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How to Start Tourism Business?

Updated on :  

08 min read.

The tourism industry is one of the largest industries in India and a significant employment generator. Many Indian states depend on tourism to generate their primary revenue. India’s tourism industry is ranked 12th among 184 countries in GDP contribution. It is set to grow at 7.8% per year from 2013 to 2023.

The tourism market in India is estimated at USD117.7 billion in 2011, and it is estimated to boom to USD418.9 billion by 2022. Thus, starting a tourism business is a good option for new entrepreneurs in India.

Process Involved to Start a Tourism Business

  • Entrepreneurs or travel businesses should identify who their target customers are and what locations they prefer to travel to.
  • The travel business can cater to a niche group of customers like family vacations, educational tours for school and college students, religious tours, etc.
  • It should define its geographical area of operation.
  • It should obtain the required licences to operate the business.
  • It should coordinate between tour guides and local vendors or outsource allied services for smooth operation.
  • It should make a plan for future funding.
  • It should make arrangements for booking travel through air, land or water and arranging its documentation processing.
  • It should carry out marketing activities to attract customers.
  • It can use referral methods and conduct loyalty programs to generate a customer base or offer discounts to repeat customers.

Types of Tourism Business in India

A travel agent can establish a small-scale or large-scale tourism business in India, thus making it one of the best businesses to start. A travel agent can operate various types of tourism businesses based on his/her niche and investments. The types of tourism business in India are as follows:

Adventure tourism

Millennials are the main target customers of adventure tourism. Adventure tourism is gaining popularity. It has the potential to grow when the travel operator approaches the business with creativity and provides unique adventure sports or activities to the youngsters.

Religious tourism

India is a religious country and home to many religious beliefs and rituals. People are looking for tour packages to visit monumental places of worship. The tour and travel business specialising in this field operates following local festivals like the Khumb Mela, Char Dham Yatra, etc.

Wellness tourism

Due to the modern-day lifestyle, people look for avenues to obtain intermittent resting of body and mind. Wellness tourism is a unique business idea that offers people an array of options for rejuvenation ranging from detox camps to rejuvenating centres.

Rural tourism

Rural tourism caters to people who want to experience the beauty of rural areas and be close to nature. The farm and vineyard visits, local cuisine, and activities for creating local crafts like pottery are some of the offerings of the rural tours and travel operators.

Heritage tourism

Indian and foreign tourists are keen to explore India’s historical monuments and buildings. Since UNESCO recognised many sites as ‘World Heritage Sites’ in India, heritage tourism is booming.

Licences Required to Start a Tourism Business in India

Tour and travel agents should obtain various required licences to start a tourism business in India. The following are the licences required for establishing a tourism business:

Business Registration

Travel agents or entrepreneurs wanting to start a tourism business should establish it as a legal entity by giving it a structure. They can choose from different structures to establish the tours and travel business, such as One Person Company (OPC), Limited Liability Partnership (LLP), private limited company, sole proprietorship or partnership firm. 

Most travel agents choose to establish their business as a private limited company since it is one of the most recognised forms of business in India. A Limited Liability Partnership (LLP) or One Person Company (OPC) business structure would be ideal for entrepreneurs who plan to build the business slowly or do it part-time.

However, when entrepreneurs establish the business as a sole proprietorship or partnership firm, their liability is unlimited and can endanger personal assets in case of a financial crisis. Therefore, a public limited company, OPC or LLP, is preferred to establish a tourism business in India.

GST Registration

The tourism business needs to obtain GST registration and collect GST from the customers on the service incurred through the business. The transport and restaurant services provided by tour operators attract GST. Thus, the travel business must mandatorily register under the GST law.

Government Approved Travel Agent Registration

Travel agents and entrepreneurs establishing a tourism business can register as a Government of India approved Travel Agent. Though obtaining this registration is not mandatory, it is beneficial as it provides recognition to travel agents in India. The Ministry of Tourism started a scheme known as ‘Recognition of Tourism Service Providers by the Ministry of Tourism’ to promote the tourism sector in India.

This scheme allows travel agencies, tour operators, and travel agents to operate their business and encourages standard, service and quality in their business. The travel agents or agencies should apply to the Ministry of Tourism to be registered as recognised travel agents.

However, a travel agent should satisfy specific requirements of annual turnover, capital invested, qualification requirements for staff employed, a minimum period of operational experience, maintenance of minimum office space and other stipulations as per the guidelines for the scheme to become a Government of India recognised travel agent.

IATA Agent

The International Air Transport Association (IATA) is responsible for the worldwide aviation travel industry, representing around 240 airlines or 84% of total air traffic. IATA offers professional development services and comprehensive training for travel agents. The IATA accreditation is a significant seal of approval recognised worldwide. 

Thus, though becoming an IATA agent is not mandatory, it is recommended for a travel agency to obtain an IATA accreditation and enjoy access to a wide range of benefits. The IATA accreditation is vital for a travel firm providing international travel packages as it helps them simplify booking processes and conduct a hassle-free tour.

Disclaimer: The materials provided herein are solely for information purposes. No attorney-client relationship is created when you access or use the site or the materials. The information presented on this site does not constitute legal or professional advice and should not be relied upon for such purposes or used as a substitute for legal advice from an attorney licensed in your state.

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