The Profitability of Indian Tourism Sector: A Fixed Model Panel Analysis

Abstract

The current paper tests the applicability of the SCP framework i.e. industrial structure, conduct and performance in the Indian tourism industry. Herfindahl-Hirshman Index was used to understand concentration index for the Indian tourism industry and the structure conduct and performance relationship was tested using fixed effect model for panel regression in Eviews. The data was collected from Prowess for 23 companies in the tourism industry for a period of five years i.e. 2011 to 2015. The results of the study indicated that the Indian tourism industry was highly concentrated between 2011-2015, with a few major players enjoying majority market share, however, in 2015, the indicators pointed towards lower levels of concentration. The panel regression analysis indicated that the SCP paradigm was not supported for Indian tourism industry, though support was found for relationship between conduct and performance. The negative relationship between conduct and performance also indicated that there was a higher expenditure on marketing and advertising in the industry. The results of the study indicated that the industry was not working on IO based structure but rather Efficiency bases model which needed to be studied further.