As growth slows down in more mature markets, India’s hospitality sector is likely to see investment in excess of $200 billion over the next three years, with investors’ shifting their focus to Asia’s growing economies.
According to a recent report by global database and research service for hotel construction projects, Tophotelprojects.com, around 300 branded hotels will come up in India over the next three years, constituting about 17 per cent of Asia’s hotel construction pipeline.
India has the second largest number of hotels under construction with 292 first class and luxury hotels after 592 hotels that are coming up in China of the total 17,000 hotels being built in Asia over the next three years. The hotel projects under construction include projects from companies such as Accor, Carlson Rezidor Hotel Group, Fairmont Raffles Hotels International, Hilton Worldwide, Hyatt Hotels Corp. and Indian Hotels Co. Ltd that runs Taj Hotels.
Sector analysts say taking an even spread of hotels coming up across segments ranging from budget to luxury hotels and considering at least 100 rooms per hotel, on an average each room will entail cost of construction of around Rs 60-70 lakh.
“Globally, from the growth perspective, higher percentage of growth is coming out of India. Where global economies are growing at two-something percentage, Asian economies are growing at five-six per cent. Hospitality industry is closely linked with economy,” said Chintal Patel, Director, Real Estate and Hospitality, Ernst & Young. “Also, it is still a while before India becomes a mature market like that of the US or Europe. Even China has huge supply coming in, thus growth prospects in India are better.”
The government has termed the shortage of branded hotel rooms in the country as an acute shortage. It estimates an additional need of 180,000 branded hotel rooms in addition to existing 128,000 rooms now in order to increase India’s share of global inbound tourists to 1 per cent from current 0.6 per cent by 2016-2017.
HVS, a hotel consultancy company, puts the number of hotel beds available across the country in the organized sector at 84,000 and outlines a need for 90,000 hotel beds over the next five years in India’s metropolis, including 11,000 in Mumbai and 10,000 in Bangalore.
Of those hotel companies which will be opening properties in India, Accor is currently looking at eight hotels, Carlson Rezidor is developing 30 new properties while Hilton and the InterContinental Hotels Group Plc are planning nine and 16 new hotel openings, respectively, notes the report. Hyatt, which operates 13 hotels in India, will also expand its presence with 15 new hotel opening in next few years.
The report noted that hotel companies are betting big on India’s growing, well-off middle class with 350-500 million people having spare money to spend on travel.