Introduction

Travel and tourism is the largest service industry in India. This industry provides heritage, cultural,
medical, business and sports tourism. It is expected that the tourism sectors contribution to the countrys
gross domestic product (GDP) will grow at the rate of 7.8 per cent yearly in the period 20132023.
The Indian tourism sector has been flourishing in recent years due to the improved connectivity to and
from the country. Also, better lodging facilities at the tourist destinations has been a factor which has
contributed to increased Foreign Tourist Arrivals (FTA).
The policies and changes implemented by the Government of India has also been instrumental in
providing the necessary boost to the Indian tourism and hospitality industry and attracting more and more
foreign tourists every year.

Market Size
The tourism and hospitality sector is among the top 10 sectors in India to attract the highest foreign direct
investment (FDI). In the period April 2000 August 2014, this sector attracted around US$ 7,441 million
of FDI, according to the Department of Industrial Policy and Promotion (DIPP).
A high and positive growth of 12.5 per cent was registered in foreign tourist visits (FTVs) to north-eastern
states of India during 2012 from 2011, which further rose by more than 100 per cent to register a growth
of 27.9 per cent during 2013 from 2012. Among these north-eastern states, Manipur recorded the highest
FTVs followed by Arunachal Pradesh and then Tripura.
FTAs in India witnessed a growth of 12.9 per cent in the period July 2013 July 2014, according to data
received from Ministry of Tourism, Government of India. The FTAs during the period JanuaryJuly 2014
stood at 4.11 million as compared to 3.87 million during the corresponding period of 2013, registering a
growth of 4.4 per cent. USA contributed the highest number to foreign arrivals in India followed by
Bangladesh and the UK.
Foreign exchange earnings (FEE) during JanuaryJuly 2014 stood at US$ 11.055 billion as compared to
US$ 10.85 billion during the same period last year. FEE during July, 2014 stood at Rs 10,336 crore (US$
1.68 billion) compared to Rs 8,620 crore (US$ 1.41 billion) in July, 2013.

Investments
With the rise in the number of global tourists and realising Indias potential, many companies have
invested in the tourism and hospitality sector. Some of the recent investments in this sector are as
follows:
MakeMyTrip Ltd plans to set up a US$ 15 million innovation fund to support early-stage travel companies, with a
special focus on mobile and IP-based companies. This is an inorganic growth strategy by which they are pursuing
M&A opportunities in the travel technology space.

Peppermint Hospitality has aggregated close to 2,200 operational hotel rooms across the country with the
acquisition of Bengaluru-based Boutique Hotel Management & Marketing Services Ltd, which has 60 hotels in its
portfolio. Peppermint Hospitality has five operational hotels and is present in overseas markets of Florence, Italy
and the UK that are operated through the management contract route.

IFC has invested US$ 21 million in SAMHI Hotels through compulsorily convertible debentures. This is IFC's first
investment in the hotel sector in India. SAMHI has seven operational hotels in Greater Noida, Ahmedabad,
Bengaluru, Hyderabad and Pune.

Bengaluru-based Embassy Group plans to invest Rs 1,500 crore (US$ 245.13 million) for the expansion of its
hospitality business in India. The Embassy Group is also in the process of buying out the property on which the
Four Seasons hotel is located, entailing an investment of Rs 600 crore (US$ 98.06 million).

Indian Hotels Co Ltd (IHCL) plans to add 30 hotels with 3,700 rooms and invest Rs 440 crore (US$ 71.91 million)
for the next three years.

Government Initiatives

The Indian government has realised the countrys potential to rise in the tourism industry and has taken
several steps to make India a global tourism hub. Some of the recent government initiatives in the sector
are as follow:
The Government of India has launched the Incredible India mobile application. The app will help tourists to seek
information, besides enabling quality and reliable services from service providers recognised by the Government of
India. This app demonstrates the Ministry of Tourisms commitment to the use of technology for service delivery

The Ministry of Tourism, Government of India has launched the new tourism brand for the Union Territories of
Daman and Diu and Dadra and Nagar Haveli, as well as released the Vision 2020 publication for Dadra and Nagar
Haveli. This step by the government has been taken with a view to help in overall economic development of these
union territories.

The West Bengal government has decided to set up an eco-tourism board to project the state as a major tourist
destination. Work for developing a mega tourism project has already started in Jalpaiguri district and plans to
develop similar projects in Sylee and Kunjanagar is under discussion.

