The domestic hospitality industry is undergoing rapid transformation, with several hotel groups investing in new properties across India and the globe. Additionally, real estate players are entering the industry through management contracts with established hotel chains.
This expansion in the hospitality business is taking place on account of the massive growth that India is likely to witness in the coming years. Currently, India’s travel and tourism industry is estimated at 6.1% of the gross domestic product (GDP) — below the world average of 9.9%.
The capacity for star-rated rooms in India is far shorter than its demand, and cities are now evolving from a single-business district to multiple-business districts, as growth spreads and cities get bigger. Moreover, new growth centres are emerging in previously untouched markets such as Orissa, Chhattisgarh, Jharkhand, Pune and West Bengal, among others. This has greatly expanded the market for star-rated hotel accommodation in the country.
The hospitality industry is divided into four segments: luxury, leisure, business and budget hotels. Major hotel chains like Indian Hotels Company (IHCL), Hotel Leela and ITC Hotels are aiming for a presence in most of these segments.
For instance, the market leader, IHCL, is following an integrated approach to offer rooms at all price points and in almost all million-plus cities in the country. This is being complemented by setting up hotels at strategic locations across the globe. The company plans to double its room inventory to over 20,000 in 3-5 years. This includes around 3,000 rooms under the ‘Ginger’ brand, which is IHCL’s budget chain of hotels.
Meanwhile, ITC Hotels is using a mix of owned investment and franchisee model to take a shot at market leadership. The company offers a choice of over 90 hotels across 77 destinations in India under four different brands — ITC Hotels, Welcome Group, Fortune and Welcome Heritage. It also has four properties under the Sheraton franchise, which adds up to an inventory of 6,000-plus rooms, with half of the room inventory being at the premium end.
Hotel Leela has already started constructing hotels in Udaipur, Chennai and Delhi, while it continues to expand its existing properties at Bangalore and Kovalam. East India Hotels (EIH) plans to set up one new hotel each at Mumbai, Gurgaon, Bangalore, Hyderabad and Khajuraho. Besides, it is expanding its flight kitchen services in Kolkata and Mauritius, and plans to refurbish its existing properties.