| The current global turmoil of economy not | | | | Domestic tourists as a segment can now be said to |
| withstanding the Indian hospitality industry is riding on | | | | have finally "arrived" in India. With rising income and |
| a high growth phase. This is because of more than | | | | lifestyle changes domestic tourism opportunities will |
| decent growth in economy and the proactive policies | | | | give an impetus to demand growth in this sector. |
| initiated by the Indian Government in Travel and | | | | Right now domestic travel is growing at a rate of 15 |
| tourism sector. | | | | to 20 percent. |
| By 2010 the Tourism ministry is expecting the | | | | Firming up of Average Room Rents |
| domestic tourists to cross the sixty seven crore | | | | Average room rate or ARR is an important indicator |
| mark. Thanks to growing affluence of Indian middle | | | | of growth. This is because it is the room rent that |
| class, good infrastructure in terms of road and | | | | accounts for the major potion of revenue earned by |
| railways this claim looks like a distinct possibility. | | | | the Hotel industry of India. Average Room Rates |
| From the point of view of long range investments | | | | (ARRSs) and occupancy rates have shown a |
| lets look at some of the positive triggers as well as | | | | consistent increase over the major Indian cities. The |
| concerns for the industry. | | | | reason attributed to this increasing Average Room |
| Acute Supply shortage | | | | Rates (ARRS) and occupancy is the influx of foreign |
| There is a complete mismatch of demand and supply | | | | tourists. In the coming days also despite the global |
| situation due to the rapid pace of growth | | | | inflationary trends industry Pundits estimate their |
| experienced by the Indian Hospitality sector that has | | | | arrival to be steady. |
| far exceeded the supplies. According to the industry | | | | Concerns |
| insiders the current demand for hotel rooms is of 2.5 | | | | Now to the flip side of the story, owing to acute |
| lacs but there are only 1.1 lac rooms available leaving | | | | shortage in supply of hotel rooms there are many big |
| a huge shortfall. Right now major cities spanning India | | | | projects in the pipeline. There is sudden fear that |
| is experiencing high room rates and low availability of | | | | once these projects are executed there may be a |
| rooms. | | | | case of oversupply with considerable room additions. |
| Boost in Demand | | | | However the condition of the global market with |
| Considering that three major sporting events are in | | | | liquidity crunch, high inflation et al, it would take a |
| the offing in the next few years demand for the | | | | substantial time before these projects are fructified. |
| hotel rooms is expected to show a steady curve | | | | As such there is no immediate threat of over supply. |
| upwards. This upward trend is led by both foreign as | | | | Though lack of Budget hotels across India especially |
| well as domestic tourists. | | | | metro cities is a worrying industry pundits. |