Incredible India, is the way world knows us! Interesting? Has the word Incredible borrowed its ’I’ from the ’I’T sector that had boomed in the late nineties before it busted off subtly or from ’i’mmense population of this country that make us jostle for every inch of space available, or may be ’I’ has something to do with ’i’mmune, as chronic corruption syndrome is being infused into all of us along with polio drops, or is it ’i’ncurable brooding attitude or may be our ’i’ncorrigible behaviour.
But, there is one ’I’ that is making incredible a more meaningful word in the Indian context i.e, Inn. Thanks to booming economy and ever surging business activities Indian hotel industry is now the closest to the word incredible than it was ever before.
India is no longer just an ’exotic’ country, but is now the destination of choice not just for foreign tourists, but also for business travellers. Need a testimony?
Digest this, foreign tourist arrivals in India rose 11.4 per cent in September from a year earlier, as the country’s tourism industry booms amid a strong economy and growth in business and leisure travel.
India had 2, 62, 925 foreign visitors in September, compared with 2, 35, 970 a year earlier, while foreign exchange earnings rose 16.1 per cent to $420.58 million.
India, which is Asia’s third-largest economy, is trying to boost tourism by running a high-profile publicity campaign called ’Incredible India’ to showcase attractions like its heritage palaces, jungles, ski slopes and spiritual and adventure tourism destinations.
The biggest beneficiary of this tourism boom in India is the hotel industry. And this seems to be just the beginning of what can be a long juggernaut for Indian hospitality business.
To anyone’s surprise there is already a mismatch between demand and supply, leading to higher occupancies and ever-springing average room rates. During 2004-05, revenue per available room in hotels across India increased by 29 per cent over the 2001-02 level. And if this is a sign of the things to come then it will not be an exaggeration to predict that demand will outpace supply in the short to medium term and average room rates will take 13-14% jump in next two years. Incredible, isn’t it?
India’s unique advantage for the hotel industry, as is the case for most other industries, is the chunk of demand is domestically generated. Just 16 to 18 per cent of its demand for rooms comes from foreign tourists. According to estimates, 100 million Indians travel within their country each year, enough to fill the capacities being set up.
India till very recently was considered as a six or seven city market, including four metros and other tourist hotspots like Jaipur and Agra. However, the rise in economic activities across the country has lead to an increase in demand in several other smaller cities including Chandigarh, Pune, Banglore and Hyderabad among others.
According to a government estimate, India needs about 80, 000 rooms in all categories over the next two to three years at an estimated cost of about $8b to $9b, and out of which 20 percent should be in premium segment. Currently, India has 1800 properties comprising more than 84, 000 rooms with an occupancy rate of 73%. But large chunk of Indian hospitality industry is unorganised (60%) and the majors in the organised sectors are the Taj, Oberoi, ITC Hotels, Leela and Asian Hotels among others.
Clearly, the supply of the hotel rooms are on the shorter side and a quantum investment is required to meet the accentuating demand. Probably, that is why IT bell-wether, Infosys is building a 500 room hotel for its guests to save them from difficulty in getting rooms.
Moreover, to buck the trend in the Indian hotel industry almost all major foreign players are lining up to set up their branded edifices. At present there are 26 hotel brands in the country which is expected to reach 40 by 2010 as foreign majors like Hilton, Conard, Scandic among others are planning to set up shop in India.
Hotel industry has always been a bi-product of other core businesses and as other businesses are prospering, surely, hospitality industry would like to make most out of it.