Importance Of Tourism Opportunities In Hotel Industry

Opportunities in the Indian Hotel Industry

How international hotel companies can serve the domestic traveller in the budget sector

By Caroline Bussenius

X520 AGILE India

Prof. Philip Powell

January 28, 2015

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Introduction

“Lonely Planet” ranks India among as one of the top five travel destinations in the world and with 28 World heritage sites and 25 bio geographic zones it is a prime candidate for tourism. As a result, the travel and tourism industry is the largest service industry in India and is expected to grow by over 8% annually between 2013–2023. The reasons for this strong growth are manifold:

• Increasing number of and better quality lodging facilities

• Improved connectivity to other countries

• Growing interest in India as a foreign travel destination

• Increased domestic travel due to raising income

• Governmental

After compiling an initial list of places, the locations should be narrowed down by analyzing:

• Security

• Infrastructure

• Local Market

• Available real estate

• Access to personnel

Land cost constitutes about Rs 15-16 Lakh per room and equals usually 25-30% of the entire cost of the project. Construction is another RS 30-50 Lakh for a 100-room hotel and it can take up to three years to get a hotel ready for launch (compared to the 15-18 months in developed countries). Therefore, it is advisable to either

• Buy and convert existing private hotels if available

• Use shared spaces by integrating the hotel into existing buildings like office spaces or malls

• Sharing the same building with a mid-level hotel of the same brand as Accor sometimes does in France with Ibis and Novotel or Ibis and Formule 1 hotels

All three options allow brands to save on real-estate cost and constructions costs and reduce launch time. Converting an existing hotel also enables the hotel to take over the existing employees and train them if needed