Rethinking DMO Strategy: Lessons from India’s Bold Tourism Gamble

In the rugged heart of Vermont’s Green Mountains, a quaint village found itself at a pivotal crossroads.

With its tourism budget as thin as the veil of morning mist over the valleys, the Destination Marketing Organizations (DMO) wrestled with an agonizing choice: funnel funds into restoring the town’s iconic covered bridges, their weathered boards creaking like old rocking chairs, or launch a vibrant fall foliage campaign to entice leaf-peepers from across the nation.

The gravity of the decision hung in the crisp autumn air, as local maple syrup producers, hoteliers and artisans anxiously awaited the verdict that could make or break their livelihoods.

This travel and tourism marketing scenario, while fictional, echoes a very real and pressing dilemma faced by DMOs worldwide: the delicate balance between development and promotion.

As DMOs grapple with limited resources and the need to both enhance their destinations and attract visitors, a recent strategic shift by India has sparked intense discussion in the tourism marketing industry.

India’s bold move to heavily prioritize infrastructure development over destination promotion offers a compelling case study, challenging conventional wisdom while creating risk.

They chose to unapologetically go all in on the covered bridges.

The Big Shift

In a significant shift in tourism strategy, India has implemented substantial changes to its tourism budget. As part of its interim budget announced in February 2024, the Indian government allocated INR 24.5 billion ($293 million) to the tourism sector for development purposes, a slight increase from the previous year’s initial allocation of INR 24 billion.

Notably, the government has also decided to reduce its global promotion allocation by 97%, bringing it down to INR 30 million ($361,000).

This reallocation of funds represents a clear shift from traditional tourism marketing approaches towards a focus on infrastructure and sustainable development.

Government officials suggest that this change aims to strengthen the foundation of India’s tourism industry. The increased development budget is intended to upgrade destinations, improve infrastructure and enhance overall tourist experiences. This aligns with the government’s vision of growing tourism’s contribution to India’s GDP from 6% to 10%.

The Development Focus – At What Cost?

India’s development strategy encompasses several key areas, each with specific goals and potential challenges:

Infrastructure Improvements: Focusing on upgrading transportation networks, accommodations and tourist amenities across the country. This includes modernizing airports, improving road and rail connectivity and developing better facilities at tourist sites. The goal is to enhance visitor experience and accessibility. However, the challenge lies in the high initial investment required, project lengths and potential disruptions during the construction phase.

Sustainable Tourism Practices: Implementing eco-friendly measures and promoting responsible tourism through education and incentives. This involves developing green certification programs for businesses and encouraging conservation efforts at popular destinations. The aim is to preserve India’s natural and cultural heritage while attracting environmentally conscious travelers. The main challenge is balancing sustainability with profitability, as some businesses may resist due to increased operational costs.

Streamlined Regulations: Simplifying visa processes for international visitors and easing business registration procedures for tourism-related enterprises. The aim is to reduce bureaucratic hurdles and make India more accessible to both tourists and tourism businesses. While this could boost tourism, it may face resistance from bureaucratic entities and raise concerns about maintaining adequate security measures.

Uniform Tax Policies: Working towards a standardized Goods and Services Tax (GST) rate for the hospitality sector and simplifying tax filing procedures. This effort seeks to create a more predictable and business-friendly environment for tourism operators. The challenge lies in getting all states to agree on uniform rates, as some may lose revenue in the short term.

Local Community Benefits: Ensuring tourism revenue reaches local communities and promoting local handicrafts and cultural experiences. This includes providing training and employment opportunities in the tourism sector for locals, aiming to make tourism more inclusive and beneficial for host communities. The potential challenge is managing conflicts between local interests and large tourism corporations, as well as ensuring equitable distribution of benefits.

Why It Matters – and Why It’s Risky

Tourism contributes approximately $200 billion to India’s economy, accounting for 6% of its GDP. These figures underscore tourism’s importance and highlight why such a major strategic shift could have far-reaching consequences. While development is crucial, severely cutting promotion budgets could lead to significant challenges in brand strategy.

