Tourism has probably been one of the major failures in our country. Even today we have about 100,000 hotel rooms in a country of the size of India. In 1980, I recollect having come to India to attend the Travel Agents Association of India (TAAI) Convention in Chennai. The then minister for tourism in his address assured the audience that we would reach the 5 million-mark for inbound tourist arrivals before the end of the decade -- that is, before 1990. Two decades later, in 2000, we had achieved only 2.65 million tourists. Tourism was never considered very important. I recollect the Indian Prime Minister in the 1980s saying in his opening remarks at a Pacific Asia Travel Association (PATA) function in New Delhi that the financial benefits of tourism are only incidental. Enough of the gloom. The government did wake up to tourism and we started to see double digit growth and crossed 5 million in 2007 and should cross 7 million this year. Multiple factors, such as opening up of civil aviation, larger and more modern airports, and a much higher number of cities with international airports (which, at last count, stood at 23), have helped tourism. Electronic visas and visas on arrival should now see India sustaining a double-digit growth and I hope the tourism numbers will dramatically change by 2020. With economic liberalisation in 1991, India created a massive middle class, which today is the backbone of tourism. If India's economic growth goes back to 8 to 10 per cent, we will certainly see domestic tourism expanding very, very rapidly. But then, our infrastructure will be under great stress and the number of hotel rooms would need to be tripled. It is heartening to see that the present government not only accords tourism priority, but also understands the economic and employment benefits that tourism brings. This will need to be backed up with major structural changes needed to develop the tourism infrastructure. Sarovar is a young company, which has just completed 20 years, and is now operating 70 hotels and five major institutional services. We operate two hotels in Africa, one is more under construction, and I hope that by 2020 we would have a major presence in that continent. I am more excited about the potential of growth in India where not only hotels but motels would become a reality as a result of aggressive highway development programmes. Sarovar genuinely would endeavor to be a pan-India company covering every possible location. I certainly hope we will be operating well over 100 hotels in India and continue our expansion in the three-, four- and five-star categories, leaving the luxury market out of our scope. Motels, whose time we think would come very soon, will definitely be another major field to expand in. Anil Madhok is the Founder-Managing Director of Sarovar Hotels
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FIFTEEN years ago, India had 25,000 rooms. That number stands at 100,000 rooms today. In the next five or six years, we will have a minimum of 150,000 rooms, an increase of 50 per cent. We need to have the talent to be able to service this growth. More importantly, we must understand that it's not just a quantity game, but along the quality dimension, India has progressed wonderfully well. The Oberoi has been named the best hotel brand in the world. The Leela hotels and a couple of Taj properties regularly make it to the Top 25 lists of the world. India is definitely going to be a destination of note for the discerning luxury clientele. That is why we need to have impeccably trained staff. The war for talent is only going to get more and more intense. There is only so much that we can take from each other. It is not a question of how you're going cut the cake, you have to grow the size of the cake. That is really what it's all about. We have to invest in a bigger way than ever before into the development of people. In the last few years prices and rates have suffered. Because of that, price has exaggerated its importance compared to product differentiation, which I am sure will stage a comeback to the forefront. Product differentiation means the quality of the guest experience, which in turn is a reflection of how much you have invested in training your human resources, is going to be the ultimate differentiator. The element of service is so deeply engrained in our hospitality culture. We have grown up with it. What works in the West has to be modified for India. You can't serve cold breakfast to a guest in India. You can't make him carry his own bag. You can't make newspapers a luxury offering. Even though the mid-priced hotel category will see the biggest growth in the coming years, The Leela will continue to stick with the luxury segment. We have an opportunity to grow in the luxury sphere and then we will go to the premier and mid-market segments, but as of right now, we don't even have a pan-India presence. We know that at least another six or seven destinations that can easily support a luxury hotel from The Leela, so we want to be there first. Once we have completed that part of our journey, we can start with a second brand. The hospitality industry has been through a very difficult five to seven years, so clearly there is a rate correction that is going to take place. As of today, no new hotel is economically viable because of the high land cost, high interest cost and low rates. Ninety-eight per cent of all new hotel projects are stressed assets. Which is simply because there is a problem with our cost structure. The interest rate here hovers around 13.5 per cent, and the principal amount with interest has to be paid within ten years. Out of these 10 years, five are taken up in construction and another year for ramping up, so a new hotel is left with just four years to fulfil this obligation, which is very hard to do. For our rates being low, the blame perhaps rest at our doorsteps. Nothing stops us from increasing our rates tomorrow, but we don't because there is a threat from fresh supplies. We have to scratch the surface and dig deeper. Until 10 years ago, hotels were being built by hoteliers, which is no longer the case. Hotels today are being built by developers. They are being built as a part of their bigger real estate strategy. The brands don't put in a paisa. And because there is this macro number that says India needs more hotel rooms, there has been irresponsible building. You need more rooms, but in the right locations because hotel rooms are built for a market, so you have to understand the location and the need of the market, not that you build just because you need more rooms. Nonetheless, I get the sense that good days are round the corner. Whether it'll take six months for the turnaround to take place, or 18 months, it's a matter of conjecture. What is certain is that we are clearly on the growth path. Rajiv Kaul is the President, The Leela Palaces, Hotels & Resorts The article first appeared in the inaugural edition of BW Hotelier, JAN-FEB 2015.
