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It’s champagne time for the Indian hotel industry

Af ter braving recession and the terror attack crunch, the Indian hospitality industry has been one of the first sectors to recover. Hotels and restaurants in metros and tier I & II cities across the country have witnessed an increase in occupancy since August this year. Mumbai, where the worst ever terror attacks took place, hotels registered occupancy of as high as 65%. The industry expects complete recovery in the coming 12-18 months.

According to the world travel and tourism council, the annual growth in the hospitality industry is pegged at 15% with 2, 00,000 rooms (both luxury and budget) needed in the country and the segment is poised for a stupendous growth.

The World Tourism Organisation (WTO) also estimates that international tourist inflow in India by 2020 would reach 10 million with 6.5% growth for the next eleven years. This makes the country one of the fastest growing tourist destinations in the world, second only to China.

Initiatives like massive investment in hotel infrastructure and open sky policies made by the government are all aimed at propelling growth in the hospitality sector.

With the Commonwealth Games in 2010 and the Cricket World Cup in 2011, high influx of foreign tourists have ensured huge footfalls for the sector. Internal tourism too has, of late, begun offering great potential. Also, with the $23 billion software services sector pushing the Indian economy skywards, more and more IT professionals are flocking to Indian metro cities, thus signalling a boom-time for the hotel and hospitality segment.

Says, Anuj Prakash, general manager of Mumbai-based The Resort, “Hotel and hospitality industries are among the biggest employment generators in the country.
Towards propelling its growth, while the government should confer infrastructure status to the hotel industries, several taxation issues also need to be rationalised. Further permits and licences required for the hotel operations need to be rationalised by offering a 'single window' mechanism.”

Commonwealth Games 2010: A booster dose
The Commonwealth Games (CWG) would be a good opportunity to showcase “Atithi Devo Bhava,” the rich cultural heritage of the Indian hospitality to the international community, more so with the Union government aggressively promoting the Golden Triangle circuit – transport, tourism and culture.

In a bid to boost North India for the CWG, the parliamentary standing committee on transport, tourism and culture had recommended tax incentives for major hotels of Delhi, Jaipur and others like those applicable for hotels in the National Capital Region (NCR).

The standing committee report laid emphasis on the development of trains and airlines, especially international flights, and also for roping in the private sector for development of better tourist packages.

For high quality food and foodservice, the Food Safety and Standard Authority of India (FSSAI) has released a pilot project on “Safe Food and Tasty Food.” The pilot project aims at voluntary participation of food establishments of Delhi/NCR to ensure food safety and to upgrade the hygienic conditions of the eating establishments.

Union tourism minister Kumari Selja said Commonwealth Games had given an opportunity for showcasing India as a unique and hospitable tourism destination. It is expected that a large number of tourists would visit the country next year, bringing back the buoyancy in the sector.

“The tourism ministry has been working towards developing adequate accommodation, sprucing up the tourism infrastructure and enhancing the quality of hospitality related services to make the visit a truly pleasurable and enriching experience for visitors during and after the CWG–2010. The goodwill generated through the successful organisation of this mega sporting event would enable a sustainable growth of tourism sector,” Selja said.

According to sources, the department of tourism has received hospitality project proposals under various categories of hotels, resorts and heritage hotels and camping sites for about 202 units in 2008 and 113 in 2009 across Rajasthan which are under various stages of completion.

Centre’s attempt and future projects
With themes like “Visit India Year – 2009” & “Incredible India” the tourism ministry made a fair attempt to tackle global economic slowdown which had cascading effect on the tourism sector and has adversely affected allied sectors including hospitality.

About the government’s activities to boost tourism & hospitality, Selja said that the tourism ministry had introduced a scheme called “Visit India Year – 2009” in close partnership with airlines, hotels and tour operators to attract visitors to India from different countries. “The promotional efforts in key source markets have been enhanced through important global events, road shows and outdoor advertising campaigns. The Central government is also making conscious efforts to develop emerging short and medium haul markets,” Selja added.

Additionally, the government decision to substantially upgrade over 28 regional airports in smaller towns, privatisation and expansion of Delhi and Mumbai airports, has improved the business prospects of hotel industry in India. Also, the upgrading of national highways connecting various parts of India has opened new avenues for the development of budget hotels in India. Couple this with the availability of qualified human resources and the hospitality sector has already got great growth prospects.

“Increased competition and increase in demand has consolidated the hospitality segment, whilst opening up a plethora of opportunities but at the same time there are various constraints to continue. The high cost of land, high taxes and the additional taxes such as value added tax and service tax, tax holidays to specific hotels hamper the growth of the hospitality industry,” Oscar Fernandes, CEO – India, Bohemian Crystal Co. India (BCC) told Food & Beverage News.

BCC India represents some of the finest hotel equipment brands like Bauscher, Revol, Tafelstern and Zwiesel. The company is one of the leading providers of hotel glassware, crockery and other services to the hospitality sector.

