According to the World Travel and Tourism Council, the hospitality sector, which has been growing at an annual rate of 8.8%, has the potential to earn $24 billion in annual foreign exchange by 2015, which is awesome amount of money contributing to the India Inc Growth Story.
Demand for hotel rooms is towering in India with the growth of the Indian Economy. Foreigners & NRIs are visiting India for both Business and Vacation which is the big reason for the need for hotel rooms. The rise of low-fare airlines is also bringing domestic air travel within reach of more Indians, who, until recently, had little chance of ever boarding a jet, is again another factor pushing the hospitality industry to its edges.
For all the accounted travelers, India offers only 110,000 hotel rooms. China has 10 times as many, and the United States 40 times as many. The New York metropolitan region alone has about as many rooms as all of India.
The shortage is pushing peak season rates for basic rooms into the stratosphere, by Indian standards, and attracting some of the world’s best-known names in hotels — Accor, Hilton, Wyndham, EMaar, Pan Pacific etc to invest heavily in India.
In Bangalore, rooms are so costly that traveling salespeople and other professionals often commute from as far away as Mumbai, 1,000 kilometers, or 620 miles, away, to save the cost of staying in Bangalore. Many corporates are making sales people plan one day trips and fly in the morning and back in the evening so as to save on the hotel Bill. The domestic airline fair is getting cheaper and cheaper hence making traveling in and out of a metro a more viable option than staying in a hotel.
According to New York Times, “The high prices are all the more striking in a low-wage country like India. At a $500 rack rate for the five-star rooms favored by business travelers, a hotel employee earning minimum wage here would have to work about a year to pay for one night’s stay, versus about two and a half weeks’ work for an American earning minimum wage… Even though the Chinese earn twice as much as Indians on average, India has the more expensive rooms, according to a recent edition of Travel Business Analyst, an industry newsletter. Comparing rooms of similar quality, suitable for business travelers, a room in Delhi cost $187 on average this year, versus $122 in Beijing; a room in Mumbai was $178, versus $150 in Shanghai.”
Indian software giants Wipro and Infosys are taking steps to provide their guests with accommodation. Infosys, the Indian software giant with 66,000 employees worldwide and they get 40-50 visitors every day and also valued overseas clients and not only getting the right type of a room in an issue but the time taken to commute from the hotel to their offices is also too high looking at the maddening traffic conditions in Bangalore.
Infosys, has now built a 500-room, in-house hotel next to its headquarters in Bangalore. By June, it expects to have 15,000 company- owned rooms across India — an eighth of all the rooms in the country and more than any Indian hotel chain. They think doing it in-house works better for them in India.
If we have a close look at the recent investments made in the India Hospitality Industry,
Emaar MGF – India’s leading real estate developer today announced a 50:50 Joint Venture with Premier Travel Inn – a subsidiary of Whitbread PLC, UK’s largest hospitality company. In the past Emaar MGF has tied up with Accor – global leaders in economy & budget Hotels to bring 100 Formule 1 hotels across India with an investment of US$ 300 million.
DLF Forms JV With Hilton For Hotels In India to develop and own 75 hotels and serviced apartments over the next seven years, beginning with 20 hotels in Chandigarh, Chennai and Kolkata. The hotels will cover several Hilton brands, including Hilton Hotels, Hilton Garden Inn, Homewood Suites by Hilton and Hilton Residences. DLF will hold 74 percent and Hilton will hold the remaining stake. The JV plans to invest up to $143 million.
Also in line line, Singapore-based Meuse Hotels and Hospitality Ltd will invest Rs 1,000 crore over the next two years to set up 100 hotels mostly targeting tourist and emerging destinations in the country.
UK-based Dawnay, Day Group is to invest $200 million in India over the next few years to build hotels.
The Leela Group of Hotels will invest a whopping Rs 2,200 crore in the next three years to develop six hotel projects in different Indian cities who will come up with five new hotels and service apartments by 2010. It will bring the hotel in cities including Hyderabad, Chennai, Udaipur, Pune, and Delhi whereas service apartments will be developed in Gurgaon.
India does still need budget hotels, B&Bs otherwise for a foreseeable future, the shortage of viable options in hospitality in India might still continue the same. By some experts, it is predicted that 15-20% reduction in premium hotels might be observed as a result of more availability of hotels in the near future.
Recognizing that hotels employ 180 people for every 100 rooms, by some industry estimates, the Indian government is now matching up and working hard to expand supply. According to an online news agency, it recently paid for half-page advertisements in Delhi newspapers that urged families to convert their homes into bed-and-breakfast operations, which can charge about $35 a night. The government's goal is to approve enough homes turned hostels to offer another 10,000 rooms in time for the Commonwealth Games in 2010. This way, not only does the problem with tourism and hospitality sorts out, but employment opportunities in abundant help fight poverty and can keep India going steady with its economic graph on a steady rise.