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In last decade, the travel and tourism industry has emerged as one of the largest and fastest growing sectors globally, but there are still immense possibilities waiting to be tapped. With virtually the entire spectrum of climatic and topographic possibilities available in a single nation, coupled with its ancient and vibrant culture, couture and cuisine, India has the potential to gain its second wind as the 'destination of choice' of global international travellers. From a 'culture lover' to an intrepid explorer or backpacker, to a consumer of curated boutique experiences, a visitor can always find something new and interesting for his first, second and, daresay, third visit to the country. The forward-looking developments in infrastructure development and concerted focus on developing 'circuits' should all lead to the expected increase in foreign tourist arrivals to India to close to 25 million by 2020. But this is just the tip of the iceberg, for Thailand already gets 25 million foreign tourist arrivals today. The innate entrepreneurial spirit of the Indian travel and tourism industry, coupled with the aforementioned points of interest, will be a significant driver of the growing relevance of this destination. In addition, the natural hospitality and linguistic adaptability of Indians will help catapult India to a top position on the global destination map. The tourism industry, with its immense grassroots-level employment potential, will play a pivotal role in sustainable economic and social development. Well-planned tourism development also minimises the environmental impact of this economic development, for the preservation of a destination is often intrinsic to its continued appeal. This Gargantuan task is not easy at all. The government will have to open avenues for Public Private Partnership to unlock the potential of this country as a tourism magnet. The primary need of global travellers is not to travel to Agra from Delhi in less than 90 minutes. What they really want are spotlessly clean railway coaches, a comfortable drive, and good food, even if the journey takes 15 minutes longer. The government is taking steps in desirable directions, such as making the e-visa a reality, but we must be on our guard because most well-meaning government policies flounder on account of a lack of effective last-mile execution. The industry must therefore build bridges with the government and address together with it this critical area of weakness. As for The Oberoi Group, it has, for the longest time, epitomised the Prime Minister's 'Make in India' mantra, globally, in the hospitality sector. Befittingly, global recognition, such as the World's Leading Luxury Hotel Brand by Travel + Leisure USA and the World Travel Awards, and being ranked as ’’?the world's highest-rated luxury hotel brand’’? by Review Pro, has came the group's way in the very recent past. The continued presence of at least two properties of this 30-hotel Indian chain in the top 10 of any global list of best hotels is a testament to the brand's position at the vanguard of global luxury hospitality, albeit with a distinctly Indian flair. Using our distinctively crafted blend of quintessentially Indian hospitality that appeals to the international traveller, we will further increase the number of advocates for India across the globe. The Oberoi Group also plans to expand its footprint in key getaway cities not only in India, but also in international source markets, by 2020. The recovery of India's economy, coupled with the Group's expanding global footprint, bode well for an extended positive run for the company, and this should amply mirror the future of the country tourism industry too. Kapil Chopra is the President of The Oberoi Group and the Vice-Chairman of the World Travel & Trade, India Initiative The article first appeared in the inaugural edition of BW Hotelier, JAN-FEB 2015.
