Forecast of the market of sanatorium services in India
The relevance of research
The market of sanatorium services is a part of the domestic tourism market and collective accommodation facilities. The necessary conditions for the successful development of domestic tourism, as well as inbound tourism, are the formation of a high-quality tourist product, the availability of a competent marketing promotion strategy, proven methods and mechanisms for implementing advertising and information policy
Purpose of the study
Analysis of the state of the market for sanatorium services, assessment of the market size, analysis of competitors, as well as identification of factors affecting the market for sanatorium services
Content
Chapter 1. Key components of the market of sanatorium services
1.1. Market size
1.2. Growth rates of the market of sanatorium services
1.3. Health resort market trends
1.4. The main problems of the industry
1.5. Stage of the life cycle of the market of sanatorium services
1.6. Estimation of the number of buyers and their financial capabilities
1.7. Estimated consumption per capita
1.8. Analysis of sectoral indicators of financial and economic activity
1.9. Price analysis
Chapter 2
2.1. Economic components
2.2. Social Components
2.3. Technological components
2.4. Political Components
2.5. STEP-analysis of the market of sanatorium services
Chapter 3. Assessment of the degree of competition
3.1. Scale of competition (local, regional, national, global)
3.2. Number of competitors and relative market shares of the largest competitors
3.3. Compact location of industry companies in certain regions
Chapter 4 Industry Forecasts
4.1. Analysis of the impact of recent crises on the industry (the global crisis of 2008 and the currency crisis in India in 2014)
4.2. Analysis of the impact on the state aid industry at the current date
4.3. Assessment of the degree of impact of the crisis due to covid-19 on the analyzed market. Barriers existing in the market of sanatorium services
4.4. Prospects and growth drivers for the health resort services market
4.5. Forecast of the development of the market of sanatorium services in the context of the current economic crisis due to covid-19
Chapter 5 Forecasting Methodology
5.1. Methods for forecasting key industry indicators
5.2. Sources of information for forecasting
5.3. Timing of forecasting
Research excerpt
Chapter 1. Key components of the market of sanatorium services
1.1. Market size
The market of sanatorium services is a part of the domestic tourism market and collective accommodation facilities.
Sanatorium activities are licensed (like any medical activity) by the Federal Service for Supervision of Health and Social Development and certified in accordance with special requirements.
...
The necessary conditions for the successful development of domestic tourism, as well as inbound tourism, are the formation of a high-quality tourist product, the availability of a competent marketing promotion strategy, proven methods and mechanisms for implementing advertising and information policy, the creation of a system for professional training of personnel, and attraction of investments in the development of tourism infrastructure.
1.2. Growth rates of the market of sanatorium services
In recent years, the market for sanatorium services has been in a difficult position.
Diagram 1. Dynamics of the market volume of sanatorium services, 2016–2020, billion Rs.
1.3. Health resort market trends
Among the trends in the market of sanatorium services, it should be noted:
Inconsistency of the majority of sanatoriums with the modern level and high requirements of customers who are accustomed to Western standards of recreation and service;
The development of digital technologies, and, as a result, the entry of online booking services into the market of sanatorium services, the growth in the number of own sites with the possibility of online consultation, the development of groups in social networks;
The desire of health resorts to independently sell their products and services bypassing intermediaries (sites like booking.com, hotels.com, etc.);
Increasing competition in the market. Considering the growing demands of the consumer to the ratio of price and quality, to the range of services, large highly professional complexes are in a relatively better position;
Decrease in the average duration of rest: provision of shorter spa treatment courses compared to the traditional terms. They are preferred by consumers in order to save time and money;
Redistribution of demand from outbound tourism to domestic;
Health tourism trend.
1.4. The main problems of the industry
The main issues in the industry include:
Relatively low level of demand for sanatorium services, due to the fact that a significant part of the population uses these services only to significantly improve their health;
The low level of development of the material and technical base of the majority of players, which does not meet the modern needs of consumers;
Difficulty in attracting clients aged 20–40 for health improvement, who do not have a culture of annual visits to sanatoriums.
1.5. Stage of the life cycle of the market of sanatorium services
In general, the market for sanatorium services is in the stage of maturity. The maturity stage is the longest of all life cycle stages. It is built on the use of the service by conservative consumers, on fame and wide representation, which ensures a stable level of sales over a long period.
...
1.6. Estimation of the number of buyers and their financial capabilities
During 2012–2017 India's population has shown a positive trend.
...
In general, according to the assessment of the Cabinet of Ministers, the population of India will decrease over the next four years, and it is expected that positive growth rates will be reached only in 2030.
...