Contributed By : Kaustubh Jarag
Demand for hotel rooms is towering in India with the growth of the Indian Economy. Foreigners & NRIs are visiting India for both Business and Vacation which is the big reason for the need for hotel rooms. The rise of low-fare airlines is also bringing domestic air travel within reach of more Indians, who, until recently, had little chance of ever boarding a jet, is again another factor pushing the hospitality industry to its edges.
For all the accounted travelers, India offers only 110,000 hotel rooms. China has 10 times as many, and the United States 40 times as many. The New York metropolitan region alone has about as many rooms as all of India.
The shortage is pushing peak season rates for basic rooms into the stratosphere, by Indian standards, and attracting some of the world’s best-known names in hotels — Accor, Hilton, Wyndham, EMaar, Pan Pacific etc to invest heavily in India.
In Bangalore, rooms are so costly that traveling salespeople and other professionals often commute from as far away as Mumbai, 1,000 kilometers, or 620 miles, away, to save the cost of staying in Bangalore. Many corporates are making sales people plan one day trips and fly in the morning and back in the evening so as to save on the hotel Bill. The domestic airline fair is getting cheaper and cheaper hence making traveling in and out of a metro a more viable option than staying in a hotel.
According to New York Times, “The high prices are all the more striking in a low-wage country like India. At a $500 rack rate for the five-star rooms favored by business travelers, a hotel employee earning minimum wage here would have to work about a year to pay for one night’s stay, versus about two and a half weeks’ work for an American earning minimum wage… Even though the Chinese earn twice as much as Indians on average, India has the more expensive rooms, according to a recent edition of Travel Business Analyst, an industry newsletter. Comparing rooms of similar quality, suitable for business travelers, a room in Delhi cost $187 on average this year, versus $122 in Beijing; a room in Mumbai was $178, versus $150 in Shanghai.”
Indian software giants Wipro and Infosys are taking steps to provide their guests with accommodation. Infosys, the Indian software giant with 66,000 employees worldwide and they get 40-50 visitors every day and also valued overseas clients and not only getting the right type of a room in an issue but the time taken to commute from the hotel to their offices is also too high looking at the maddening traffic conditions in Bangalore.
Infosys, has now built a 500-room, in-house hotel next to its headquarters in Bangalore. By June, it expects to have 15,000 company- owned rooms across India — an eighth of all the rooms in the country and more than any Indian hotel chain. They think doing it in-house works better for them in India.
If we have a close look at the recent investments made in the India Hospitality Industry,
Emaar MGF – India’s leading real estate developer today announced a 50:50 Joint Venture with Premier Travel Inn – a subsidiary of Whitbread PLC, UK’s largest hospitality company. In the past Emaar MGF has tied up with Accor – global leaders in economy & budget Hotels to bring 100 Formule 1 hotels across India with an investment of US$ 300 million.
DLF Forms JV With Hilton For Hotels In India to develop and own 75 hotels and serviced apartments over the next seven years, beginning with 20 hotels in Chandigarh, Chennai and Kolkata. The hotels will cover several Hilton brands, including Hilton Hotels, Hilton Garden Inn, Homewood Suites by Hilton and Hilton Residences. DLF will hold 74 percent and Hilton will hold the remaining stake. The JV plans to invest up to $143 million.
Also in line line, Singapore-based Meuse Hotels and Hospitality Ltd will invest Rs 1,000 crore over the next two years to set up 100 hotels mostly targeting tourist and emerging destinations in the country.
UK-based Dawnay, Day Group is to invest $200 million in India over the next few years to build hotels.
The Leela Group of Hotels will invest a whopping Rs 2,200 crore in the next three years to develop six hotel projects in different Indian cities who will come up with five new hotels and service apartments by 2010. It will bring the hotel in cities including Hyderabad, Chennai, Udaipur, Pune, and Delhi whereas service apartments will be developed in Gurgaon.
India does still need budget hotels, B&Bs otherwise for a foreseeable future, the shortage of viable options in hospitality in India might still continue the same. By some experts, it is predicted that 15-20% reduction in premium hotels might be observed as a result of more availability of hotels in the near future.
Recognizing that hotels employ 180 people for every 100 rooms, by some industry estimates, the Indian government is now matching up and working hard to expand supply. According to an online news agency, it recently paid for half-page advertisements in Delhi newspapers that urged families to convert their homes into bed-and-breakfast operations, which can charge about $35 a night. The government's goal is to approve enough homes turned hostels to offer another 10,000 rooms in time for the Commonwealth Games in 2010. This way, not only does the problem with tourism and hospitality sorts out, but employment opportunities in abundant help fight poverty and can keep India going steady with its economic graph on a steady rise.
Contributed By : Kaustubh Jarag
1 comment:
I think a simple answer would be the Shortage of Rooms per capita! This is leading to tremendous hike in the room rates and also occupancy of 100% on weekends.
This is a worrying situation for all developing economies.
Cheers!
Shrinath Navghane
CEO
SDN Financial Group
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