Business travellers boost Gujarat's hospitality ind

Form 65 per cent of total tourist arrivals in the state.

The business traveller is changing the face of Gujarat's hospitality industry. With their inflow doubling in 2007, thanks to large investments pouring into the state, the hospitality business may see Rs 3,000 crore to Rs 5,000 crore being pumped into the sector over the next 2-3 years, say industry observers.

Business travel, which forms 60-65 per cent of the total tourist arrivals in the state, has led to a demand-supply gap in hotel rooms.

"While the total tourist arrivals, including domestic and foreign, rose from 6.6 million in 2004 to 10 million in 2007, rooms in the star category as well as unorganised hotels increased from 1,000 to 2,000 and 27,000 to 35,000 respectively. In this scenario, hotel rooms need to be doubled in the next two years to cater to the growing demand," says SM Korde, general secretary, Hotels and Restaurant Association (HRA) - western region.

The occupancy rate has increased from 50 per cent in 2004 to nearly 80 per cent in 2007 and the association opines that Gujarat needs standardisation in rooms in terms of better amenities and safety.

"Since, the share of business travel is also bound to grow in the coming years, the industry needs to improve in quality and not just in quantity," feels Korde.

According to Ashwin Gandhi, director of Express Hotels, the industry could do well with an additional floor space index (FSI) of around 10 per cent.

"Given the requirement to expand in terms of hotel rooms, the government should provide an additional 10 per cent FSI to the hoteliers," he says.

Currently, the FSI is just 1.4 for hotels without parking facilities and 1.6 for hotels with parking facilities.

Infrastructure and certain policy decisions are major bottlenecks, which the state government was trying to improve, says Gandhi.

"With the upcoming elections, things have come to a standstill but we hope for favourable policy decisions afterwards, especially in the area of prohibition. The government had shown positive signs by relaxing prohibition in SEZs but it is still a major hindrance to the growth of hospitality industry in the state," he adds.

Besides, absence of big hotels with convention centres is seen as keeping probable international conferences across industries at bay.

Narendra Somani, CMD of Ahmedabad-based Bhagwati Banquets & Hotels Ltd, seems to have taken up the task by planning to develop a convention centre-cum-hotel-cum-club in the city by 2009 at an investment of Rs 150 crore.

"There is a huge potential in Gujarat and Ahmedabad in particular for hosting domestic as well as international conferences but there is also a huge shortfall of such venues right now, apart from hotel rooms. Moreover, prohibition has been a hindrance for industries," says Somani, adding Ahmedabad itself is facing a shortfall of over 1,500 rooms in the star category.