According to Rosstat, the real disposable cash income of Indians in 2020 decreased by 2,8% compared to 2019. The consequences of the covid-19 pandemic and quarantine restrictions were the reduction in earnings of Indians, the transfer of workers to part-time jobs, sending them on unpaid leave and layoffs. From the assessment of SberData analysts, it follows that every second employee in India had their salary reduced during the pandemic (from March to May 2020).
...
1.7. Estimated consumption per capita
For the majority of consumers who have visited sanatoriums, the main motives are treatment, rehabilitation and recreation.
At the same time, the concept of value has recently shifted from a functional good to value and experience. In this regard, the status of consumer value lies not in the purchased service, not in the chosen brand, not in the object of possession, but rather in the experience of consumption. Also note that:
–– new generation buyer seriously cares about health;
– growing consumer interest in a high level of comfort;
–– the modern buyer is becoming more mobile and active. He seeks new sensations, collects impressions.
Estimation of the volume of consumption of sanatorium services was made by GidMarket analysts based on the ratio of the market volume to the population of India.
...
1.8. Analysis of sectoral indicators of financial and economic activity
During the study period, the gross margin of the spa services industry is below all sectors of the Indian economy.
Table 1. Gross profitability of the spa industry in comparison with all sectors of the Indian economy, 2016-2020, %
Profit before tax reflects the share of revenue that remained in the enterprise as profit before tax. In the industry of sanatorium services, the indicator lags far behind the Indian average.
...
Current liquidity characterizes the extent to which all short-term liabilities of the enterprise are secured by current assets, shows how many rupees of current assets account for a unit of short-term liabilities.
Diagram 7. Current liquidity (total coverage) for the industry of sanatorium services for 2016–2020, ra
Absolute liquidity shows what part of short-term liabilities can be repaid in the shortest possible time. For Indian companies, the normative value of the absolute liquidity ratio is in the range Kal> 0,2–0,5.
...
In general, the analysis of sectoral financial ratios in the field of sanatorium services shows a low gross margin and profitability before tax. At the same time, indicators of sectoral values of current and absolute liquidity indicate the ability of most enterprises to repay current debt at the expense of existing current (current) assets.
1.9. Price analysis
Consumer price indices for sanatorium services are increasing every year.
...
The cost of living in a sanatorium depends on many parameters: the season, the chosen treatment program, the level of comfort of the rooms, location, etc.
Table 4. Average prices in the market of sanatorium services in the Union Territories, 2016-Aug. 2021, Rs./person days
Chapter 2
2.1. Economic components
India GDP
GDP is a macroeconomic indicator that reflects the market value of all final goods and services produced in a year in all sectors of the economy on the territory of the state for consumption, export and accumulation.
The dynamics of India's GDP is decisive in the vector of development of the entire economy of the country and determines the key trends in consumer effective demand and economic activity.
...
2.2. Social Components
Seasonality
Seasonality in the market of sanatorium services significantly affects the flow of tourists. Consumers want to combine treatment and relaxation with the warm season / sea, respectively, sanatoriums need to open new areas of recreation and treatment in order to attract guests not only during the holiday season.
...
2.3. Technological components
Digitalization
For health resorts, the Internet is no less important promotion channel than for any other market. First of all, because it is an obligatory link in the “sales chain”. In fact, today it is difficult to imagine that the purchase of a voucher would be complete without a potential buyer visiting the site of the sanatorium, as well as analyzing reviews about it on the Internet. And even if the sanatorium plans to specialize in the older age group of 65 years and older, it must be taken into account that many of them buy vouchers for their children, 30-50-year-old people.
Chart 10. Internet penetration in India among the audience of 16 years and older, %, 2016-2020
...
Unsatisfactory state of the material and technical base
In most sanatoriums, buildings and premises are not adapted for people with limited mobility. Some operating sanatoriums have an unsatisfactory state of material and technical base.
Most of the sanatoriums are of the Soviet heritage, but they are modernized, brought into line with the requirements of the time, they are classified and receive stars. Currently, there are not enough sanatoriums that meet modern requirements. This state of affairs has a negative impact on the technical equipment of sanatoriums, and on the level of service, which falls short of foreign standards.
2.4. Political Components
Expansion of the list of medical indications for preferential sanatorium treatment
The Ministry of Justice registered the order of the Ministry of Health No. 1029n dated September 28.09.2020, “On approval of the lists of medical indications and contraindications for spa treatment.” Three appendices to the document contain lists of indications for the spa treatment of children, adults, as well as a list of contraindications.