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I DO BELIEVE that no power on earth can stop an idea whose time has come. We live in exciting times and India's time is now. History will record these as the golden years of Indian tourism. But numbers tell a different story. India's share of the world tourism pie is a minuscule 0.7 per cent. With 6.8 million international visitor arrivals in 2013 (a number that is likely to rise by 7.8 per cent when the 2014 figures are finally in), India is ranked No. 10 in Asia and No. 65 among 140 countries in the WTO Travel & Tourism Competitiveness Report 2013. Even the Ministry of Tourism's target of 11 million international visitor arrivals by 2017 will take India's share in global tourism to a mere 1.0 per cent. We cannot wait any longer to convert the country's natural, economic and cultural advantages into a strong competitive advantage. To enable the industry to do it, the government must respond proactively to our ten long-standing demands. Ensure that the proposed GST regime gets the much-deserved level playing field. Grant infrastructure status, including hotels above Rs 20 crore. Revisit the taxation policy on exports and aviation turbine fuel (ATF). Promote the idea of 'One India', or seamless tourism across the country. Eliminate double taxation and enable depreciation benefits. Deliver on Atithi Devo Bhava. Alter the perception that India is 'unsafe' by creating a tourism police force and sensitising law-enforcement agencies to the special needs of women travellers. Create islands of excellence -- a minimum of one per state -- and evolve from 'World Class Products' to 'World Class Experiences'. Focus on new potential source markets such as China and give tourism from neighbouring nations the big thrust it requires. Invest in potential growth segments: yoga and wellness; culinary tourism; Buddhist circuits (four out of five are in India); adventure and wildlife; river and seas cruises; Himalayas; MICE. The Centre and the states must work in unison with the travel and tourism sectors to harness the vast potential of Incredible India. The government has already demonstrated its sincerity to address these demands and emerging opportunities beckon. In this environment, with the Namaste as the enduring symbol of the ITC Hotels experience, we offer comprehensive hospitality solutions with a collection of more than 100 hotels in over 70 destinations in India. We have upwards of 40 hotels in various stages of development with 5,000-plus rooms being readied to be added to our inventory over the next five-six years. We have made our first foray into the leisure segment with a luxury resort -- the ITC Grand Bharat at Manesar, Gurgaon. It will be followed by the ITC Vilasa at Mahabalipuram in mid-2015. And we established yet another milestone in the journey of ITC Hotels, when we broke ground for our first international project, the ITC One at the Colombo One Luxury Hotel & Residences in Sri Lanka. Our pipeline also includes hotels in Ahmedabad, Amritsar, Bhubaneswar, Coimbatore, Guntur, Hyderabad, Kathmandu, Kolkata and Srinagar. ITC's triple bottomline approach to business is reflected in our ethos of Responsible Luxury -- offering luxury experiences that are planet positive. Responsible Luxury at ITC Hotels is manifest in our hotel concepts that are 'rooted to the soil', in our world-renowned Indian dining concepts such as Bukhara and Dum Pukht, and in our globally acclaimed spa brand Kaya Kalp. Our Responsible Luxury endeavours have led to 55 per cent of the total energy demand of ITC Hotels being met through renewable sources. Water consumption has gone down by 50 per cent across the chain over the last five years. Almost 100 per cent of the solid waste generated is reused or recycled. And more than 40 per cent of our food ingredients and beverages are sourced within a 100km radius to create a carbon-positive footprint. Nakul Anand is Executive Director, ITC Limited, and Chairman of the travel and tourism industry's new national umbrella body, FAITH The article first appeared in the inaugural edition of BW Hotelier, JAN-FEB 2015.
