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Shortage of hotels in India to be alleviated by 2010

April 23, 2007

The shortage of hotels in India has been the bane of the tourism industy, in fact all industry. The government has allowed a hundred per cent FDI (foreign direct investment) in this sector, and we also know that approximately $6.5 billion is being invested in building hotels in India (2006 estimates) and by 2010 there are plans to build about 140,000 new hotel rooms, adding to the existing 110,000.

So far so good. Promising plans for the future. Hilton to build 75 new hotels by 2010. A Ramada Hotel tie-up with Royal Orchid, an Indian company, to build four and five-star hotels. The Taj group tapping the lower economic segment…set to introduce 100 $22-a-night range of hotels in five years. Accor, and Emaar (a developer in Dubai) to invest 300 million USD to build another 100 hundred hotels. An Accor tie up with Sofitel to build more hotels. Starwood Hotels to invest hundreds of millions of dollars in hotel brands such as Sheraton, Westin, Le Meridien, W and Aloft. The US-based real estate developer Royal Indian Raj International Corporation (RIRIC) will be investing 6 billion dollars in India and DLF Universal about $ 700-800 million USD.

Here are some figures to mull over:

India has 110,000 hotel rooms. China has 10 times as many, and the United States 40 times as many. The New York metropolitan region alone has about as many rooms as all of India.

And the result of all this are the exhorbitant prices. Whats really sad for us who live in India is that most of us can only dream about staying in the really good hotels. As it says here:

The high prices are all the more striking in a low-wage country like India. At a $500 rack rate for the five-star rooms favored by business travelers, a hotel employee earning minimum wage here would have to work about a year to pay for one night’s stay, versus about two and a half weeks’ work for an American earning minimum wage… Even though the Chinese earn twice as much as Indians on average, India has the more expensive rooms, according to a recent edition of Travel Business Analyst, an industry newsletter. Comparing rooms of similar quality, suitable for business travelers, a room in Delhi cost $187 on average this year, versus $122 in Beijing; a room in Mumbai was $178, versus $150 in Shanghai.

Ofcourse, problems in construction are anticipated, because of the high cost of real estate in India right now, but the government is doing all it can to help with speedy permissions and easing of red tape.

From a traveler’s point of view, it looks good, as the cost of hotels will come down and there will be more choice. And ofcourse thousands of new jobs will be created.

(I took the photo of the two famous hotels of Mumbai at Lands End in South Mumbai)

Related Reading: Real Estate boom in India

3 Comments leave one →
  1. April 23, 2007 8:59 am

    It shows economical strength of india .nice article

  2. April 23, 2007 9:01 am

    However – curstomer service will still need to improve at star hotels per my recent experience at a 5star hotel I stayed for few weeks mid last year. I somehow felt the quality at $80 hotels in USA was equal or better than the quality of service I noticed / experienced at the 5star hotel where I stayed.

  3. jose permalink
    May 12, 2007 7:16 pm

    a hotel owner reports:-cost of construction is extremely high in india,and the returns are below par,the rooms are rented to companies at 50 per cent below advertised rates,also corruption costs ,interferences from every tom ,dick and harry around all add up ,that is why hotel business in india is a headache rather than a cashcow

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