• Decreased International Visibility: India may fade from the global tourism spotlight with minimal promotional efforts. This could lead to reduced brand recall among potential travelers when considering vacation destinations.
• Potential Loss of Market Share: Competitors who maintain strong promotional efforts may capture the market share that India risks losing. Countries with similar offerings but more aggressive marketing could become more attractive options for tourists.
• Reduced Awareness of New Developments: As India invests in infrastructure and sustainable tourism practices, these improvements may go unnoticed by potential visitors due to lack of promotion. This could result in a mismatch between the enhanced tourism product and visitor perceptions.
• Slower Growth in Emerging Markets: Emerging markets, which often require targeted marketing efforts to build awareness and interest, may be particularly affected by the reduced promotion. This could hinder India’s ability to diversify its tourist base.
• Missed Opportunities for Cultural Exchange: Reduced promotion may lead to fewer opportunities to showcase India’s rich cultural heritage, potentially limiting cultural exchange and global appreciation of India’s diverse traditions.
• Difficulty in Crisis Management: In the event of negative incidents or perceptions, the lack of a robust promotional budget could hinder India’s ability to manage its image and communicate effectively with potential visitors.
• Reduced Leverage with Travel Trade: With limited promotional activities, India may lose influence with international tour operators, travel agents and online travel agencies, potentially resulting in less favorable placement and recommendations.
• Difficulty in Promoting Niche Tourism Segments: Specialized areas such as medical tourism, adventure tourism or wellness tourism, which often require focused marketing efforts, may struggle to attract visitors without adequate promotion.

These risks highlight the potential consequences of India’s dramatic shift in tourism strategy. While the focus on development is commendable, the severe reduction in promotional efforts could significantly impact the country’s ability to attract tourists and fully capitalize on its tourism investments.

Strategic Lessons for All DMOs

India’s recent strategic shift offers a thought-provoking case study for all DMOs. If you want to grow the economic impact of tourism in the long run, what comes first? Development or promotion?

While the scale and context may differ, the core challenge of balancing development and promotion resonates with destinations across the globe. By examining India’s approach, domestic DMOs can glean valuable insights to inform their own strategies, adapting and refining their methods to suit their unique contexts and goals.

• Maintain a strategic balance between infrastructure development and promotional efforts, like paid media marketing. While upgrading facilities and improving sustainability are vital, they take time so continuous promotion is necessary to keep the destination visible and attractive to potential visitors. Think of constant reinvention.
• Focus on enhancing transportation networks, accommodations and tourist amenities to improve visitor experience and accessibility. Upgraded infrastructure can lead to higher tourist satisfaction and repeat visits.
• Implement and promote sustainable tourism practices. Developing eco-friendly measures and responsible tourism initiatives can attract environmentally conscious travelers and preserve the destination’s natural and cultural heritage. As many destinations experience the downside of overtourism, planning ahead and creating contingencies are critical. Our recent Q&A with Nepal’s Tourism Director reveals their blueprint for doing just this.
• Keep promoting the destination to maintain brand recall and competitiveness. Reduced promotional efforts can lead to decreased visibility with target audiences, loss of market share to competing destinations and a mismatch between improved infrastructure and tourist perceptions.

The key takeaway? While development is important, ongoing promotion remains crucial for attracting visitors and showcasing a destination’s offerings. A balanced approach that invests in development and promotion will likely yield the best results.

Striking the Balance: Development vs. Promotion

India’s strategic shift highlights the ongoing challenge DMOs face in balancing development and promotion. While investing in infrastructure is crucial, maintaining visibility through effective marketing remains essential for attracting visitors and showcasing improvements. 

At Noble Studios, we specialize in crafting tailored strategies that strike this delicate balance, helping you build a sustainable foundation for long-term tourism growth while keeping your destination in the spotlight. Contact us today – you can have the covered bridges AND maple syrup-drenched pancakes.