India: the booming hotel industry

The hotel sector in India will experience exponential growth in the next 5 years. According to analysis by HVS, a company that provides global consulting services to businesses and operators in the hotel and catering industry, the opportunities in India for this market are enormous. Following the global recession and the terrible attacks that shook the city of Mumbai in 2008 (which targeted the luxury hotels Oberoi, Taj Mahal, and Trident), a significant growth process has occurred since the following year, and today the data presented in the report attests to the incredible boom of this industry.

India’s hotel capacity currently stands at 62,404 rooms, but over the next five years, approximately 90,000 more rooms will be built—an increase of 143% over the existing number. Specifically, 2010 was the year with the highest number of new hotel openings, with a significant increase of 14,081 new rooms. This growth is undoubtedly driven by India’s major metropolis, New Delhi: by 2015, an additional 20,021 rooms will be built (the current number stands at around 11,018), representing an increase of 182%. This is, however, a phenomenon affecting the country across the board and involving all major cities.

Hoteliers point to Ahmedabad (where 20 new hotels will be added to the current 21, with an additional 2,339 rooms to be built, representing a 154% increase), Pune (22 additional hotels compared to the existing 24, 5,196 new rooms, and a 19.4% increase), Whitefield (7 new hotels compared to the current 5 and 1,350 new rooms), Hyderabad (where 22 new hotels are expected to open compared to the current 19, adding 5,302 new rooms, for a +1,40% increase), and Noida (where 18 new hotels will be added to the existing 4, with the construction of 4,268 rooms) are the new destinations that will be impacted by this trend.

The cities with the highest percentage increase in new room construction are Kolkata, with a +2,291% increase (3,481 new rooms will be added to the current 1,520), and Chandigarh, with a +2,271% increase (1,482 new rooms will be added to the current 653).

The breakdown in terms of quality of the hotels to be built will be as follows:

• + 18% luxury hotel
• + 32% high-end hotel
• + 31% mid-range hotel
• + 16% economy hotels

 In light of this data, it can be stated that the opportunities for investors and industry operators are enormous. India can count on an annual population of around 650 million travelers, more than double the entire population of the United States, and the emergence of a middle class capable of spending on tourism and holidays (and especially inclined to do so) represents one of the main factors capable of driving the sector's economy. This thesis is reinforced by a further element: domestic hotel demand has always historically been higher than foreign demand in India (5 million in 2009). Therefore, particularly in today's India, the immense domestic demand is more than capable of supporting tourism growth, despite the difficulties in Western economies.

The governments of Rajasthan, Goa, and Kerala have sniffed out a good deal and have long begun to focus their efforts on enhancing tourism and hotel facilities.

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