The Tourism Ministry of India along with the state government of Maharashtra plan to create a cultural hub on the
lines of Times Square, New York. The vision behind such a cultural hub is to provide popular entertainment as well
as access to heritage and culture for the benefit of international tourists, domestic tourists and the people of
Mumbai.

Road Ahead
The medical tourism market in India is projected to hit US$ 3.9 billion mark this year having grown at a
compounded annual growth rate (CAGR) of 27 per cent over the last three years, according to a joint
report by FICCI and KPMG. Also, inflow of medical tourists is expected to cross 320 million by 2015
compared with 85 million in 2012.
The tourism industry is also looking forward to the E-visa scheme which is expected to double the tourist
inflow to India. Enforcing the electronic travel authorisation (ETA) before the next tourism season, which
starts in November, will result in a clear jump of at least 15 per cent, and this is only the start, as per Mr
Madhavan Menon, Managing Director, Thomas Cook India.
Exchange Rate Used: INR 1 = US$ 0.0163 as on October 28, 2014
References: Media Reports, Ministry of Tourism, Press Releases, Department of Industrial Policy and
Promotion (DIPP)

History[edit]

The Tabard Inn, Southwark, London

Facilities offering hospitality to travellers have been a feature of the earliest civilizations. In GrecoRoman culture hospitals for recuperation and rest were built atthermal baths. During the Middle
Ages various religious orders at monasteries andabbeys would offer accommodation for travellers
on the road.
The precursor to the modern hotel was the inn of medieval Europe, possibly dating back to the rule
of Ancient Rome. These would provide for the needs of travelers, including food and
lodging, stabling and fodder for the traveler's horse(s) and fresh horses for the mail coach. Famous
London examples of inns include the George and the Tabard. A typical layout of an inn had an inner
court with bedrooms on the two sides, with the kitchen and parlour at the front and the stables at the
back.[1]
For a period of about 200 years from the mid-17th century, coaching inns served as a place for
lodging for coach travelers (in other words, a roadhouse). Coaching innsstabled teams
of horses for stagecoaches and mail coaches and replaced tired teams with fresh teams.
Traditionally they were seven miles apart but this depended very much on the terrain.

Tremont House in Boston,Massachusetts was a luxury hotel, and the first to provide indoor plumbing.

Some English towns had as many as ten such inns and rivalry between them was intense, not only
for the income from the stagecoach operators but for the revenue for food and drink supplied to the
wealthy passengers. By the end of the century, coaching inns were being run more professionally,
with a regular timetable being followed and fixed menus for food.[2]
Inns began to cater for richer clients in the mid-18th century, and consequently grew in grandeur and
the level of service provided. One of the first hotels in a modern sense was opened in Exeter in
1768, although the idea only really caught on in the early 19th century. In 1812 Mivart's
Hotel opened its doors in London, later changing its name to Claridge's.[3]
Hotels proliferated throughout Western Europe and North America in the 19th century, and luxury
hotels, including Tremont House and Astor House in the United States,[4] Savoy Hotel in the United
Kingdom and the Ritz chain of hotels in London and Paris, began to spring up in the later part of the
century, catering to an extremely wealthy clientele.

Standards of hotel classification[edit]

The more common classification systems include "star" rating, letter grading, from "A" to "F",
diamond or simply a "satisfactory" or "unsatisfactory" footnote to accommodation such as hostels
and motels. Systems using terms such as Deluxe/Luxury, First Class/Superior, Tourist
Class/Standard, and Budget Class/Economy are more widely accepted as hotel types, rather than
hotel standards.
Some countries have rating by a single public standard Belgium, Denmark, Greece, Italy, Malta,
Netherlands, Portugal, Spain and Hungary have laws defining the hotel rating. In Germany, Austria
and Switzerland, the rating is defined by the respective hotel industry association using a five-star
system the German classifications are Tourist (*), Standard (**), Comfort (***), First Class (****)
and Luxury (*****), with the mark "Superior" to flag extras beyond the minimum defined in the
standard, but not enough to move the hotel up to the next tier ranking. The Swiss hotel rating was
the first non-government formal hotel classification beginning in 1979[3] It did influence the hotel
classification in Austria and Germany.[3] The formal hotel classification of the DEHOGA (German
Hotel and Restaurant Association) started on August 1, 1996 and proved very successful with 80%
of guests citing the hotel stars as the main criteria in hotel selection.[4] This implementation
influenced the creation of a common European Hotelstars rating system that started in 2010 (see
below).
In France, the rating is defined by the public tourist board of the department using a four-star system
(plus "L" for Luxus) which has changed to a five-star system from 2009 on. In South Africa and
Namibia, the Tourist Grading Council of South Africa has strict rules for a hotel types granting up to
5 stars. In India, the classification of hotels is based on two categories such as Star and Heritage.
Hotels in India are classified by Hotel and Restaurant Association Classification Committee
(HRACC), Ministry of Tourism, India.[5]

