FUNDAMENTAL ANALYSIS OF HOTEL

INDUSTRY IN INDIA
Submitted by: Jenifer Pereira, 81.

HOTEL INDUSTRY IN INDIA

Over the last decade and half the mad rush to India for business opportunities has
intensified and elevated room rates and occupancy levels in India. Even budget
hotels are charging USD 250 per day. The successful growth story of 'Hotel
Industry in India' seconds only to China in Asia Pacific.

'Hotels in India' have supply of 110,000 rooms. According to the tourism ministry,
4.4 million tourists visited India last year and at current trend, demand will soar to
10 million in 2010 - to accommodate 350 million domestic travelers. 'Hotels in
India' has a shortage of 150,000 rooms fueling hotel room rates across India. With
tremendous pull of opportunity, India is a destination for hotel chains looking for
growth. The World Travel and Tourism Council, India, data says, India ranks 18th
in business travel and will be among the top 5 in this decade. Sources estimate,
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 India' room rates are most likely to rise 25%
annually and occupancy to rise by 80%, over the next two years. 'Hotel Industry in
India' is eroding its competitiveness as a cost effective destination. However, the
rating on the 'Indian Hotels' is bullish. 'India Hotel Industry' is adding about 60,000
quality rooms, currently in different stages of planning and development and
should be ready by 2012. MNC Hotel Industry giants are flocking India and
forging Joint Ventures to earn their share of pie in the race. Government has
approved 300 hotel projects, nearly half of which are in the luxury range. Sources
said, the manpower requirements of the hotel industry will increase from 7 million
in 2002 to 15 million by 2010.
With the USD 23 billion software services sector pushing the Indian economy
skywards, more and more IT professionals are flocking to Indian metro cities.
'Hotel Industry in India' is set to grow at 15% a year. This figure will skyrocket in
2010, when Delhi hosts the Commonwealth Games. Already, more than 50
international budget hotel chains are moving into India to stake their turf.
Therefore, with opportunities galore the future 'Scenario of Indian Hotel Industry'
looks rosy.

GROWTH OF HOTEL INDUSTRY

The increase in the need for accommodation has hugely increased the demands for
hotels which in turn has boosted the growth of the hospitality sector in India
especially that of the hotel industry.

Over the last decade and half the mad rush to India for business opportunities has
intensified and elevated room rates and occupancy levels in India. The successful
growth story of 'Hotel Industry in India' seconds only to China in Asia Pacific. The
Hotel Industry is inextricably linked to the tourism industry and the growth in the
Indian tourism industry has fueled 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.

The hotel industry in India is going through an interesting phase. The industry has
a capacity of 110,000 rooms. According to the tourism ministry, 4.4 million
tourists visited India last year and at the current rate, the demand will soar to 10
million by 2010 – to accommodate 350 million domestic travelers. The hotels of
India have a shortage of 150,000 rooms fueling hotel room rates across India. With
tremendous pull of opportunity, India has become a destination for hotel chains
looking for growth.
Due to such a huge potential available in this segment, several global hotel chains
like the Hilton, Accor, Marriott International, Berggruen Hotels, Cabana Hotels,
Premier Travel Inn (PTI), InterContinental Hotels group and Hampshire among
others have all announced major investment plans for the country. The
Government's move to declare hotel and tourism industry as a high priority sector
with a provision for 100 per cent foreign direct investment (FDI) has also provided
a further impetus in attracting investments in to this industry.

It is estimated that the hospitality sector is likely to see US$ 11.41 billion rise in
the next two years, with around 40 international hotel brands making their presence
known in the country by 2011. Simultaneously, international hotel asset
management companies are also likely to enter India. Already, US-based HVS
International has firmed up plans to enter India, and industry players believe others
like Ashford Hospitality Trust and IFA Hotels & Resorts among others are likely
to follow suit.

One of the major reasons for the increase in demand for hotel rooms in the country
is the boom in the overall economy and high growth in sectors like information
technology, telecom, retail and real estate. Rising stock market and new business
opportunities are also attracting hordes of foreign investors and international
corporate travelers to look for business opportunities in the country.

Also India has been ranked as the fourth most preferred travel destination and with
Lonely Planet selecting the country among the top five destinations from 167
countries; India has finally made its mark on the world travel map. Thus, the
increase in the need for accommodation has hugely increased the demands for
hotels which in turn has boosted the growth of the hospitality sector in India
especially that of the hotel industry.
 OBJECTIVES OF THE STUDY
1. The main objective of the project is to do fundamental analysis of the hotel
industries in India.
2. Secondly to study the present scenario of the hotel industry.
3. Analyze the information collected on sales, profit, earning per share, market
price etc.
4. To do Ratio Analysis of the selected companies and make necessary comments
on it so as to provide complete idea and core ideology of the company.
5. To conclude about the fundamental position of the selected companies according
to the findings.

NEED FOR THE STUDY

1. To identify the reasons behind the growth of hotel industry in India and its
impact on the growth of the country.

2. To find out the efforts and contribution made by the hotels to attract the

tourists.