Global hotels to mushroom in India

A booming tourism industry in the country has prompted over a dozen global chains "" including the Hilton, Accor, Marriott International, Berggruen Hotels, Cabana Hotels, Premier Travel Inn (PTI) and InterContinental Hotels group "" to announce plans to set up over 350 five-star, four-star and budget hotels and 50 villas.

The plans would roughly translate into 65,000 additional hotel rooms "" a quantum leap, considering that over the past decade the total number of hotel rooms in all categories has only grown 10 per cent to about 92,000 rooms.

India's popularity has been surging on the global tourism circuit. Foreign tourist arrivals rose to 4.43 million last year from 3.92 million in 2005.

More than half of these were foreign business travellers.

Besides, there are approximately 300 million domestic travellers each year and this number is expected to grow by 10-15 per cent every year.

Most of these global chains have already joined hands with real estate developers. Leading the pack is the Hilton, which entered into a joint venture with real estate major DLF Group last year to build 25,000 hotel rooms over the next five years. DLF will invest around Rs 12,000 crore in the project to build a chain of hotels, including some 10-12 luxury resorts and 100 business hotels with an average capacity of 100-250 rooms in tier-II cities.

Whitbread PLC (for its budget hotel brand, Premier Travel Inn) and Accor have got into a joint venture with real estate major Emaar MGF. While Whitbread, through its partnership with EmaarMGF, will set up 50 hotels (7,500 rooms) with an investment of Rs 1,500 crore under the Premier Travel Inn brand,

Accor will introduce the Formule 1 budget hotels in the country and build 50 hotels with 5,000 rooms over five years. Accor has also signed an agreement with real estate developer Nirmal Lifestyle to develop five hotels with 1080 rooms under its various hotel brands.

Beside these five-star luxury and budget hotel brands, India is high on the agenda of resort and spa developers too. For instance, Banyan Tree Hotels and Resorts, a leading Asian hospitality group has tied up with Brigade Group for managing its two resorts and a spa. The Banyan Tree Resort and Spa would be in the super luxury category, with about 50 villas (See table).

Says an analyst: "According to the London-based World Travel Tourism Council, India, currently at the 18th position, may be one of the top five destinations for business travellers in a decade and these global hospitality chains do not want to miss that opportunity when India will be high on every travellers destination."

But all is not hunky dory with these ambitious announcements. According to Manav Thadani, Managing Director, HVS Hospitality Services: "A lot of announcements are being made but not much is happening on the ground. In the past six months little has moved from announcements to construction. The hike in interest rate has slowed down the construction which will impact the supply of hotel rooms."

There are approximately 18,000 luxury rooms in the country at tariffs ranging from Rs 5,000 rupees ($124) to Rs 15,000 a day, with an overall room shortage of about 33 per cent. "Room tariffs have risen about 40 per cent in the past 1 1/2 years on higher occupancy and demand. The inventory that these hotels will bring in to the market will make rooms affordable for the average traveller," says an analyst.