Indian Hotel Industry

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Introduction

In India, the hotel industry has monitored enormous boom in current years. The industry is linked with the tourism industry and the growth of hotel industry was fuelled by the tourism industry. It’s been seen that the industry offers luxury and comfort service to increase the foreign exchange of the economy. Early in 1980’s, the hotel industry in India was a budding industry consisting of single hotel companies. Increase in demand for hotels was high in late 1990’s. The increase in business opportunities and flourished economy has boosted the level of growth in hotel industry. According to a report, the Indian hotel industry has a current supply of 110,000 rooms and a scarcity of 150,000 rooms. According to ballpark figure, demand will go above supply by 100% within the next 2 years. The hotel industry in India is going to look rosy in the future. For the next few years, it is seen that the mid-market and budget hotel are going to observe massive growth and development while the segment of luxury will continue to carry out well.

The year 2008-09 was one terrible year for Indian tourism because of the terror attack; the hotel industry was affected drastically. The industry experienced a downfall in occupancy and revenue in major cities

List of players in the industry

* Taj group
* Inter-continental
* Le meridien group of hotels
* Oberoi group of hotels
* The park group of hotels
* Welcome heritage group of hotels
* ITC welcome group of hotels

Industry Structure

Hotels in India are broadly classified into 7 categories (Five star deluxe, Five star, Four star, Three Star, Two Star, One star and Heritage Hotels)

Premium Luxury Segment
This segment comprises the high-end Five Star deluxe and Five Star hotels, which mainly provide to the business and upmarket foreign leisure travellers and present a class quality and range of services

Mid Market Segment
This segment includes 3 and 4 star hotels which cater to the standard foreign and domestic leisure traveller. This segment also accommodate to the middle level business travellers since it offers most of the essential services of luxury hotels without the high costs.

Budget Segment
These comprise 1 and 2 star hotels known to as “Budget Hotels”. These categories do not offer as many facilities as the other segments but offers inexpensive accommodation to the highly price-conscious segment of the domestic and foreign leisure tourists.

Heritage Hotels
In the past four decades, certain architecturally distinctive properties such as palaces and forts, built prior to 1950 have been converted into hotels. The Ministry of Tourism has classified these hotels as Heritage Hotels

FDI in hotel Industry

The main reason for foreign direct investment policy in India is to promote foreign investment. The liberalized economic policies have converted India the biggest and largest democracy in the global investment. In hotel industry FDI has been allowed up to 100% through automatic route. Automatic approval is given if:

1. Up to 3 % of the capital cost of the project is proposed to be paid for technical consultancy services. 2. Up to 3 % of the net turnover is payable for franchising and marketing/publicity fees. 3. Up to 10 % of gross operating profit is payable for management fees, including incentives fees.

Statistical Data- Indian Hotel Industry

Size of the Hotel Industry| USD 3.8 Billion|
Share of premium segment in the overall hotel market (2008)| USD 2.3 Billion| Expected growth rate from 2008 to2009| 12 percent|
Key Players| Indian Hotels, Leela Ventures, ITC Hotels, Oberoi Hotels, Bharat Hotels, ITDC, Kamat Hotels.| RoomsCurrent SupplyCurrent Demand| About 110,000 hotels roomsAbout 150,000 hotels rooms|

Source: Crisil research Annual Review 2009

Growth Rate

In a report it is stated that, the Indian hotel industry has a current supply of 1, 00,000 rooms and a...
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