Hotel Industry Boom

Indian tourism has suddenly become a booming sector. During 2007, an estimated 4.4 million tourists visited the country, registering a growth of 14 per cent. With this robust trend in tourism, the hotel industry has also witnessed a rise in the growth and over the last decade and half, there has been a mad rush to India for business opportunities, elevating room rates and occupancy. The Hotel Industry in India is second only to China in Asia Pacific.

India is a destination for hotel chains looking for growth. According to the World Travel and Tourism Council, India ranks 18th in business travel and will be among the top 5 in this decade.

Hotels in India have a supply of 110,000 rooms. At the current trend, demand will soar to 10 million in 2010. With a shortage of 150,000 rooms, likely to result in demand-supply disparity, room rates will see a rise to 25 per cent annually and occupancy would rise by 80 per cent over the next two years. The industry seems to be fast getting rid of competition when it comes to being a cost-effective destination.The industry is adding about 60,000 quality rooms, currently in different stages of planning and development and should be ready by 2012. Government has approved 300 hotel projects, nearly half of which are in the luxury range. The manpower requirements will increase from 7 million in 2002 to 15 million by 2010.The hotel industry is set to grow at 15 per cent a year. This figure will skyrocket in 2010, when Delhi hosts the Commonwealth Games. Already, more than 50 international budget hotel chains are moving into India to stake their turf. Therefore, the future scenario of the Indian hotel industry looks rosy.

The government of India has taken a number of steps to promote tourism. An amount of Rs 0.6 bn is to be allocated for the Commonwealth Games. Income tax exemption for 5 years is granted to two, three or four star hotels established in specified districts having UNESCO-declared World Heritage Sites. The hotel should be constructed and start functioning during the period April 1, 2008 to March 31, 2013. The industry wants it to be treated at par with other infrastructure sectors such as roads, ports and telecommunications and be granted full tax benefits.

The slowdown in the global economy, rising crude prices and higher airfares has affected the hotel sector to a certain extent. Due to rising costs, companies are facing pressure on their earnings. Plus, cost cutting measures have led to lower business tourist arrivals in recent times. There is an urgent need for the hotels to adopt cost cutting devices. These can include using resources more efficiently; minimizing waste production; using products and materials that have the least negative impact on the environment, both in use and source of origin; pursuing action programs that benefit the environment in the local community; and fostering the education of environmental awareness, both internally and externally. Waste management; energy conservation; water use; and laundry and dry-cleaning should be given priority because these areas have huge wastages which can be curbed. Paper and stationery can be recycled; air conditioners and other electrical appliances should be switched off when not in use. Some hotels also offer free wine and hence it should be available in only those rooms where it is demanded. People generally tend to misuse the free stuff that is available in the hotels. Hence, it should be made available only on demand. The government should increase its budget towards the hotel industry as it is observing high rates of growth and can lead to India’s development as well.

Aparna Vyas

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