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Before World War 1, most hotels in India were developed in locations that were frequented
by the British and Indian aristocracy. This period saw the development of hotels being
undertaken by individual British and Indian entrepreneurs, with only a few companies
owning hotels in India, such as The Taj Group--Indian Hotel Company (owned by J. R. D.
Tata) and Faletti's Hotel, East India Hotel Oberoi Group.

The important hotels that were built during India's British period were:
The Rugby, Matheran (1876)
The TajMahal Hotel, Mumbai (1900)
The Grand, Calcutta (1930)
The Cecil Hotels, Shimla and Muree (1935)
The Savoy, Mussoorie (1936)

India gained independence in 1947, and the hotel industry had a period in which no
hotel development took place. Upon his return from the Non-Aligned Movement Conference
in 1956, Late Pundit Jawaharlal Nehru, then Prime Minister of India, recognized
that tourism could be an engine for the country's economic growth and was inspired to
build quality hotels in India for visiting foreign dignitaries. This led to the first-ever gov-
ernment investment in the hotel industry with the building of the Ashoka Hotel in New
The India Tourism Development Corporation (ITDC) was set up in 1966 as a corporation
under the Indian Companies Act of 1956, which provided a boost to the Hotel Industry.
The government gave the tourism industry another boost when it created the Ministry
of Tourism and Civil Aviation in 1967, separating it from the Ministry of Transport
and Shipping, thereby recognizing that tourism was not simply about transporting
people from point A to point B but had a much wider role to play in the nation's economy.

When India agreed to host the 1982 Asian Games, a major boost was given to the country's
hotel industry. The government announced a national policy. This policy was timed to help
the country meet the huge need for hotel rooms in New Delhi, the venue of the Asian Games.

What the future holds:
Despite the global recession, inflation, terrorism and other factors, the overall outlook
for the Indian hospitality market is optimistic and will remain so says HVS
India remains the second fastest growing economy in the world and the economic
growth of the country is at 7.1% of the GDP as declared by Mr. Pranab Mukherjee,
Finance Minister, India.
The Tourism Ministry, Government of India, has set a target of 10 million tourists to
India by 2010
The WTO (World Travel Organisation) predicts that India will receive 25 million
tourists by year 2015
Projected investments years 2009-015
Rooms being built across hotel categories: 114,000, source HVS
Investment in rupees - approximation of INR 400 million

Major Hotel Industry Players.
The major players in the Indian hotel industry include a group of Indian-owned
hotel chains and a few international chains as well. Table below lists the top 10 hotel chains
in India, based on room supply.

Top 10 hotel chains in India:
Rank Hotel Chain Properties Rooms
1 Indian Hotel Company 51 5832
2 India Tourism Development Corporation 33 3903
3 East India Hotels 18 2860
4 ITDC Hotels 31 2738
5 Six Continents 14 2108
6 Hotel Corporation of India 5 1310
7 Choice Hotels 19 1019
8 Hyatt International 2 920
9 Le Meriden 4 909
10 Clarks Hotels 4 677

Over the years, the Indian hotel industry has achieved a significant level of maturity,
and most of the major hotel chains have effectively established specific brands to target
different segments of the market. For example, East India Hotels (The Oberoi Group) has
the Trident brand of hotels targeting the business segment and the Oberoi brand in the
5-star-deluxe segment. International chains such as Six Continents, Carlson Group, and
Choice Hotels have adopted the strategy in India that they follow globally for entering
the budget business segment with their Holiday Inn, Country Inns and Suites, and
Quality Inn Brands, respectively.

Hotel Industry Outlook

India has the potential to become the number one tourist destination in the world with the
demand growing at 10.1 per cent per annum, the World Travel and Tourism Council (WTTC)
has predicted.
The WTO (World Travel Organisation) predicts that India will receive 25 million tourists by
year 2015.
Major attractions in India are the world's highest mountains, miles of coastline with excellent
beaches, tropical forests andwildlife, desert safari, lagoon backwaters, ancient monuments,
forts and palaces, adventure tourism and, of course, the TajMahal.
India currently has over 200,000 hotel rooms spread across hotel categories and guest-houses
and is still facing a shortfall of over 100,000 rooms (source: FHRAI).
The country is witnessing an unprecedented growth in hotel constructions and will be adding
almost 114,000 hotel guest rooms to its inventory over the next five years. (source: HVS)
The earlier setbacks in global tourism have strengthened the Department of Tourism's resolve
to promote India's tourism through aggressive marketing strategies through its campaign
'Incredible India'.
The 'marketing mantra' for the Department of Tourism is to position India as a global brand
to take advantage of the burgeoning global travel and trade and the vast untapped potential of
India as a destination.

The current scenario
Existing hotel rooms in India: 202,963, source FHRAI
Revenue of the Indian hotel industry FY 2009-10: US$ 137.36 (INR 47,889.03 crore)
30% of this revenue i.e. US$ 41.2 million (INR 14,366.7 crore) went back into the market
in FY 2008-09 as operating expenses
Number of hotels and restaurants in India:
Hotel category No. of Hotels No. of Rooms
5 star deluxe/5 star 165 43, 965
4 Star 134 20, 770
3 Star 505 30,100
2 Star 495 22,950
1 Star 260 10,900
Heritage 70 4,200
Uncategorised 7,078 -
Total 8,707 1,32,885
Restaurants 12,750

Major Hurdles facing Indias Hotel sector:

1. Lack of skilled labour:
The biggest challenge is to create skills
In a country where branded hotel supply has tripled during the past decade, a quality
Workforce has failed to keep up.
2. Utility costs:
Energy costs are hurting every hotel
The extra utility feeswhich can range from 6% to 7% of a hotels total operating
expenseis still less expensive than installing and operating an on-site generator.
3. Taxation:
Unfortunately hotel projects are being viewed as juicy pieces of enterprise through
which the maximum can be extracted through taxes or otherwise
4. AirLift:
Indias airlift lags growth in demand
keep opening the skies
5. Capacity Building:
Lack Capacity
India lacks the taxi drivers, tour guides, travel managers and other key positions
necessary to facilitate travel.
6. Not-so-Incredible India:
You need to constantly, aggressively unleash new campaigns into the market,
Branding of a country cannot be in the hands of only the government it has to be a
private-public partnership over a long period of time. The private sector has to play a far
greater role.
7. Cost of Land:
Bidding of land in urban cities for hotel purposes is a big NO
The rapid rise of development during the past decade has seen land costs skyrocket.