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Hospitality Industry

The Indian hospitality industry has emerged as one of the key driving forces of the services sector in India. It has evolved into an industry that is sensitive to the needs and desires of people. The Indian hospitality industry has recorded a healthy growth fuelled by a robust inflow of foreign tourists as well as increased tourist movements within the country. It has also become one of the leading players in the global industry. Foreign Tourist Arrivals (FTAs) into the country increased steadily from 2002 to 2008. FTAs dipped in 2009 due to the global economic slowdown. However, the impact on the Indian industry was much lower. FTAs are expected to increase in 2010. On the other hand domestic tourist movements within the country were the highest in 2009.


The prospects for the hotel industry in India are bright. With the revival in the global economy, international tourist inflow into the country is expected to rise. Additionally, hosting of international sports events, trade fairs and exhibitions in the country are expected to aid both the inflow of international tourists and domestic tourist movements. The upcoming industrial parks, manufacturing facilities and ports across the country provide a good opportunity for budget and mid-market hotels. Although around 89,500 additional rooms are expected to come up in India in the next five years, the supply of branded/quality rooms in India is much lower when compared to other countries across the globe. Hence, there exists a huge potential for investors and operators across all the segments of hotel industry in India. The increase in room inventories is expected to make the hotel industry more competitive. As a result, hotels would be under the pressure of maintaining quality and service levels at competitive prices. This would aid the growth of segments such as MICE amongst others. While there is immense potential, concerns for growth of the industry still prevail. These include high real estate prices in the country, security threats, shortage of manpower, high tax structure and non-uniformity in taxes.

Market Analysis:

Tourism is now one of the largest industries in the world. According to the UNWTO, the export income generated from international tourism ranks fourth after fuels, chemicals and automotive products. The UNWTO also points out that for many developing countries, tourism is one of the main sources of income for foreign exchange and it also creates the much needed employment opportunities for economic development. The industry has witnessed a staggering growth over the past six decades. The WTO says that from 1950 to 2009 international tourist arrivals grew from 25 million to 880 million. The industry is expected to continue to grow rapidly in the long term. The World Travel and Tourism Council (WTTC), a forum for business leaders in the travel and tourism industry says that globally in 2009, travel and tourism employs approximately 219 million people or 7.6% of total employment and generates 9.4% of world GDP. The WTTC anticipates that by 2019 travel and tourism will generate 276 million jobs or 8.4% of total employment and shall account for 9.5% of global GDP.

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