Facts and Figures of Indian Hospitality Industry

Overview
According to Economic Survey of 2010-11 the average annual growth rate of hotel and restaurant sector has been 8.8 per cent for the period during 2007-2016

The Hotel and tourism industrys contribution to the Indian economy by way of foreign direct investments (FDI) inflows were pegged at US$ 2.35 billion from April 2000 to February 2011, according to the Department of Industrial Policy and Promotion (DIPP) Thus domestic hospitality sector is expected to see investments of over US$ 11 billion by 2012, with 40 international brands making their presence in the country in the next few years.

Sector Status
Several studies have highlighted the demand-supply gap in hotel rooms in India. Most of them have estimated a gap of 150,000 hotel rooms
Since the construction of hotels is capital intensive with a long gestation period, the Government is making efforts to stimulate investments in this sector and speed up the approval process to attract private sector investments. 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

 Although, organized sector contributes only one-third of revenue of the overall revenue of the industry but several well known hotel chains have lined up aggressive expanding plans for India
An upward trend in growth of the overall hotel sector is expected in the next few years, whereby the industry is expected to grow to US$ 36 billion by 2018.

Key Points
India occupies the sixty-eighth position among the top tourist destinations in the world, according to the Travel and Tourism Competitiveness Report 2011
In the general budget for 2011-12, Rs 11.7 bn for development of tourism infrastructure and promotion of tourism was allocated. This figure is higher by Rs 1.0 bn as compared what was allocated in the previous year. The Centre and States are also working out a PPP (Public-Private-Partnership) model to increase hotel capacity. Government of India increased spend on advertising campaigns (including for the campaigns 'Incredible India' and 'Athithi Devo Bhava The ministry granted Tourist Visa on Arrival (T-VoA) for the citizens of Finland, Japan, Luxembourg, New Zealand and Singapore It also promoted India as a safe tourist destination and undertook various measures, such as stepping up vigilance in key cities and at historically important tourist sites

Supply As of January 2011, the total count of hotel rooms in India is 120,000 and the country is expected to require additional 80,000. The shortage is more prominent in budget and mid market segment. This will support improvement in ARRs (Average Room Rates) in this segment for the next few years.

Demand Largely depends on business travelers but tourist traffic is also on the rise. Demand normally spurts in the peak season between November and March.
Barriers to entry High capital costs, poor infrastructure facilities and scarcity of land especially in the metros. Bargaining power of suppliers Limited due to higher competition, especially in the metros.

Bargaining power of customers Higher in metro cities due to increasing room supply.
Competition Intense in metro cities, slowly picking up in secondary cities. Competition has picked up due to the entry of foreign hotel chains.

Key Players

Public Players ITDC Hotels Hotel Corporation of India

Private Players ITC Hotels Limited Indian Hotels Company The Oberoi Group (EIH) Hotel Leela Venture Ltd. Asian Hotels Limited Radisson Hotels & Resorts

Indian hospitality industry International players

International players include Hilton, Shangri-La, Radisson, Mariott, Meridian, Sheraton, Hyatt, Holiday Inn, InterContinental and Crown Plaza. Global Brands who are planning to enter India in joint venture with domestic players include Amanda, Satinwoods, Banana Tree, Hampton Inns, Scandium by Hilt and Mandarin Oriental

Some announcements
Carlson Group is bringing Regent to Gurgaon by 2013. To tie-up with Pioneer Urban Land and Infrastructure that will invest US$ 49 million. The Leela plans to open six more properties by 2013. ITC Ltd expects to add 8-10 hotel sin India in the next 3-5 years. The Thailand-based hospitality major, Amari, plans seven 4-star hotels near major airports in the country

MARKET LEADER
ITC Limited
ITC is one of India's foremost private sector companies with a market capitalisation of over US $ 33 billion and a turnover of US $ 7 billion ITC Hotels

ITC Hotel Maurya Sheraton & Towers, New Delhi

ITC Hotel Grand Maratha Sheraton & Towers, Mumbai ITC Hotel Sonar Bangla Sheraton & Towers, Kolkata Welcome Hotel Mughal Sheraton, Agra Welcom Heritage ( These hotels are spread over all over india and are currently operating in Rajasthan, Punjab, Himachal Pradesh, Madhya Pradesh, Uttaranchal, Jammu & Kashmir, West Bengal, Tamil Nadu, Haryana and Karnataka.)

THE FOLLOWER
The Indian Hotels Company Limited (IHCL)
Incorporated by the founder of the Tata Group, Mr. Jamsetji N. Tata, the company opened its first property, The Taj Mahal Palace Hotel, Bombay in 1903 The Taj, a symbol of Indian hospitality, completed its centenary year in 2003

IHCL operate in the luxury, premium, mid-market and value segments

Taj Hotels Taj (luxury full-service hotels, resorts and palaces) Taj Exotica Taj Safaris Vivanta by Taj Hotels & Resorts The Gateway Hotel Ginger

CHALLENGES FOR HOSPITALITY INDUSTRY

1. Shortage of skilled employees 2. Retaining quality workforce 3. Shortage of rooms 4. Intense competition and image of India: 5. Customer expectations

6. Manual back-end
7. Human resource development

Future tense
TRENDS IN HOSPITALITY SECTOR
Low Cost Carriers Budget Hotels Service Apartments Technology Loyalty Travel

Prospects
The Indian hotel industry is still in the nascent stages of recovery
Despite an anticipated revival in room demand, hotels will not be able to hike ARRs significantly as the expected additions to room inventory will intensify competition. Chennai, Pune and Hyderabad are expected to be among the worst-hit destinations The industry is yet to witness a sustained and significant improvement in occupancy levels and ARRs. In the long-term, the outlook for the sector is very promising. Demand levels are likely to improve as economic growth gathers momentum and companies increase spending on travel

 The number of foreign tourists is expected to reach 6.2 m during 2011 and further to 11.1 m by 2021
Investment in Travel & Tourism is estimated at Rs 1.2 trillion in 2011 and is expected to reach Rs 2.8 trillion by 2021 (implying a CAGR of 8.7%), according to World Travel and Tourism Committee (WTCC) estimates In light of the cash crunch and high interest rates, the players are approaching fresh expansion projects with caution. While the long term fundamentals remain strong, the sector is highly dependent on external factors which could possibly mar its performance.