The Dire Need of Hotels in India

The current scenario

The Indian economic bubble has managed to achieve a commendable feat of growing bigger and bigger without bursting. The consequences are there for all to see. The Bull Run in the Indian stock markets has been unstoppable and the much ridiculed spending power of the average Indian has touched new highs. Above all, the Indian economy is showing no signs of slowing down, and promises to grow at an incredible rate. This scenario has been particularly favourable for the hotel and hospitality industry. The Incredible India! Campaign, cheaper airfares, and eased security concerns because of improved relations with Pakistan, have together added more fuel to the already booming tourism industry.

Lack of hotels in India

But unfortunately, the hotel and hospitality industry here has yet to catch up with this growth. The introduction of the bed and breakfast scheme - which offers tourist accommodation at houses that have rooms to spare - is ample proof of the scarcity of hotel rooms in India. The demand for rooms is pitched at 90,000 rooms, which can hardly be met by the supply of 61,000 rooms. To add to this, the demand-supply difference is expected to rise, taking into account the growth in the tourism industry. Today, the tourism industry is in the want of 2,00,000 more rooms.

The requirement of hotels

We are in the process of unveiling the power of India to the world. Be it in culture tourism, business tourism, or medical tourism, India has already gained place on the world map. And we definitely do not afford to lose our position because of the lack of availability of hotels for tourists to stay in. Though the current growth rate of the hotel industry on the whole is a stupendous 40 per cent per annum - with Bangalore experiencing the highest rate of growth - we are in dire need of hotels in various categories, including luxury five star hotels, business class hotels, and reasonable accommodation catering to the domestic traffic.

The causes for increased demand

The rise in the disposable incomes of the increasingly affluent middle class of India has been one of the causes of the increased demand for hotel accommodation, apart from the easy visa rules, public freedom, and copious low fare airlines on the platter. The new corporate culture with travel incentives and the mushrooming of blue chip companies in India have all contributed their own bit in the increased demand for hotel accommodation in the country.

Government measures to meet the demand

The government has increased the foreign direct investment (FDI) in the industry to 100 per cent, in May 2001. Considering the numerous opportunities for hotel owners here, the sector is seen at the top slot among sectors vying for FDI. Though this has surely paved the way for foreign hotel giants to set shop in India, the lack of infrastructural facilities, red-tapism and anarchic land laws are a deterrent to many. The government, while focusing on reviving tourism, must also take care to provide the necessary groundwork that is required for the gestation of new hotels. The hotel taxes in India are more than in most of the other Asian countries. This needs to be addressed urgently.

Why is India the next big destination

The domestic tourism

What can be better news than the hotel industry stalwarts from the world over waiting to set shop in India to experience a piece of action of its booming economy, and in turn fulfilling the demand of accommodation for tourists? Consider this – The Indian domestic market is one third of the total international arrivals at all the global markets taken together. Religious tourism and the destination campaign of the Incredible India initiative also account for the growing domestic tourism industry.

The International tourism market in India

The number of international visitors in India has been steadily increasing over the last decade due to a number of reasons. With multinationals converging upon India to set up business operations, there has been an upsurge in the business travelers from diverse parts of the globe. The Indian culture has played an important role in attracting leisure tourists to the holy land, while the splendid beauty of our virgin countryside and the unparalleled monuments make for an interesting trip. Religious tourism too is catching up, with induced circuits in Buddhist travel attracting Japanese tourists in hordes. The fillip that medical tourism has seen in recent years can be attributed to the low cost medical treatments at the hands of some of the most intelligent brains of the world.

The challenges ahead of us 

Experts are not completely wrong in painting a rosy picture of our hotel industry in the years to come. But they are not completely right either. We can assist brands in setting up hotels here only when we improve upon some of our drawbacks. Our deteriorating infrastructure needs to be fixed up before we expect the trickle of foreign visitors to turn into a deluge. The dilapidated roads, never-on-time railways, and not-getting-any-younger airports are some of the first hurdles in receiving international traffic. The esoteric business practices and the corruption, too might shoo away foreign investors.

Bottomline

The fact that there is a huge demand for hotels in India being true, we are at a junction where leaping ahead is a matter of coping up with the challenges associated. If we can do that successfully, we will reap its benefits; if not, we are losing on one of the biggest opportunities facing us.