“Fierce competition has led to innovative ideas by hotel majors, thereby delivering impressive hospitality products and services. This has, in turn, also prompted them to generate new lines of revenue with creative approaches, be it by reducing transaction costs, increasing productivity or promoting traditional Indian values,” Fernandes added.

Further the industry also seeks revised tax service which can promote investor to foray into hospitality particularly in plant and machine manufacturing for hotels & restaurants. According to Rohit Mathur, director – Bond the Fun Bar, the hospitality sector in India has tremendous growth opportunities however there are changes required in the rules and regulations to provide momentum of growth. The government should look for abolition of tax service on tour packages which will help push tourism in the country. A uniform tax structure for rooms and food & beverage across the country is much required. In addition, an extension of tax holidays on a pan-India basis and not just limited to the NCR region is required.

“Section 32 of the IT Act should be amended to restore the depreciation rate to 20%. The additional depreciation applicable to “plant & machinery” under section 32 1 (ii a) should also be allowed to hotels that make heavy investments in plant and machinery,” Mathur urged.

Far-fetched forecast – Vision 2015
Hotels & restaurants have now become the integral part of the society. The upcoming trends in this sector is international companies entering India, kiosks and food courts becoming more popular as food joints, expansion of brands into smaller cities and newer locations, Indian companies making international forays, multi-cuisine outlets, and chef-led innovations into fusion cuisine.

Currently, there are over 1,10,000 hotel rooms in India. According to the tourism ministry, about 4.4 million tourists visited India last year and at current trend, demand will soar to 10 million in 2010 – to accommodate 350 million domestic travellers. Hotels in India have a shortage of 1, 50,000 rooms fuelling hotel room rates across India.

With tremendous pull of opportunity, India is a destination for hotel chains looking for growth. The world travel and tourism council data states, India ranks 18th in business travel and will be among the top 5 in this decade. Further, analysts estimate, demand is going to exceed supply by at least 100% over the next 2 years.

Five-star hotels in metro cities allot same room, more than once a day to different guests, receiving almost 24-hour rates from both guests against 6-8 hours usage. With demand-supply disparity, hotel room rates are most likely to rise 25% annually and occupancy to rise by 80%, over the next two years. The Indian hotel industry is eroding its competitiveness as a cost effective destination.

Indian hotels are adding over 80,000 quality rooms, currently in different stages of planning and development and should be ready by 2015. The Central government has also approved 300 hotel projects, nearly half of which are in the luxury range. The manpower requirement of the hotel industry will increase from 7 million in 2002 to 20 million by 2015.

India's hotel industry looks, feels sunnier

Things are beginning to look better for the hospitality industry across India [ Images ], with an increase in occupancy levels to 10-30 per cent and hotel rates getting closer to the pre-recession ones.

Says Nandkishore Somani, executive assistant manager, Sun-n-Sand: "Occupancy levels have increased to almost 50-60 per cent in our Mumbai and Pune hotels, as the recession effect is loosening over the market and companies are not cutting on travel like before. This is why we can now think of revising the tariffs to the rates we used to quote before the economic slowdown."

Signs of recovery in the market have brought in good expectations for next year, also thanks to the ongoing wedding and festive season, as well as the coming Commonwealth Games [ Images ]. Till a month earlier, hotels were busy working out discounted rates, tailormade packages and budget packages; now, company and individual bookings have started ringing in.

Said a source from the Leela Group of Hotels: "Earlier, the condition was not looking good due to security issues and the economic slowdown. But now, across our hotels we are enjoying close to 80-90 per cent occupancy. We are booked around 90 per cent in Goa [ Images ] and Kerala [ Images ], and 80 per cent in Gurgaon, Bangalore and Mumbai for this season." The new year will see this chain opening two new hotels, in Delhi [ Images ] and in Chennai.

Is this trend here to stay? Kamlesh Barot, senior vice-president, Hotel and Restaurant Association (Western India) sounds optimistic. "Hotels across the country are enjoying occupancy levels at around 70 per cent on an average, a dip of only about 10 per cent compared to pre-recession time. This revival is due to the festive season, which will push growth and stabilise the situation, post this peak season."

The Pride Hotels has seen a steady increase in occupancy levels in properties across cities like Ahmedabad [ Images ], Bangalore, Chennai and Pune, by close to 20 per cent. Managing Director S P Jain says they are now witnessing 70 per cent occupancy in their hotels.

Then came November and more enquiries started turning into business opportunities. Pune district witnessed an average of 60 to 65 per cent occupancy in the last month, according to General Manager Deepak Manocha from the seven-month-old Courtyard by Marriott (CBM), Pune. The outbreak of H1N1, the Mumbai terror attacks [ Images ] and the economic slowdown seemed to be the only hurdles.

