Hotel Development India—it’s going Up, Up, Up

By: Prabhash Bhatnagar


The hotel industry in India has entered the global arena, supported by its budding economy and the growth of the 'Incredible India' tourism brand.

The Domestic Factor

Amongst the exceptional features of the Indian hotel industry is the overwhelming volume of the domestic market. As a rule hotels receive double the number of domestic clients than international clients.

India is likely to witness a steady and continued trend of boom in expenditure, fuelled by higher disposable incomes. This is excellent news for the hotel industry as higher disposable incomes enhance the concept of traveling, for leisure. A healthy domestic demand and sustained foreign tourist inflow shall facilitate popular leisure destinations in absorbing potential hotel developments, thus continuing the current trend of value appreciation.

Investment Needs

As most branded hotels in India are at the top end of the market, the hotel industry is at present very top heavy. A number of companies are addressing the needs of the increasing domestic market for more economical hotels.

In response to the needs of this growing giant, many companies plan to extensively increase their portfolio over the next two years, by 100% and 50% respectively. Hotel companies have also taken steps to guarantee they profit from the country's huge domestic demand. Indian Hotels launched its IndiOne brand with huge success in Bangalore. Intercontinental Hotels Group also introduced their economy brand, Holiday Inn Express.


Markets like Bangalore, Mumbai, Delhi and Hyderabad have, witnessed strong demand from the extended-stay and domestic business travel segments. The surfacing of relatively new feeder markets and steady demand for quality lodging across most business destinations from niche markets, like the extended-stay segment, ensures that hotels now have a base demand that guarantees certain minimum level of occupancy. This type of demand is advantageous to hotels because it provides a base level of occupancy over an extended period that usually includes weekends and slow seasons.

The International Factor

Even though the international market is considerably smaller than India's domestic market, it also shows potential for growth. The country's appeal to international tourists has earlier been affected by the situation in Kashmir as well as the worldwide events of the past years. The situation has now improved due to relative geo-political steadiness and global economic growth. Tourism in India also benefits from the stronger economy of India's major source markets--the United Kingdom and the United States. The peace talks with Pakistan have also vastly bettered the situation.

Presently business travel dominates the international arena. The Indian subsidiary of Kuoni approximates that 80% of foreigners in hotels are there on business. While corporate business will obviously continue to increase as the economy grows, there is vast untapped potential in India’s leisure market. "Incredible India" has focused not only on promoting conventional holiday attractions and cultural tourism, but on defining distinctive markets from medical to spiritual tourism. In fact, India has already seen rising Japanese arrivals due to the endorsement of Buddhist travel.

International Investments

Marriott has announced plans to set up the Courtyard brand in India. Hilton Hotels announced plans for its first 10 hotel development projects with joint venture partner, DLF, in India. The Hilton-DLF joint venture will center on 3 Hilton Family brands, as well as the flagship Hilton, business brand, the Hilton Garden Inn and the long stay brand Homewood Suites.

Conclusion

All in all investing in a hotel, economy or luxury would be a smart move. It is a golden opportunity which will greatly enhance your company’s worth.


Prabhash Bhatnagar is Manager of Sales & Marketing, maker of hotel management software, and Resort management software handles the key aspects of the running of client’s business, including bookings & reservations, Housekeeping, Spa, POS and generating reports.