Indian hotel industry going places, eyes 10m foreign visitors by 2010

by Dave

Financial Express

The long-term outlook for the [Indian] hotel industry remains upbeat as the country’s tourism industry experiences unprecedented growth, according to the latest Indian hotel market outlook report, ‘India Digest 2008’, by Jones Lang LaSalle Hotels, one of the leading hotel investment and advisory service providers.

While domestic tourism is expanding in India owing to an increasingly affluent and growing population, greater consumption and the introduction of low cost airline carriers, the government is looking to grow foreign visitation to 10 million international visitor arrivals by 2010, the year of the Commonwealth Games in Delhi. Over the last five years, India has seen a double-digit growth in foreign visitors to a 10-year high of five million arrivals in 2007. Foreign exchange earnings for the same year soared in tandem to $12 billion (Rs 48,000 crore), a year-on-year increase of 34%.

The strong performance of the corporate sector and the growth in the economy has led to an unprecedented surge in business travel. “While the Indian economy has been affected by the current challenges faced by the global economy, the impact is expected to be short term,” said Sudeep Jain, executive vice-president (India), Jones Lang LaSalle Hotels. Aggressive growth in revenue per available room (RevPAR) has been recorded in the three key cities of Delhi/NCR, Mumbai and Bangalore over the past five financial years.

“In India, if you look at from medium to long-term, the fundamentals are very promising. In a global context, given the size of the economy, the population and the future potential of India as a tourist destination, the demand fundamentals are very good. We expect that continued economic growth, increased interest in the Indian markets and improved international access, combined with the modernisation of major airports, will boost inbound travel in India,” Jain added.
The long-term demand for India will mean that the country
requires a lot more hotels to service the future demand. With a current
supply of around 1,00,000 rooms, stifled stock growth over the last
five years is leading to a demand-supply mismatch. “Based on the
government target for 2010, India will need to add at least 1,50,000
new rooms in the next four years. The total known supply in the
pipeline for major Indian cities (as of March 2008) through to 2011
stands at just over 29,000 rooms and some of this supply will be
delayed given the turmoil in the global financial markets,” Jain said.