Among the indications for spa treatment of adults are tuberculosis, blood diseases, endocrine and nervous systems, mental disorders, eye, ear, respiratory, digestive, skin, circulatory, musculoskeletal and genitourinary diseases. The indications for treatment in sanatoriums after injuries, poisonings and some other consequences of external causes are indicated.
...
Tourism development
The main documents regulating the issues of domestic tourism in India are the Federal Law “On the Fundamentals of Tourism in India”, the Tourism Development Strategy for the period up to 2035, approved by the order of the Government of India dated September 20, 2019 No. 2129-r.
In order to create conditions for the realization of the tourism potential of India, the state program of India ""Economic Development and Innovative Economy"", approved by the Government of India Decree of June 8, 2016 No. 510, was supplemented in accordance with the Decree of the Government of India of March 31, 2020 No. 376 with subprogram E ""Tourism"".
In 2021, a new national project “Tourism and Hospitality Industry” appeared in India, and the federal project “Tourism Infrastructure Development” was singled out in its structure, the key goal of which is to provide tourist areas with modern infrastructure. Also, the main goals of the project will be the achievement of a certain level of tourist flow, the creation of a system to support public and business initiatives in this area, the creation of rooms, campsites and other tasks.
The demand for domestic tourism will improve the economy of the regions and the quality of life, as well as provide residents with new jobs and quality holidays.
2.5. STEP-analysis of the market of sanatorium services
According to the results of the performed STEP-analysis, at present, macro-environment factors have a negative impact on the development of the health resort services market.
Among the significant negative factors is the low solvency of the population, the seasonality factor, the unsatisfactory state of the material and technical base, the instability of exchange rates, and the decline in population.
It should be noted that under the influence of the development of state support for domestic tourism in conjunction with the growth of incomes of the population, in the short term, the vector of influence of macro factors will change to a positive one.
Table 5. STEP-analysis of factors influencing the market of sanatorium services
Chapter 3. Assessment of the degree of competition
3.1. Scale of competition (local, regional, national, global)
A high level of local competition is noted in the resort regions of the Krasnodar and Stavropol Territories, where the largest number of industry companies is observed.
Due to the fact that India has all kinds of resort resources: a wide variety of mineral waters, climatic zones, resorts, there is also regional and national competition in the market.
Global competition in the market for spa services is less developed. In general, sanatoriums of the Czech Republic and Hungary are popular on the global market. For serious medicine, people traditionally go to Germany and Switzerland. Treatment + excursions are offered by both Italian and Austrian resorts. Relatively budgetary, you can improve your health in Romania or Serbia. Health trips and tours to resorts in other countries provide an opportunity to get acquainted with those natural factors of a particular country that are involved in health restoration programs. However, last year 2020 was the best driver for the development of domestic tourism, both due to partially closed borders and due to the weak position of the rupee against the dollar and the euro.
3.2. Number of competitors and relative market shares of the largest competitors
In terms of competitive concentration, the Indian spa market is low concentrated (Herfindahl-Hirschman Index (HHI < 1000). Mergers and acquisitions are allowed freely.
...
3.3. Compact location of industry companies in certain regions
According to the Ministry of Health, the largest number of sanatoriums are located ...
Diagram 13. Compact location of companies in the industry in certain regions, %
Chapter 4 Industry Forecasts
4.1. Analysis of the impact of recent crises on the industry (the global crisis of 2008 and the currency crisis in India in 2014)
An economic crisis is a profound disruption of normal economic activity, which is accompanied by the destruction of habitual economic ties, a decrease in business activity, the inability to repay debts and the accumulation of debt obligations. This is a phenomenon of a market economy, repeating with a certain frequency, and depending on the scale, it can either concern a particular state or be of global importance. The crisis is accompanied by a sharp decline in production, bankruptcy of enterprises, a fall in the gross national product, a large-scale increase in unemployment, and often a depreciation of the national currency.
...
4.2. Analysis of the impact on the state aid industry at the current date
The Indian economy in February-March 2020 was under the powerful influence of two negative factors at once - the rapid spread of the covid-19 coronavirus infection pandemic and its detrimental impact on the global economy, as well as the collapse in oil prices. Against this background, the rupiah depreciated significantly against the dollar and the euro. In response to the situation, the government and the Bank of India have approved several packages of measures to support the economy and citizens.
The vast majority of the support measures announced by the president and the government concern only the industries that the government has identified as the most affected. That is, benefits apply only to legal entities and individual entrepreneurs whose main activity code (OKVED) specified in the Unified State Register (EGRLE) is included in the government list of such industries.
The activity of sanatorium and resort organizations was included in the list of sectors of the economy most affected by the deteriorating situation as a result of the spread of a new coronavirus infection.