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We believe that the hospitality industry in India offers opportunities for strong and steady growth. The fundamentals that drive growth in the industry are strong and these continue to propel the sector. Some key drivers are continued growth of the Indian economy, steady investment in infrastructure, growing numbers of international and domestic travellers, and a burgeoning middle class with increasing disposable income. Additionally, the government's stimuli, such as extending the Tourist Visa on Arrival Scheme from 11 to 180 countries, and the recent introduction of the e-visa facility for 43 countries, will provide an additional boost to tourism-related activities in the country. Hilton Worldwide is a leading global hospitality company that offers a powerful portfolio of 12 brands catering to all customer segments, from luxury and full-service to mid-market. Four of our brands have a presence in India. These include our upscale, full-service brands (Hilton Hotels & Resorts and DoubleTree by Hilton) and our mid-market, focused-service brands (Hilton Garden Inn and Hampton by Hilton). Presently, we operate 14 hotels and resorts in India and we have a presence in seven of the top ten hospitality markets in the country (in terms of number of branded hotel rooms). Our footprint now extends from New Delhi, Gurgaon, Jaipur and Agra to Mumbai, Chennai, Bangalore, Thiruvananthapuram, Goa, Vadodara, Pune and Shillim in the Western Ghats. Over the last 12 months, we have entered four new markets -- Bangalore, Thiruvananthapuram, Jaipur and Agra -- and opened five new hotels: Hilton Garden Inn Thiruvananthapuram, Hilton Embassy Golf Links and DoubleTree Suites by Hilton in Bangalore, Hilton Jaipur and DoubleTree by Hilton Agra. With our entry into Agra, we now have a presence across the Golden Triangle. We are committed to India, one of our key strategic growth markets, and continue to explore opportunities to extend our network in the country through a multi-brand and multiple-partner strategy. We now have a robust pipeline of 17 hotels with 2,899 rooms, which has given us the confidence to launch our luxury brand, Conrad Hotels & Resorts, in India. With over 4,250 hotels in 93 countries, at Hilton Worldwide we realise we are in a position to be able to effect positive change for our community and planet. Hilton Worldwide was the first major multi-brand hospitality company in the world to make sustainability measurement a brand standard, and a critical performance measure, just as quality, service and revenue. Our continued effort in this regard is resulting in the enhanced efficiency of our operations and a mitigation of their environmental impact. Earlier this year, we announced a global commitment to impact the lives at least one million young people by 2019. Our endeavour is to enable young people by exposing them to new cultures, preparing them for success in the workplace through mentorships, apprenticeships and our global career showcase, Careers@HiltonLive: Youth in Hospitality Month, which was our largest ever in May this year with more than 600 events reaching 73,000 young people across the globe. Daniel Welk is the Vice President (Operations-India), Hilton Worldwide
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India is at present an under-penetrated hotel market. In terms of hotel rooms per 10,000 people, India has a little over one, compared with 28 rooms globally and 180 rooms in the US. Even if one assumes that the country's consuming population is only 10 per cent of the actual population, there should still be a requirement of three rooms per 10,000 people based on the global average. Due to structural issues, India is also a unique market for hotel development. The high cost of land, the high cost of short-duration debt and opaque localised approval processes create significant barriers to entry. Consequently (and unlike in the rest of the world, especially the US), most of the hotels in the country are owned by individuals (rather than institutions) with an inverted pyramid of supply, wherein a majority of hotel rooms in India are either upscale or better. As an analogy, imagine a scenario in which the majority of airline seats in India were business class. Clearly, as a result of these factors, there is a price-demand mismatch with more high-priced rooms than required and far fewer lower-priced rooms. It means that over the next few years, India can easily absorb another 200,000 rooms in the 'right'-priced mid-scale (three-star) and economy (one- or two-star) categories. If one looks at the aggregate demand-supply mismatch in India, it was in favour of hotels up until about 2007-8, when occupancies across the country were in excess of 70 per cent. Over the past six or seven years, supply has grown at close to 16 per cent CAGR, and demand at only 12 per cent CAGR. Consequently, national occupancies for the last few years have been under 60 per cent. This has led to irrational pricing, great financial stress for hotels and significant debt on their balance sheets. Going forward, additional supply injections are slowing down to about 7 per cent CAGR over the next four or five years, whereas demand is expected to continue to rise at a minimum 12 per cent CAGR. It is clear therefore that by 2018-19, hotel occupancies across the country will once again cross the magic figure of 70 per cent. Indian hotels have a bright future provided they are able to manage short- to mid-term cash flows and debt service obligations. The Lemon Tree Hotel Company (LTH) at present owns 3,000 rooms and manages an additional 300 rooms across 15 cities in India. Since the launch of its first hotel in 2004, the company has grown at close to 50 per cent CAGR over the past decade. Another nine owned hotels aggregating 2,000 rooms are under development. By 2020, LTH will most likely own 7,500 rooms and manage an additional 10,000 in 30 cities across India. At that point in time, the company will control about 7 per cent of the total supply of branded hotel rooms in the country and more than 15 per cent of mid-market rooms. Of these, about a third will be upscale (four-star), another third, midscale (three-star) and the balance, economy (two-star). Patu Keswani is the Chairman and Managing Director, Lemon Tree Hotel Company
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