SHORTAGE OF HOTEL ROOMS MAY HALT TOURISM GROWTH (By Gour Kanjilal)
The year 2006 saw tourism in India emerging as one of the major sectors for growth of the Indian Economy. International Tourist Arrivals grew at 13% over that of previous year. The foreign exchange earnings through tourism in terms of rupees registered an impressive growth of 17.6%. India was declared amongst top 5 tourism destinations among 134 countries by the leading tourism journal of USA. The increased arrival trends continue in 2007 also. Till January end the arrivals showed 15% growth over the corresponding period of last year and foreign exchange earnings had 17% growth compared same period last year. The country earned foreign exchange worth around Rs. 29603 cores. In calendar year 2006 the country attracted 4.43 million tourist and foreign exchange earning around US$ 6 billion.
However, the paucity of tourism infrastructure especially hotels have been holding back arrivals of foreign tourist specially leisure groups. India needs atleast 150,000 rooms by 2010 to meet the growing demand for hotel rooms. In India average room rates have soared by 20% making the country one of the most expensive destination.
Crunch of rooms in Goa and all metropolitan cities are visible and turning down the requests for more hotel rooms in Goa from charter operators have been informed by many tour operators. They had turn down the requests from overseas charter operators’ inspite of the fact that hotel prices have gone up. In many tourist places the prices went up without corresponding increase in service and product levels. This has raised a question of sustainability of business. Infact in high season the shortage of rooms may go around 50,000 / 60,000 in rough calculations looking into the demand for rooms in metropolitan cities like Mumbai, Bangalore, Delhi or tourist places like Goa, Udaipur, Jodhpur etc. ‘Incredible India’ brand has created right impact in many new markets and with present level of growth trend there will be Demand/Supply problem. The hotel room position is not that convincing to meet the demand which Incredible India campaign has generated as also the improved air connectivity to India. Now few question arises whether industry can support 60,000 plus rooms by 2010 that is to meet the growth; whether our airports can take this tourist load etc. India has to reach 5 million tourist figures by 2007 and that being the objective., there should be sincere efforts what is most essential now is to have land bank for giving on long lease and at a reasonable price so that private sector can be motivated to construct new hotels.
The hotel industry has already felt the increased demand for rooms and increase in average room rates or ARR in view of demand for rooms outpacing supply which may be there for next few years, one good thing that happened is that hotels in India have been suffering in business since 9/11 Sept.’ 01 events in USA and series of negative events that followed to name a few like Iraq war, SARS, Tsunami etc. now hotels got a big boost and price match of international standard. “The scarcity is and will continue in tourist cities like Goa, Jaipur, and Delhi and in business destinations like Bangalore, Mumbai (North Mumbai, Chennai). Rooms will be needed more in 4 star / 3 star categories. Hyderabad will be in demand and do have good room capacity. More rooms will be needed for Srinagar once the demand grows. It has already seen domestic tourist boom since last year. More airport hotels will be needed as low cost carriers will create more demand for hotels nearer to airports especially when they will fly to some interior areas or other airports than metropolitan cities. This will also enable opening up new areas, avoid congestion at metropolitan cities and quick dispersals. This augurs well for growth of tourism but shortage of rooms is the key issue for continued growth.
