TABLE 3: PROPOSED NEW SUPPLY (2010/2011 - 2014/2015) Agra


Ahmedabad Bengaluru Chandigarh Chennai


Delhi NCR Goa


Hyderabad Jaipur


Kolkata Mumbai Pune


Other Cities TOTAL


1,439 1,521 5,597 653


3,806


11,018 3,288 3,782 2,472 1,520 9,877 2,672


14,759 62,404


Source: HVS Trends & Opportunities Report, 2010 Edition


international tourist, over at HVS, Thadani is not so sure. “Do we really need them?” he questions, pointing out that a vast number of the foreign arrivals are in fact ex-citizens returning home who don’t fit the conventional description of what a tourist is. “We have 250m domestic travellers versus 5m international visitors,” he compares. “If I lost that 5m, I still have my 250m to worry


country’s infrastructure, finding trained manpower to staff the massive influx of new rooms, as well as the world’s delicate economic recovery. Thadani also believes that, like anywhere, there is the potential threat of further terror attacks. Despite this, there is strong optimism on the ground. In a survey(2)


carried out by Horwath HTL, General Managers from


Yes, there are challenges, but from those challenges will emerge a lot of


opportunities. Vijay Thacker, Horwath HTL-India


about. And if that 250m is growing at 15- 20% and the 5m refuses to grow, I will still survive to see the next decade.” The future of the hotel industry in India


is by no means without its challenges. Says Thacker: “I don’t see where the money is going to come from. With interest rates going up again, new projects are going to be held back. You can’t do development finance at 14% and on top of high land costs and long gestation periods it’s not going to be easy.” Further setbacks lie in developing the


hotels across India were asked to assess their outlook for 2011 in terms of revenue. 84% of respondents expect growth in the year ahead with one fifth predicting it to be in excess of 12%. These figures are particularly optimistic given the new supply. General Managers were also asked how they viewed the impact of new supply. Over 70% expect it to impact their business in 2011 with the threat being greater from branded hotels than from unbranded. With only 14% believing independent hotels to have a major impact on their business, the clear


(1) Hotel Valuation Index and Compensation Survey, HVS, HICSA Edition 2011 (2) General Manager Outlook Survey 2011, Horwath HTL, January 2011 22


message is that brand affiliations are key. Both Manav Thadani and Vijay Thacker


believe that the story lies in the mid-market, accommodating the domestic traveller. Says Thacker: “Hot sectors in terms of positioning is the mid-market, the upper mid-market, and maybe even some of the budget economy hotels. I’m not saying there’s no space for luxury, but I think the focus and the opportunity is bigger in the mid-market segment. That has to do with two things,” he explains. “In the past there’s been too much concentration on five-star hotels, and if you look at the domestic traveller as playing an increasingly important role as a demand generator, then I think that mid market is going to become more important.” Thacker also believes that budget hotels


will break through, though not without their challenges: “It’s going to be a struggle because of land costs and differences between service expectations and the typical service you would plan to deliver in a budget hotel,” he says. “The market needs to be educated to that but over time, I’m sure it will come good.”


Summing up the sentiment of the


hotel industry in India, Thacker concludes: “Yes, there are challenges, but from those challenges will emerge a lot of opportunities.”


Table 3 - Proposed New Supply (2010/2011 - 2014/2015) Existing Supply


Proposed 510


2,339 9,819 1,482 5,995


20,021 1,736 5,302 2,664 3,481 7,477 5,196


23,427 89,449


Increase over 5 Years 35%


154% 175% 227% 158% 182% 53%


140% 108% 229% 76%


194% 159%


143%


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