India: Not Enough Hotel Inventory for a Booming Economy - 2007-02-26

SUCCESSFUL MEETINGS March 2007 While India's tourism and business travel figures seem to be growing by leaps and bounds, the subcontinent is hard-pressed to find places to lodge its expanding market.

According to Ministry of Tourism Deputy Director General M. N. Javed, "There are about 1,975 hotels in India, with over 100,000 rooms. But we still need an additional 30,000 rooms in each city. Bangalore and Delhi have only about 9,700 rooms each, and Mumbai has 11,000 rooms." The government, he adds, "is now open to public-private partnerships."

The hotel crisis is having its effect on India's meetings market. Last year, while inaugurating the fourth Convention of the India Convention Promotion Bureau, Minister of Tourism and Culture Ambika Soni lamented, "The world market in conference and convention tourism is estimated to be around $130 billion per year, yet India accounts for not even a one percent share of this huge market."
Rubbing salt into the wound is the sellers' market. Because of demand, says a planner from Mumbai, "A hotel room that should sell for $80 costs $300."

However, the hotel crunch in major cities, particularly India's tech capital, Bangalore, is expected to subside over the next few years, due to the influx of new hotel brands entering the market. As India-based companies like Oberoi and Taj move into the world market, Asia-based Shangri-La Hotels & Resorts, which opened the 323-room Shangri-La Hotel, New Delhi, in 2005, will debut two more properties in Bangalore in 2008 as part of the dozens of new properties, service apartments, and mixed-use development projects expected-for a total of 6,100 more rooms overall. Within the next two to three years, Shangri-La also anticipates signing management contracts for up to eight hotels in cities like Mumbai, Hyderabad, and Bangalore.

Less than 40 miles from New Delhi, the five-star, 97-room Westin Sohna-Gurgaon Resort & Spa opens this month with 6,500 square feet of meeting space; the Westin New Delhi Hotel & Residences follows next year. The Starwood Capital Group, owners of the Crillon, "1" Hotels and Residences, and Campanile brands, expects to acquire its first Indian property this month.

The mid-range but full-service sector is also expanding; for example, 20 Hilton Garden Inns are expected to open in Chandigarh, Chennai, Kolkata, and other locations, while France-based Accor is developing more than 100 mainly mid-range hotels throughout India.

Constraints on the convention segment are also easing, with new centers coming online in Hyderabad, Delhi, and Chennai, which are aggressively promoting their products.

South Asia's first and India's largest, the Hyderabad International Convention Centre (HICC) opened in January 2006 with 291,000 square feet of conference space; it accommodates events for delegates ranging from 50 to 5,000. HICC, a joint venture between Dubai-based Emaar Properties and the Andhra Pradesh Industrial Infrastructure Corporation Limited, is managed by Accor, which also manages the adjoining, 300-room Novotel, which opened in March 2006.

The 301,392-square-foot Expo XXI, on the outskirts of Delhi and five minutes' drive from a Greg Norman-designed, 18-hole golf course, is fully flexible and capable of holding smaller conferences with 50 to 800 delegates and larger congresses of up to 12,000 delegates. At present there are 1,200 rooms of different categories available within a short distance of the venue; within two years, two five-star hotels will debut-one on site and the other at the golf course. -Neelam Mathews