Challenges to hotel industry growth in India still remain, but Abhijit "Beej" Das sees massive opportunities as well.
Last week, Das was named managing director of Molinaro Koger Hotels (India) Pvt. Ltd. The new entity will provide development, branding, capital and brokerage services to its clients.
Das believes the hotel industry India is under served, with a need most apparent in a number of areas and segments.
"There is a great need for hotels in and around religious and tourist sites," Das said. "Imagine, for example, if Vatican City didn’t have any hotel rooms."
Also, India's secondary and tertiary markets are "massively underserved" in terms of the amount of hotel rooms, Das said, and he also sees a nationwide need for budget hotel product.
India's growing middle class is sure to boost demand. Infrastructure improvement in India is one key to this, Das said, noting that the construction of the Interstate highway system in the U.S. spurred increased hotel demand.
Economic growth is sure to be another driver. India's per capita gross domestic product is now half of the level where travel becomes what Das calls a "lifestyle essential," and with that figure growing at about a ten percent rate, that threshold should be crossed soon, he believes.
Many hotel companies have growth in India in their playbooks. IHG currently operates 14 hotels, consisting of 2,369 rooms in India, and has plans to launch 30 new hotels by 2009.
"Factors creating opportunities for growth in India include a projected increase in the number of domestic travelers, as well as international arrivals, the rise of budget airlines, and the heightened tourist profile in the lead up to the 2010 Commonwealth Games," said Paul Logan, vice president of development for Southern Asia for IHG Asia Pacific. IHG signed ten management contracts in India in 2006.
And, in late August, Wyndham Hotel Group announced that it had signed an agreement with Gammon India Ltd. to develop at least 38 Super 8 and Days Inn hotels across India by 2011.
Challenges are still significant. Rising land prices means that many landowners, believing that prices will rise further, want to continue to hold on to their land, Das said. Many Indian hotels are also overstaffed, he said. While American hotels average less than one staff person per guest, that figure is more like 2.5 to 3 staff members per guest in many Indian hotels, he said.
Source: Commercial Property News
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