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Reforms, changing fads fuel India hotel boom

There is a hotel construction boom underway in India.

To appreciate the scale, a visitor has to travel no further than several hundred metres from Bombay's international airport.

Six new luxury hotel projects are in various stages of construction within a kilometre of the airport, all aimed at wooing the traveller flying into Bombay, India's financial capital.

The clatter of excavators and drilling machines compete with shrill screeches of aircraft tyres as hundreds of labourers toil day and night inside barricaded sites to put up spanking new structures.

The building boom will add 4,000 rooms over the next five years just in Bombay, more than doubling the number of luxury hotel rooms in the nation's financial and entertainment capital.

The Hyatt, Rennaissance and the Marriot are all homing in on Bombay, where the high-end hotel market has been long dominated by the Taj group of the Indian Hotels & Company Ltd and the Oberoi Group.

At last count, about 21 branded hotels were under construction in various parts of Bombay, a boom fuelled by the swelling number of business travellers scouting for opportunities in the fast liberalising economy.

And it's not just Bombay where hotel construction is booming.

"An amazing 110 hotel properties are coming up throughout India in the next four years. And we are only talking about branded ones," Manav Thadani, managing director, India, of global hospitality industry consultancy firm, HVS International, said.

The new hotels will add nearly 10,000 rooms, one-third of India's existing room capacity in the branded hotel category.

The country has caught the fancy of leading international groups such as Marriott International, Accor, Carlson Hospitality, Hyatt, Hilton and Le Meridian, all of which are expanding their presence in India.

THE ALLURE

Driving the boom is a surge in business travel and the changing lifestyles of a spendthrift middle-class population.

"With the opening up of the economy, India, with the world's second-largest population, offers a huge market with its 100-150 million-strong middle class," says Thadani.

Increasing fights into India and an expected boom in airline crew business is another drawing factor.

Minneapolis, U.S.-headquartered Carlson Hospitality, which operates the Radisson, Regent, Country Inns and Suites brands, has built four hotels in under two years.

It plans to open 17 more in the next five years, including four in calendar year 2001 and three more in 2002.

Industry officials say the Hyatt has 6-7 properties under development, the Marriott three and Le Meredien three to four.

Carlson, unlike many of the other groups, is targeting smaller cities which have no quality accommodation, but whose economic potential is attracting business travellers.

"The business traveller is moving to explore. During this period, there's a lot of activity. They have to come to metros, get to cities, get approvals from state governments," said K B Kachru, vice-president of Carlson Hospitality.

Indeed, much of the activity is in smaller cities such as Bangalore, Hyderabad, Cochin and even small towns like Jalandhar.

Indians are changing

Some 285,608 foreign tourists arrived in India in January, up 14 from a year earlier. In calendar 2000, 2.62 million tourists visited the country, up 5.7 per cent from the previous year.

But it's not just foreign travellers who are fuelling the hotel building boom. India's growing middle class is as well.

"Take for example our TGIF (Thank God It's Friday) restaurants. Earlier people would not have imagined we would do 700 people a day in one restaurant, especially where Indian food is not served," said Carlson's Kachru.

Indians are also travelling more for sightseeing and pleasure -- a change from the past when a vacation meant packing up bags and travelling home to visit grandma.

Flights have increased and the domestic tourist is spending more. Not surprisingly, luxury hotels, for long the preserve of the corporate traveller and foreign tourists, are striving to woo domestic tourists with attractive packages.

Local chains get into the act

Not to be outdone, homegrown chains too are expanding.

The two big chains, the Taj group with 57 hotels and the Oberoi Group with 32, are building or acquiring new properties.

Both are considering buying some properties of state-owned hotel firms India Tourism Development Corp and Hotels Corp of India, industry officials say.

So is this building boom sowing the seeds of a hotel bust in five year's time?

Not likely, experts say.

"Despite this new capacity, India will still have less rooms than even Singapore or New York," notes Thadani.

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