HOTEL INDUSTRY

 GLOBAL SCENARIO
Hotel industry is one of the world’s largest industries. It is a several billion
dollars industry that depends on availability of leisure time and disposal
income.

Today, this industry is going through an interesting phase. One of the major
reasons for the increase in demand for the hotel rooms in the world is the
boom in the overall economy and higher growth in sectors like Information
Technologies, Real Estate etc. Hotel Industry is also inextricably linked to
the tourism industry and its growth has added fillip to the hotel industry.

The foreign tourist arrivals to India up to the month of November, 2009

decreased by 6.3% over the arrivals for the same period in 2008. The
cumulative arrival figures for the period January to November 2009
reached 4.54 million. The downward growth is due to global economic
slowdown, terrorist activities, H1N1 influenza pandemic, etc. (Source:
Tourism Ministry – Press Release)

There were nearly 5.37 million international tourist arrivals in 2008 from
5.08 million in 2007, an increase of about 5.6 per cent. (Source: Tourism
Ministry Report, 2008)
Hotel Industry has today, emerged as the fastest growing industry in the
world.

 POTENTIAL OF INDIA

India is seen as one of the most wonderful holiday destination and thus
hotel industry is going tizzy and continuously showing remarkable progress
in its state. Around 11% demand of hotel industry is generated by the long
staying guests. As there is an acute shortage of branded serviced
apartments within the country so this shortage is filled by the hotels.

The hotel industry in India is currently at Rs 87,601/- crore and is set to

grow at 15% a year. This figure is likely to skyrocket in 2010,
when Delhi will host the Commonwealth Games. Already, more than 50
international budget hotel chains are moving into India to stake their turf.
Therefore, with opportunities galore the future Scenario of Indian Hotel
Industry' looks rosy. (Source: Business Standard)

Presently, the Indian hotel industry is witnessing a short fall of around

1,50,000 rooms against a supply of nearly 1,10,000 rooms. As per an
estimate, demand for rooms will be exceed to at least 100% of supply in
next two years. To combat with this demand and supply gap, Indian hotel
 industry is ready to add about 60,000 good quality rooms, which are
currently in different stages of planning and development. Government is
required to take a move for fillip of this gap for coming 2010. (Source:
Business Standard)

India's hotel industry comprises of four main categories:

 Star hotels,
 Heritage hotels,
 Budget hotels and
 Unclassified hotels.

It is expected that the budget and mid-market hotel segment will witness
huge growth and expansion while the luxury segment will continue to
perform extremely well over the next few years.

 INDUSTRY PERFORMANCE (Source: HVS)

The global meltdown had its impact on all the industries. Hotel Industry was
no exception. The Industry showed a downward trend since 2008. The
occupancy levels of the overall industry saw a decline of 12.4% in the year
2009. The average rates for the industry surprisingly declined by 1.9% only
for 2009. Despite minimal rate correction,

 The key operating characteristics of major cities have been worked

out as under:

a) RevPAR (Revenue per available room): The RevPAR saw a large

decline by 14% in 2009 due to the major decline in occupancy levels.
(Figures in Crore)
Name of the % Inc / (Dec)
2007 2008 2009
City *
Agra 2777 3068 3097 0.9
Ahmedabad 2394 3189 3011 (5.6)
Bangalore 7544 6417 5373 (16.3)
Chennai 4017 4616 4341 (6.0)
Delhi 7069 7707 6916 (10.3)
Goa 4223 4516 3807 (15.7)
Hyderabad 4299 4120 3476 (15.6)
Jaipur 3462 3665 3258 (11.1)
Kolkata 3992 4859 4647 (4.4)
Mumbai 6807 8155 6513 (20.1)
Pune 5440 5522 4719 (14.6)
* Growth in 2009 (in absolute terms) expressed as percentage of the figure for
2008.
 b) The occupancy levels : The occupancy levels of the Major cities saw
a large decline in 2009 due to global meltdown and economic recession.

(Figures in % )
Name of the % Inc / (Dec)
2007 2008 2009
City *
Agra 58.9 58.3 53.3 (8.6)
Ahmedabad 67.9 73.3 62.1 (15.3)
Bangalore 72.5 65.3 56.4 (13.6)
Chennai 74.7 72.8 64.7 (11.1)
Delhi 76.9 73.9 68.5 (7.3)
Goa 72.8 72.2 60.9 (15.7)
Hyderabad 72.1 65.7 56.6 (13.9)
Jaipur 65.5 64.7 54.3 (16.1)
Kolkata 75.5 73.9 69.5 (6.0)
Mumbai 77.9 74.6 60.9 (18.4)
Pune 83.4 69.5 61.1 (12.1)
* Growth in 2009 (in absolute terms) expressed as percentage of the figure for
2008.

 The occupancy levels according to hotel category have been

worked out as under:
(Figures in % )

Occupancy Levels

80.00
60.00 2007
40.00 2008
20.00 2009
0.00
Five Star Deluxe Five- star Four- star Three- star
2007 73.00 70.20 71.70 68.90
2008 71.70 67.20 68.90 64.70
2009 62.30 59.90 59.50 57.50

 POTENTIAL OF RAJASTHAN

Rajasthan is one of the most popular tourist destinations in India, for both
domestic & international tourists. Almost every third foreign tourist visits
India like to visit Rajasthan. The state contributes about 11.2 per cent and
3.3 per cent share in India’s foreign and domestic tourist arrivals
respectively. (Source: Jaipur Hotel Deals)
Number of Tourist Arrival in Rajasthan (Source: Tourism Department
Raj.)

Domesti % Foreign % Inc % Inc

c Inc er Total
200 2348328 25.0 7.87 247034 24.02
6 7 0 1220164 51
200 2592052 10.3 14.82 273215 10.60
7 9 8 1401042 71
200 2835891 9.41 5.47 298365 9.21
8 8 1477646 64