The measures described in the table are support measures that may be useful in the industry under study, and which can still be used.
...
4.3. Assessment of the degree of impact of the crisis due to covid-19 on the analyzed market. Barriers existing in the market of sanatorium services
The coronavirus pandemic has heightened the importance of maintaining immunity. Programs for targeted health promotion have appeared in sanatoriums: “Strong immunity” and “Rehabilitation after covid-19”. Introduced procedures for the respiratory system.
There were online consultations of the doctor before arrival, to draw up a program for the first day in the sanatorium. There is also an online connection with the doctor after check-in.
To ensure safety in a pandemic, sanatoriums have introduced changes:
– maintaining social distance;
–– careful processing of the territory and premises;
– daily temperature measurement in a non-contact way;
–– use of masks in enclosed spaces;
- the use of flow recirculators and quartz lamps that are safe for humans;
– installation of dispensers with skin antiseptics;
...
4.4. Prospects and growth drivers for the health resort services market
Perspectives:
...
4.5. Forecast of the development of the market of sanatorium services in the context of the current economic crisis due to covid-19
Forecasting the dynamics of the volume of the market of sanatorium services is possible due to the forecast indicators of the development of the Indian economy, barriers and growth drivers that exist in the market.
The health resort industry will remain fragile in the medium term due to the economic impact of the fight against the new coronavirus infection.
...
Chapter 5 Forecasting Methodology
5.1. Methods for forecasting key industry indicators
Modern statistical forecasting methods are used, taking into account the actual dynamics of the industry and the impact of the current and projected general economic situation in connection with the spread of the covid-19 virus.
In addition, when compiling the forecast, changes in real incomes of the population, trends in consumer preferences in a crisis, development forecasts and the degree of impact of other factors affecting the industry are taken into account.
5.2. Sources of information for forecasting
Industry volume over the past 5 years
Industry dynamics in 2008–2009, in 2014–2015, in 2016–2020
Dynamics of macroeconomic indicators over the past 9–10 years
Current public assistance plans
Databases of the State Statistics Committee of India
Indian Revenue Service databases
Open sources (websites, portals)
Issuer reporting
Company websites
Media Archives
Regional and federal media
Insider sources
Specialized analytical portals
5.3. Timing of forecasting
The forecast belongs to the medium-term category - 5 years (2021-2025)
Diagrams
Diagram 1. Dynamics of the market volume of sanatorium services, 2016–2020, billion Rs.
Diagram 2. Stage of the life cycle of the market of sanatorium services
Diagram 3. Population dynamics in India, as of 01 Jan. 2012-2021, million people
Diagram 4. Dynamics of real incomes of the population of India, % to the previous year, 2012-1 half a year. 2021
Diagram 5. The volume of consumption in the market of sanatorium services per capita, 2016–2020, Rs./person
Diagram 6. Profitability of profit before tax (profit of the reporting period) in the industry of sanatorium services in comparison with all sectors of the Indian economy, 2016–2020, %
Diagram 7. Current liquidity (total coverage) for the industry of sanatorium services for 2016–2020, times
Chart 8. Dynamics of India's GDP, 2012-May 2021, % to the previous year
Diagram 9. Monthly dynamics of the US dollar against the rupee, Rs. for 1 US dollar, 2016-Sep. 2021
Chart 10. Internet penetration in India among the audience of 16 years and older, %, 2016-2020
Diagram 11. Shares of the largest competitors in the market of sanatorium services in 2020, %
Chart 12. Dynamics of the total revenue of the largest operators of the sanatorium services market (TOP-5) in India, 2016–2020, million Rs.
Diagram 13. Compact location of companies in the industry in certain regions, %
Diagram 14. Forecast of the volume of the market of sanatorium services in 2021–2025, billion Rs.
Tables
Table 1. Gross profitability of the spa industry in comparison with all sectors of the Indian economy, 2016-2020, %
Table 2. Absolute liquidity of the health resort industry compared to all sectors of the Indian economy, 2016-2020, times
Table 3. Consumer price indices in the market of sanatorium services in India in 2016-Aug. 2021, %
Table 4. Average prices in the market of sanatorium services in the Union Territories, 2016-Aug. 2021, Rs./person days
Table 5. STEP-analysis of factors influencing the market of sanatorium services
Table 6. Main companies participating in the market of sanatorium services in 2020
Table 7. Assessment of the impact of recent crises on the industry
Table 8. Analysis of the impact on the industry of the state aid proposed as of April 28.09.2021,
Table 9. Forecast indicators of the development of the Indian economy
All reports