into an exciting and competitive market place. In recent years, international brands like McDonalds, Swarovski, Lacoste, Domino`s, Wimpy`s, Pizza Hut, Pepsi and Benetton have entered the Indian market.
The cinema and movie hall sector is expected to expand quickly. At present there are only 3 multiplexes in India. However, real estate consultancy firms estimate that the all India figure for multiplexes will rise to 80 by 2003. Although there is some expertise available in India, a number of entrepreneurs are looking for overseas expertise to develop and operate multiplex cinemas. Almost all the major equipment including hardware and software need to be imported.
Consumer demand for greater sophistication will result in operators looking abroad for consultancy and advice in design and operation of amusement and water parks. The Indian amusement attraction manufacturing industry is also growing, aided by high import duty (varies between 41-62%) under the HS code 95.04 on foreign equipment. But the current range of Indian products is small compared to the US and Europe. There are good opportunities for overseas manufacturers to establish Joint ventures and technology transfer alliances with Indian Manufacturers.
The tourism sector is constrained by lack of infrastructure and little government or private sector investment. The central government is preparing to remedy this by making funds available for the states to prepare strategic plans. This might open up opportunities for consultants, including experts from the UK.
The tourism economy including support services such as hotels and travel totals 19.23 billion, accounting for 5-6% of India`s GDP, vis-à-vis the world average of 10%. Direct employment from the tourism sector is estimated at 10 million and the indirect employment at over 20 million. The number of tourist arrivals into the country has grown from 2.12 million in 1995 to 2.48 million in 1999, this was seen as a growth of 4% per annum. While the foreign exchange earnings from tourism grew from USD 1578 million in 1994-95 to USD 2553 million in 2010 this would reach 132 billion. It will grow at an annual rate of 8.3%.
A number of constraining factors have resulted in this diminished performance, principal among them, a lack of infrastructure and capacity to handle any increased tourist flow. Other examples are transportation services and systems and hotel capacity. For instance, the number of quality hotel rooms is limited more than 35% of this supply.
A new classification of heritage hotels has been introduced to cover functioning hotels in palaces, castles, ports and large residencies built prior to 1950. So far 62 properties have been classified in the heritage hotel category providing a capacity of 2000 rooms.
The Indian amusement trade association - The Indian Association of Amusement Parks & Industries (IAAPI) organized its first trade show on amusement, entertainment and leisure in February 2001 in Mamba. Apart from direct participation, many foreign companies participated through catalog display etc. IAAPI intend to repeat the show annually. Next year`s show would be from 1-3 March 2002 at the World Trade Center in Mumbai.
Interest in the recreation business is not limited to entrepreneurs. Consultants are beginning to focus on business prospects in the leisure industry. There involves foreign trade partners in this lucrative sector but the potential still remains massive.