The Growing Indian Hospitality Industry

India has the potential to become the number one tourist destination in the world with the demand
growing at 10.1 per cent per annum, the World Travel and Tourism Council (WTTC) has predicted.
The WTO (World Travel Organisation) predicts that India will receive 25 million tourists by year 2015.
Major attractions in India are the world's highest mountains, miles of coastline with excellent beaches,
tropical forests and wildlife, desert safari, lagoon backwaters, ancient monuments, forts and palaces,
adventure tourism and, of course, the Taj Mahal.
India currently has over 200,000 hotel rooms spread across hotel categories and guest-houses and is still
facing a shortfall of over 100,000 rooms (source: FHRAI).
The country is witnessing an unprecedented growth in hotel constructions and will be adding almost
114,000 hotel guest rooms to its inventory over the next five years. (source: HVS)
The earlier setbacks in global tourism have strengthened the Department of Tourism's resolve to
promote India's tourism through aggressive marketing strategies through its campaign 'Incredible India'.
The 'marketing mantra' for the Department of Tourism is to position India as a global brand to take
advantage of the burgeoning global travel and trade and the vast untapped potential of India as a
destination.
The Indian Hospitality Industry An Overview
The current scenario
Existing hotel rooms in India: 202,963, source FHRAI
Revenue of the Indian hotel industry FY 2009-10: US$ 137.36 (INR 47,889.03 crore)
30% of this revenue i.e. US$ 41.2 million (INR 14,366.7 crore) went back into the market in FY 200809 as operating expenses

Number of hotels and restaurants in India:

Hotel category

No. of Hotels

No. of Rooms

5 star deluxe/5 star

165

43, 965

4 Star

134

20, 770

3 Star

505

30,100

2 Star

495

22,950

1 Star

260

10,900

Heritage

70

4,200

Uncategorised

7,078

Total

8,707

1,32,885

Restaurants

12,750

What the future holds:

Despite the global recession, inflation, terrorism and other factors, the overall outlook for the
Indian hospitality market is optimistic and will remain so says HVS

India remains the second fastest growing economy in the world and the economic growth of the
country is at 7.1% of the GDP as declared by Mr. Pranab Mukherjee, Finance Minister, India.

The Tourism Ministry, Government of India, has set a target of 10 million tourists to India by
2010

The WTO (World Travel Organisation) predicts that India will receive 25 million tourists by year
2015

Projected investments years 2009-015

Rooms being built across hotel categories: 114,000, source HVS

Investment in rupees - approximation of INR 400 million

THE FHRAI is now the 3rd largest Hotel & Restaurant Association in the
world !
The Federation of Hotel & Restaurant Associations of India, often known by the acronym, FHRAI, is
the Apex Body of the four Regional Associations representing the Hospitality Industry. FHRAI provides
an interface between the Hospitality Industry, Political Leadership, Academics, International
Associations and other Stake Holders. FHRAI is committed to promote and protect the interests of the
Hospitality Industry

By actively seeking better privileges and more concessions for the Industry. FHRAI members are
always kept abreast with the latest trade information and trends, statistical analysis and reports on
various topics that have a direct impact on the Industry, Government notifications and circulars.

FHRAI helps the Hospitality Industry to grow, prosper and keep in pace with the development in the
International scenario.

With 3876 members comprising of approximately 2557 hotels, 1216 restaurants, 99 associate
members and the 4 regional associations, FHRAI is truly the voice of the Hospitality Industry that
brings several million dollars to the exchequer and employs more than 17 million direct workers.

FHRAI is the voice of the Hospitality Industry and provides an interface between the Hospitality
Industry, Political Leadership, Academics, International Associations and other Stake Holders.

FHRAI is committed to the progress of the Industry through the various activities like education and
training, research and publication, Annual Convention to promote interaction with Government
officials, political leaders and stake holders of the Industry.

FHRAI is managed by the Executive Committee headed by the elected President having a tenure of
one year. The Executive Committee comprises of members from the four Regional Associations. The
day-to-day business is conducted by the Secretariat headed by the Secretary General.
Over the years FHRAI has strived to fulfill the mission that the Federation has set for itself; that of
representing, promoting and developing the Hospitality Industry in India. There have been many
successes along the way and the past one year has been specially fruitful.