Hotelier India speaks to three industry stalwarts about the trends that drove the hospitality market in 2010 and emerging trends for the next year.
With the burgeoning number of hotels opening up in the country, India’s hospitality industry is experiencing a slow but steady revival after the economic slump. With demand increasing exponentially, especially with domestic travellers, the market is growing at a rapid pace. The global economy continues its speedy recovery, and India displays only positive notes ahead.
Growth is on the charts speaking about this rapid growth, Anil Madhok, managing director of Sarovar Hotels says, “The mid-market is growing at a phenomenal pace. The economy is growing, and there’s a huge explosion of demand domestically.
Also with better roads and better cars, travelling has become very frequent. Our resorts are now doing business for six to eight months a year compared to the earlier trend of two months a year. There are more weekend travellers with young couples having double incomes and a car.”
Referring to the luxury market, Madhok adds, “Luxury by definition is changing, room sizes have gone from 13 sq m to 55 sq m, huge spas are coming in, there is a total redefining of luxury as a product. You are now competing with the best brands internationally to be able to be called luxury.”
Agreeing with this is President, the Leela Palaces Hotels and Resorts, Rajiv Kaul, “I think that more than ever before the issue at hand if is value rather than price, where people are willing to pay more provided there’s value. For example, in the Bangalore market, the highest occupancy in the city is being done by the four hotels that have the highest rates. People really are willing to pay more to stay in a 5-star.”
Outlining the trend is Area Vice President – India, Pakistan, Maldives and Malaysia for the Marriott, Rajeev Menon, “Now it’s all about taking care of experiences, it’s becoming focused around creating a great experience for the guest and this doesn’t seem to be the case with luxury hotels alone, even mid-market brands are ensuring that they give their customers the highest satisfaction.”
A common factor that emerged across the board, is how the domestic traveller is now more discerning than before, knows what he wants and is willing to pay to get it. “The customer is becoming more discerning in terms of food and beverage and a specific focus on authenticity,” says Menon.
Adds Kaul, “There’s an emergence of a very sophisticated and discerning traveller. In Delhi we have international brands, which we’re bringing in such as a Japanese brand and an iconic fine dining brand Le Circe. The reason we’re bringing in all this is that our market research clearly shows that a great number of Indians go to these restaurants when they travel.”
Madhok explains,”The tastes have changed with people travelling more frequently; they know what they want and we have to provide it to them. Earlier if you had one Indian restaurant, one Chinese and one Continental, it was sufficient as far as providing an F&B experience went, but that’s no longer valid. People are willing to experiment, they demand cuisines like Japanese and Vietnamese, they want more creativity and that is happening across the board because there is so much competition between hotels to attract guests.”
With arrivals in Asia expected to top pre-downturn levels by 2011, aided by proactive government tourism initiatives to help boost demand, hoteliers express the need for specific measures that they expect from the government such as the ease in procurement of visas, seamless travel, and GST rationalisation.
Menon elaborates, “A number of laws need to addressed, one of them is taxation, which is a big issue across the country while the other is the permits and licenses to build and operate a hotel. There are also labour laws, which need to updated and made relevant for today, based on what one is specifically looking at from the HR perspective. Getting the proposed GST tax is going to be a huge positive for the country purely from the point of view of ease of doing business for the country.”
Expansion plans and an increase in arrivals according to a World Travel Market report, almost half (47%) of the travel industry see emerging markets – including the BRIC economies of Brazil, Russia, India and China – as one of the biggest growth opportunities over the next five years. Furthermore, almost three in ten (28.6%) see the emerging economies as the single biggest opportunity for the travel industry and their organisation over the next five years.
Kaul declares he is personally bullish about the increase in arrivals in India, “We’ve definitely crossed pre-downturn levels and we’re going to reach record highs. One has to understand what the drivers of growth are. Economic growth of the country is one principal driver but the second thing is that the infrastructure constraints were significant. With the modernisation of airports now, there’s a huge spurt in air capacity and there’s a direct correlation between airplane seats and hotel beds. Let’s not forget that there’s a tremendous amount of supply in the pipeline. We are building these rooms because we anticipate that much occupancy. It will vary from market to market but there will be a high.”
Menon goes on to add that while the global economy is still recovering from the slowdown, the domestic market in India has been a saviour for the hotel industry for the last couple of years.
With 5 million incoming tourists and 650 million domestic travellers that are moving around the country, he explains how his company’s focus has been on the domestic market in the last couple of years and has seen a shift for a couple of reasons, “First we’ve added a lot of hotels in cities where we are heavily reliant on domestic travellers, at the same time, there’s been a focus on the growth of the domestic travellers.
So we’ve seen a shift from 40 percent domestic travellers and 60 percent international travellers, to 60 percent Indian and 40 percent international travellers. A big part of that is coming through MICE and the domestic travellers in the secondary markets.”
Madhok shares that in India, Sarovar is expanding very rapidly and plans to launch 14 hotels in the next six months.
“We have currently a pipeline of over 30 hotels that are coming in. We are also actively looking at Africa now, where we have some proposals and we’re hoping to build some hotels there. Otherwise we are focused on India, because we still feel it has a huge potential to expand.”
The Leela will reportedly launch their hotel in Chanakyapuri in early January 2011 and six months later are looking at opening the Leela Palace in Chennai which has 330 rooms and is a magnificent palace hotel, the first property to overlook the Bay of Bengal on one side and the river on the other side.
Besides these two, they are developing our properties in Agra and Jaipur, in order to complete their presence on the north Indian circuit.
“We are determined to stay focused and complete our pan Indian presence because that will strengthen the brand, and with a strengthened brand we will go overseas,” says Kaul.