But, as the world watches the economy of Dubai [ Images ] almost on the verge of a breakdown, some hoteliers are feeling the tremors here. Says Vinay Phadnis, chairman and managing director, Sahil Group, which has properties like Radisson Resort & Spa, Alibaug, and Sahil Sarovar Portico in Lonavala: "These are acting as spoilers for us. Whatever is happening in Dubai will have an impact on our business, because there will again be a cash crunch in the market. But, the immediate future looks all right."

Abhijit Chitnis, director of sales, CBM, thinks otherwise. "Pre-recession rates will never come back. There will be a correction in rates," he says, and adds, "Though business is coming back to normal, this phase will also see the addition of significant inventory in markets, which will put pressure on occupancies."

Hospitality sector booms: Now, hotels to train workers

The Minister for Tourism Kumari Selja on Monday inaugurated the ‘Hunar se rozgar’ programme that aims to provide skill sets to young aspirants and train them as cooks and waiters.

The minister said with tourism registering a boom again, there is a need for trained personnel in the hospitality sector. While there are only 12,000 trained personnel for absorption in the hospitality related enterprises, annual demand for trained worker is over 2 lakh.

The programme imparts training to applicants who wish to make a career in hospitality sector, but lack the requisite basic skills.

The programme will be conducted in Delhi in collaboration with the Hotel Association of India and Ashok Group and its affiliate hotels, which would emerge as an ideal model of public private partnership.

Kumari Selja said the programme would be implemented in a phased manner across the country.

The minister highlighted several initiatives to augment the skills of the youths by organising skills’ specific programs for auto-rickshaw drivers, airport staff, and guest house owners, etc. under the Capacity Building for Service Providers (CBSP) scheme.

The course curriculum for Hunar Se Rozgar programme has been developed by the National Council for Hotel Management & Catering Technology and would be delivered by leading hotels of Delhi under their corporate social responsibility initiative. The food production programme is of eight weeks duration while the food and beverage service programme will last six weeks.

Sujit Banerjee, Secretary, Tourism, highlighted various schemes that have been launched by the ministry to enhance tourist infrastructure. The ministry proposes to set up 49 hotel management institutes, 31 foodcraft institutes and a tourism management institute in south India by the end of the 11th five-year plan.

Vijay Goel highlights ‘lax preparations’ again
With just 285 days to go for the Commonwealth Games, questions are still being raised if Delhi will be ready to play host. Former Union Minister of Sports Vijay Goel, who was recently expelled from the Games organising committee by chairman Suresh Kalmadi, on Monday highlighted the laxity in preparations and alleged that Chief Minister Sheila Dikshit is now “nervous”.

Goel said he has appealed to Prime Minister Manmohan Singh to come clean on the issue of Commonwealth Games preparations.

“Suresh Kalmadi says the preparations are as per schedule, but the Games Federation chief Mike Fennell expressed concern at the delay in the construction of the SP Mukherjee Swimming Complex and the Jawaharlal Nehru Stadium. Likewise, Sports Minister M S Gill has informed the Parliament that preparations would not be delayed, but Chief Minister Sheila Dikshit says she is nervous yet hopeful,” Goel said.

Goel said already the official cost of preparations for the Games has crossed Rs 10,500 crore. “By creating panic, ground is being prepared for getting more funds from Centre.”

“Corruption in the preparations for the Games has been established by the stance taken by the committee in the High Court where it has engaged the Union government in a legal battle and refused to make its accounts public on the ground that it is an independent body.”

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ITDC to recruit 700 students for Commonwealth Games

Indian Tourism Development Corporation today announced that the company will soon commence campus recruitments of 700 students from Top 10 colleges of Delhi as well as hospitality institutes across India. The students will be designated as Hospitality Executives and will be based in Hotel Ashok, Hotel Janpath and Hotel Samrat, which have been named as the Official Family Games Hotel. ITDC will also be placing these students at the DDA flats in Vasant Kunj which are being constructed for accommodating Commonwealth delegates.

 The students will be recruited by ITDC through on-campus interviews and group discussions, and will work with ITDC for a period of five months starting June 2009. The selection criteria would consist of judgeing students on aspects such as communication skills, ability to work under pressure, aptitude for interacting with international visitors etc. The selected students will undergo rigorous training modules onhospitality industry and guest relations by ITDC officials for the first two months and then assume the responsibilities allocated to them at various locations, during the Commonwealth Games.

 All 700 students will be getting a stipend from ITDC for the five month period.

 Commenting on this development, ITDC’s official spokesperson said, “India is a young country and we believe that our youth are the best ambassadors to showcase India’s strength, prowess and world famoushospitality to the world. It is our privilege to give these students an opportunity of a lifetime to interact with the Commonwealth delegates. We are already in talks with heads of various colleges andhospitality institutes and will soon begin our campus recruitment process.”