India's tourism sector shifts focus to destination-wide partnerships

India's tourism sector is shifting focus towards destination-wide partnerships. Private sector involvement is crucial for designing and managing visitor experiences. Governments must resolve land and approval issues before seeking investment. Viability and public support are essential for successful tourism projects.

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India's tourism ambitions have entered a new phase. It's no longer debating whether tourism matters to the economy, or whether it has enough destinations and cultural assets to attract visitors. It's also investing significantly in airports, roads and destination infrastructure. The harder question is how to make these pieces work together so that visitors choose to come, stay longer, spend more, and return.

India has used PPPs in tourism for years. Governments have invited private companies to build hotels, resorts and other facilities. But can we move from PPPs around individual tourism assets to partnerships around the destination itself? A tourist doesn't experience the tourism ministry, ASI, municipality, hotel company or state tourism department separately. They arrive at an airport, take a taxi, check into a hotel, visit monuments, eat at restaurants, and perhaps hire a local guide. If the road is poor, signage confusing, or there is nothing interesting to do after sunset, the destination simply feels disappointing.

This is where tourism PPPs need to evolve. India has already demonstrated, in aviation, what a well-designed PPP model can achieve. Delhi and Mumbai airport PPPs in 2006 brought private capital and operating capability into important public infra, which has since been replicated to other airports. Government retained important responsibilities around regulation, security and public interest, while private operators brought capital, expertise and a sharper focus on the passenger.

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Tourism can learn from this experience, but it can't simply copy the airport model. An airport is a defined asset; a destination isn't. Consider a heritage town. The monument may belong to ASI, roads to the state, public spaces to a municipality, an old hotel to State Tourism Corporation, and other properties to private owners. Local residents may run homestays, restaurants, craft businesses and guiding services. The circuit may stretch across several towns and districts. There is no contiguous parcel that can simply be handed to one private player.

So, the opportunity is to bring the private sector into the design and management of the tourism experience, not just the construction of a hotel. A private partner could help plan a circuit, design visitor experiences, create heritage walks and evening programmes, organise last-mile transport, manage attractions, build food and retail experiences, bring in events and market the destination.

Different assets could still have different owners. What changes is that someone is responsible for making the visitor experience work as a whole.

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This is also where the larger opportunity in brownfield public assets lies. Governments and tourism corporations own hotels, restaurants, resorts, guest houses and dak bungalows, often in some of the country's best locations. But in others, is government really the best long-term operator?

Government can retain ownership while bringing in private operators through long-term leases, concessions or management arrangements. The same principle can extend beyond individual properties to destination services and experiences.

Karnataka lists PPP opportunities for properties like Lalitha Mahal Palace and Phalguni River Lodge, as well as hotels and wayside amenities. Andaman and Nicobar are developing greenfield eco-tourism projects and brownfield properties on PPP mode.

But many tourism PPPs have struggled to attract bidders, stalled after award or failed to become commercially viable. Sometimes, land, title, approvals, access, or environmental and heritage issues remain unresolved before the private sector is asked to invest.

In other cases, governments offer an asset, rather than a viable business. A beautiful government hotel in a low-footfall location is still a poor investment. The lesson is not that PPPs don't work. There should be 3 requirements:

Viability before bidding Government must understand demand, seasonality, access, investment requirements and likely returns. If a project has strong public or destination value but weak commercial returns, it should receive appropriate public support rather than being presented as purely commercial.

Derisk before seeking investment Land, titles, approvals, access, and heritage or environmental constraints should be resolved by government. Private investors shouldn't be asked to price risks that only government can resolve.

Private participation before destination design Government should understand what visitors will pay for, what experiences can be created, what investment is commercially viable, and what operating model will work. The partnership also needs active management after signing. Awarding a concession is the beginning, not the end.

Tourism PPPs, therefore, should not all look alike. A greenfield resort may need a development concession. An existing government hotel may be better suited to a long-term lease or management contract. A heritage property may require a tightly defined concession around visitor services while conservation remains public.

India has no shortage of tourism assets. What we have to get better at is turning these assets into destinations.

The writer is CEO, Atithi Foundation.

(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)

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