Hotel industry is poised for a new growth phase

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: The hotel industry in India is going through an interesting phase. One of the major reasons for the increase in demand for hotel rooms in the country is the boom in the overall economy and high growth in sectors like information technology, telecom, retail and real estate. Rising stock market and new business opportunities are also attracting hordes of foreign investors and international corporate travellers to look for business opportunities in the country.

Hotel industry is also inextricably linked to the tourism industry and its growth has added fillip to the hotel industry. And with Conde Nast Traveller ranking India as the fourth most preferred travel destination and Lonely Planet selecting the country among the top five destinations from 167 countries, India has finally made its mark on the world travel map.

The arrival of low cost airlines and the associated price wars have given domestic tourists a host of options. The opening up of the aviation industry in India has led the way for exciting opportunities for the hotel industry as it relies on airlines to transport 80% of international arrivals.

Moreover, the government’s decision to substantially upgrade 28 regional airports in smaller towns and privatisation and expansion of Delhi and Mumbai airport will improve the business prospects of hotel industry in India. Substantial investment in tourism infrastructure is essential for Indian hotel industry to achieve its potential. The upgrading of national highway connecting various parts of India has opened new avenues for the development of budget hotels here.

The Government of India’s Incredible India destination campaign and the Atithi Devo Bhavah campaign have also helped the growth of domestic and international tourism and consequently the hotel industry.

In recent years the government has taken several steps to boost travel and tourism, which have benefited the hotel industry in the country. These include the abolishment of the inland air travel tax by 15%, reduction in excise duty on aviation turbine fuel to 8% and removal of a number of restrictions in excise on outbound chartered flights including those relating to frequency and size of aircraft. The government’s decision to treat convention centres as part of core infrastructure has also fuelled the demand for hotel rooms.