Hotel Industry in India has witnessed tremendous boom in recent years. Hotel Industry is inextricably linked to the tourism industry and the growth in the Indian tourism industry has fuelled the growth of Indian hotel industry. The thriving economy and increased business opportunities in India have acted as a boon for Indian hotel industry. The arrival of low cost airlines and the associated price wars have given domestic tourists a host of options. The 'Incredible India' destination campaign and the recently launched 'Atithi Devo Bhavah' (ADB) campaign have also helped in the growth of domestic and international tourism and consequently the hotel industry.
In recent years government has taken several steps to boost travel &
tourism which have benefited hotel industry in India. These include the
abolishment of the inland air travel tax of 15%; reduction in excise
duty on aviation turbine fuel to 8%; and removal of a number of
restrictions on outbound chartered flights, including those relating to
frequency and size of aircraft. The government's recent decision to
treat convention centres as part of core infrastructure, allowing the
government to provide critical funding for the large capital investment
that may be required has also fuelled the demand for hotel rooms.
The opening up of the aviation industry in India has exciting
opportunities for hotel industry as it relies on airlines to transport
80% of international arrivals. The government's decision to
substantially upgrade 28 regional airports in smaller towns and
privatization & expansion of Delhi and Mumbai airport will improve
the business prospects of hotel industry in India. Substantial
investments in tourism infrastructure are essential for Indian hotel
industry to achieve its potential. The upgrading of national highways
connecting various parts of India has opened new avenues for the
development of budget hotels in India. Taking advantage of this
opportunity Tata group and another hotel chain called 'Homotel' have
entered this business segment.
According to a report, Hotel Industry in India currently has supply of
110,000 rooms and there is a shortage of 150,000 rooms fueling hotel
room rates across India. According to estimates demand is going to
exceed supply by at least 100% over the next 2 years. Five-star hotels
in metro cities allot same room, more than once a day to different
guests, receiving almost 24-hour rates from both guests against 6-8
hours usage. With demand-supply disparity, hotel rates in India are
likely to rise by 25% annually and occupancy by 80%, over the next two
years. This will affect the competitiveness of India as a cost-effective
To overcome, this shortage Indian hotel industry is adding about 60,000
quality rooms, currently in different stages of planning and
development, which should be ready by 2012. Hotel Industry in India is
also set to get a fillip with Delhi hosting 2010 Commonwealth Games.
Government has approved 300 hotel projects, nearly half of which are in
the luxury range. The future scenario of Indian hotel industry looks
extremely rosy. It is expected that the budget and mid-market hotel
segment will witness huge growth and expansion while the luxury segment
will continue to perform extremely well over the next few years.
Note: The above information was last updated on 21-07-2007