India is growing, so is its hospitality industry
While most of the developing nations have been under a slump, India has stood out as an example in its growth. In contrast to the BRICS (Brazil, Russia, China and South Africa) nations it has managed an upward economic growth in 2014-15 to emerge a star – the fastest growing economy according to World Bank’s 2016 report. An important aspect of this growth is its popularity as a tourist destination. It is in fact the Travel and Tourism industry that contributed as much as 6.7% of India’s total GDP in 2014. In the past year, Rs 844.96 crore (US$ 142 million) was sanctioned by the Indian tourism ministry to develop its tourist destinations.
The country which has always been a popular destination for spirituality and heritage has now slowly opened up as a hub for wildlife, adventure, medical and sustainable tourism as well. In order to accommodate this growing interest in travel from both domestic and foreign tourists India needs at least 150,000 more rooms – this means ample opportunities in the hospitality industry. Owing to this persistent interest in travel, 2015 saw never-before developments in the hotel market. According to property consultancy Jones Lang LaSalle (JLL), in the year 2015, India saw at least 10 mergers and acquisitions (M&A), a record number for the hotel industry. It indicates a growing interest in investment in the hotel sector.
All the buzz in the sector has meant that many international players want to invest in India, but instead of starting from scratch many decide to partner with local players. They choose to convert an existing property and add value to it. Both Indian and international players have been seen ‘brand-swapping’, a trend that was so far common in developed markets.
There’s always more room here
The hotel and tourism sector brought in around US$ 8.48 billion of FDI between 2000-15 and has been among the top 15 sectors to attract significant foreign direct investment (FDI). Some of the international players entering in the market include - US-based Vantage Hospitality Group and Thai firm Onyx Hospitality who have partnered with Indian players. New York based Goldman Sachs has invested Rs 255 crore (US$ 38.3 million) in Vatika Hotels, while Japanese firm SoftBank will pitch in Rs 630 crore (US$ 94.5 million) in OYO Rooms.
The many partnerships and conversions mean that the big brands in the hospitality industry have upcoming properties across the country. The Radisson from the Carlson rezidor group has projects to look forward to in Coimbatore, Gurgaon, Mumbai, Faridabad and Chandigarh to name just a few. Indian conglomerate ITC is planning to invest about Rs 9,000 crore (US$ 1.35 billion) in the coming years to widen its portfolio to 150 hotels. It will have four more hotels - in Mahabalipuram, Kolkata, Ahmedabad and Hyderabad - by 2018. Among holiday and leisure hotels there are at least 12 that are under construction with three of these being built in Goa. There are 7 properties planned by Country Inns (Carlson Rezidor Group) in the coming two years. Among big projects, in 2016, we can probably look forward to the completion of Le Meridien in Noida, NCR, JW Marriot in Kolkata, Hyatt Regency in Lucknow, and the Ritz Carlton in Mumbai. Apart from ‘destinations’ it is India’s metros that have been the hotbed of growth in the hotel industry in India. India’s purchasing power continues to increase, its cities are growing relentlessly, it’s only natural that the hospitality industry is trying to keep pace – and from the look of it, it’s doing a very good job of catching up.
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Elizabeth Raj | Blogger- Arsha Consulting