India is turning into a sweet spot for NYC & Company, New York City's official destination marketing organization. The number of Indian travellers to the city touched almost 3.5 lakh in 2017 with the largest number of visitors in the age group of 18 years to 34 years.
As the average age in India by 2020 is set to touch 29 years, according to reports, it is no surprise that Fred Dixon, President and CEO of NYC & Company says that he is “bullish on India” and the company is “spending more than before” in the country. He expects the number of visitors will touch 400,000 and India will enter into its top 10 international markets by end of 2019.
In an exclusive interview with Fortune India, Dixon talks about his India plans, the impact of home-renting company Airbnb Inc on the organised hotel industry and factors driving tourism growth in New York City.
You hosted 65.2 million visitors in 2018 with 13.5 million international visitors clocking the ninth consecutive year of tourism growth. What are the key drivers of this growth?
One of the brand promises of New York City is that it always is changing…always evolving. So, it's a city that is constantly reinventing itself, always something new and exciting on offer. So, even if you come regularly, there's always something new to explore. The dynamism of the destination itself really helps drive a lot of interest.
How big is India as an international market for NYC visitations?
We really are bullish on India for the future. We felt like there is unlimited potential here. We know that 373,000 Indians travelled to New York in 2018 [forecasted, final numbers are yet to be disclosed] and we were pretty confident that [in 2019], we're going to see significant growth and we'll break through 400,000. If you look at it from just a purely economic perspective, total spending by Indians in New York was $650 million in 2017 [a growth from the year before], while the average spending per person per trip stood at $1,863. [Refer to table 1]
India can break in the top 10 very soon … I think it could happen next year. Our visa waiver countries, with the exception of China and Brazil – France, Australia, Germany, Italy, Spain and South Korea are all ahead of India…for India to compete on that same level [will be] challenging given the visa requirements.
Are travellers spending more?
The total direct spending from all visitors in New York in 2017 was $44 billion. The spending has been growing. But one of the trends that we are seeing overall and this isn't just New York, but the travel industry in general is [that] overall spending per capita per person is actually slightly down. I think much of that has been driven by economic factors like (the rise in the) value of the dollar. So, you haveto attract more visitors to create more spending, because each one is spending a little bit less.
Why are you betting on India?
Clearly we are spending more than before. The market is in a growth position and the population’s going up…and it's younger, more well-educated, largely English speaking. There are so many built in advantages for a market like India. A long-term best bet is on India for long term growth.
We are very focused on the fact that India is a value-driven market. Whether you're a luxury spender or you're a budget traveller, all Indian market [is value-driven] and that's something we recognize very strongly.
A major 53% Indians travelled to New York City in 2018 for leisure. So, what are you betting on for the next level of growth?
Leisure obviously is going to be the biggest piece of the of the growth pie. We also see a real opportunity in the mix business meetings and incentives. It’s a little more challenging to compete with closer destinations like the Middle East and even Europe. But that is a real opportunity for us [in the] long term.
Are Apps like AirBnB a challenge to the organized industry?
There’s no question it's been a disruptor much like Uber and other technologies. So, it shouldn't be surprising that that there has been some challenges.
Every municipality is unique in the way that engages with Airbnb because of local laws and regulations the size of the marketplace the profile of visitors that come. First of all, you have to acknowledge that every city is different in that regard.
In New York, the law is highly restrictive on home sharing. So, if you own or you rent an apartment in New York City or outside of the city and you are looking to rent part of your apartment out or the entire apartment, you have to be in residence. In other words, it's not possible in New York to go away on holiday and run out your entire apartment on Airbnb.
But the hotel industry obviously is doing really well in New York, even regardless of that there's actually not been an impact in terms of occupancy in New York necessarily. We've been selling 1-2 million room nights in the legitimate hotel industry each year greater than the year before. So last year, we sold 38 million room nights (as against) about 36.4 million the year before.
What is working for you to maintain a balance despite economic uncertainties?
From, from Asia, to Latin America to Europe, we have a very diverse visitation. So, that really helps us balance out during times of economic turmoil.
Despite the trade war, it is interesting to see as many as 1.1 million visitors from China in 2018, second largest international market only to UK. What do you make of this trend?
There's a huge group dynamic here out of China. That's what's driving a lot of this business and large leisure groups, which we don't see as much out of India by comparison. The Chinese were restricted on travel in the past and they couldn't come to the U.S. There's been a lot of pent up demand and the government has really created an atmosphere that's conducive to group travel. So you see a lot of people coming on very cheap trips where they're seeing, you know, 15 cities in 15 days. So, it's been an explosive growth from that perspective, that's not going to be sustainable in the long term because consumers won't continue to travel like that.
How has the tourism carrying capacity grown?
We've been experiencing a tremendous amount of growth in the hotel sector anymore. Our capacity has grown by almost 50% in terms of our ability to accommodate visitors from a logical perspective. We have grown from around 73,000 hotel rooms from a year ago and we're closing in on 120,000 hotel rooms. Just the physical capacity of the destination has grown exponentially.