Analysis of the Hotel Market in India

Topics: Hotel, India, Hospitality industry Pages: 9 (2869 words) Published: May 28, 2011

Analysis of the hotel market in India
Hotel industry in India has witnessed tremendous boom in recent years. Hotel industry is linked to the tourism industry, and the growth in the Indian tourism industry has fuelled the growth of hotel industry. The economy and increase business opportunity in India have acted as a boon for Indian hotel industry. These include the abolishment of the inland air travel tax of 15%, reduction in excise duty on aviation turbine fuel to 8% and removal of the number of restrictions on outbound chartered flights, including those relating to frequency and size of aircraft. According to a report hotel industry in India currently has supply of 110000 rooms and there is a shortage of 150000 rooms fueling hotel room rates across India. According to estimates demands is going to exceed supply by at least 100% over the next two years, five stars hotels in metro cities allot same room, more than once a day to different guest, receiving almost 24hours rates from both guest against 6-8hours usage with demand and supply disparity, hotel rates in India are like to rise by 25% annually and occupancy by 80% over the next two year. This will affect the competitiveness of India as a cost effective tourist destination. Indian hotel industry is adding about 60000quality rooms, currently in different stages of planning and development m which should be ready by 2012. Hotel industry in India is also set to get a fillip with Delhi hosting 2010 commonwealth Games. Government has approved 300 hotel projects, nearly half of which are in the luxury range. The future scenario of Indian hotel industry looks extremely rosy. It is expected that the budget and mid-market hotel segment will witness huge growth and expansion while the luxury segment will continue to perform extremely well over the next few years. The government law in India

Before 1991, for the foreign investors to be able to understand the law of the India is very important, not only the law is a lot but the rules are strict as well. However, since the India government adopt the liberalization economic policy after 1991, open to the foreigners to invest is become one of the most important major policy. The invest law has been develop and relax restriction since 1991. For example, simplify the process of invest, trade, finance department and foreign exchange control, also make the law and regulation of the competitions, and revise intellectual property’s law, but it still not enough for the inverters. Therefore in February 2005, to encourage foreign investment, the Indian government changed its restrictive laws, to allow 100% foreign direct investment to develop hotels. However the foreign investors still not allowed buying buildings already standing or undeveloped land. India government also allows foreign funds to own stakes of as much as 24% in the nation's publicly traded real estate companies.

The Indian laborer law are many, such as the minimum wage, the annuity method, the severance pay , the laborer insurance, the wages for the method of payment, the dividend for the method of payment and so on, moreover the enterprise withdraws from the management not to be easy, according to the industry disputed that the law (Industrial Dispute Act 1947) stipulated that the enterprise employs the population to be possible to depend on below 300 people, does not need to permit the government the business closed, discharges with severance pay the expense is 60 daily wages obtained, is more complex than other countries. SWOT for investment in India

• Huge market.
• Low labor cost.
• Democracy politics.
• Offer more free for the investors.
• English can be using it.
• Inflation is higher than the Asia main value far2.5%.
• Law of labor is strict.
• The tax system is quite tedious.
• Culture is different and religion difficult to communicates need to know clearly. • The foreign exchange control is strict, the...
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