Indian Hotel Industry
Credit Analysis & Research Limited, November 2011, Pages: 146
The hotel industry in India is of significant importance to the Indian economy. It is one of the largest employers and foreign exchange earners.
The industry slowed down since the subprime crisis and the 26/11 terrorist attack; however, FY11 saw some recovery. At CARE Research we believe that the demand is going to remain buoyant in the medium term, however, huge supply coming on board, the ARRs, RevPAR and Occupancy Rates (OR) to remain subdued in the medium term.
The growth would primarily be driven by the rise in domestic tourists. The growth in domestic tourist arrivals can be attributed to the rise in both leisure and business travellers. The growth in leisure travelers would be driven by the rise in personal discretionary income, the higher usage of credit cards, the popularized weekend vacation culture and the growing number of multiple earner families. The increase in business travellers can be attributed to the growing trade and commerce, the increasing number of Meetings-Incentives-Conferences-Exhibitions (MICE) destinations, the increasing number of multi-national companies setting up their base in India and the improvement in air, road and rail connectivity.
CARE Research’s report on the hotel industry provides information on the industry classification, the hotel concepts prevalent in India, the key characteristics of the industry and the financial and operating parameters of top hoteliers. We have also identified ten major locations for the study of the hotel industry in India. These cities represent a healthy mix of business and leisure destinations with a varied topography and culture. The ten cities covered are Ahmedabad, Bengaluru, Chennai, Goa, Hyderabad, Jaipur, Kolkata, Mumbai, NCR and Pune.
The report provides CARE Research’s outlook on market size, Domestic Tourist Arrivals, Foreign Tourist Arrivals and upcoming inventory upto FY15 and the trend in Average Room Rates, RevPAR and OR across the key ten cities and all India average.
1) Executive Summary
2) Outlook
3) Major Cities
a. Ahmedabad
b. Bengaluru
c. Chennai
d. Goa
e. Hyderabad
f. Kolkata
g. Mumbai
h. NCR
i. Jaipur
j. Pune
4) Global Tourism Industry
5) Overview
6) Industry Characteristics
7) Hotels Classification
8) Hotel Concepts
9) Tourism Concepts
10) Key Success Factors
11) Issues and Challenges
12) SWOT Analysis
13) Company Scan
a. Indian Hotels
b. EIH
c. LeelaVenture
d. Kamat Hotels
14) Regulations
15) Annexure
Mid-market the new mantra
Hotel industry in India has been an important industry to the Indian Economy. It is one of the largest foreign exchange earners, to the country and also one of the largest employers, both directly and indirectly.
The hotel industry in India can be divided into eight segments based on the norms set by the Ministry of Tourism. They are 5-Star Deluxe, 5-Star, 4-Star, 3-Star, 2-Star, 1-Star, Heritage and Unclassified. However, the 3-star, 2-star, 1star and unclassified hotels in India are spread across the length and breadth of the country and are highly fragmented in nature, whereas, the upscale, mid market and heritage categories are highly organized. The upscale category hotels are primarily present in the metros and the tier 1 cities and are now targeting the tier 2 cities for expansion.
The industry is characterized significantly by small unorganized players, labour-intensive operations, seasonality, cyclicality, highly capital intensive nature and highly sensitive to the external factors like economy, terrorism and political status.
The demand for the hotel rooms is driven by the rise in the number of the domestic and well as the foreign tourists. The demand for the foreign tourists is driven by the level of growth in Global GDP, increased business activities of other nations with India, growing number of tourist destinations, rise in trade and sporting events, marketing efforts like “Atithi Devo Bhava” & “Incredible India”.
Domestic tourist arrivals are the backbone of Indian Hotel Industry as the number of domestic tourists is more than 100 times as compared to foreign tourists. Domestic tourists are of 2 types, leisure travelers and business travelers. Growth in leisure travelers is driven by rising personal discretionary income, evolving lifestyle, growing number of multi earner families, weekend vacation culture, improvement in rail, air as well as road connectivity, diverse topography and rich cultural heritage. Drivers of domestic business traveling are rise in trade and commerce, increasing geographical spread of companies, growing MICE culture.
In the upscale category, global majors in the hospitality industry like IBIS, Westin, Novotel, Ritz-Carlton, Sofitel, Pullman, Ista, Aloft, Dusit D2, Shangri la are planning to enter India or expand their existing operations.
Players like Lemon Tree, IBIS, Park, Sarovar and Ginger have identified that there is dearth of quality rooms in the mid market segment across the country, especially in the tier 1 and tier 2 cities. Approximately, 55 per cent of the upcoming inventory is expected to be in the mid market and economy segment. Entry of such organized players is expected to improve the quality of offerings and bridge the wide gap between mid market and upscale category.
CARE Research has identified ten major cities for study of Hotel Industry in India. These cities represent a healthy mix of business and leisure destinations with varied topography and culture. These ten locations are expected to see a surge in room inventory in the upscale category. Kolkata and Noida are expected to witness the highest growth in the room inventory. Overall, CARE Research expects about 27,000-28,000 rooms to be added in the upscale category in the ten cities upto CY15. CARE Research believes that the performance of the industry in the medium term will be a mixed result, with some cities showing a robust growth, whereas some cities will suffer due to the huge supply influx.
- Indian Hotels
- EIH
- LeelaVenture
- Kamat Hotels
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