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Industry Executives Believe that Branded Hotels in India Will Double Number of
Rooms to 125,000 in Five Years as Demand Increases

By P.R. Sanjai, Mint, New DelhiMcClatchy-Tribune Regional News

April 07, 2011--Branded hotels in India will double their rooms to nearly 125,000 in the next five years to capitalize on a fast growing economy and increasing tourist arrivals from abroad, according to hospitality consultants and industry executives.

Domestic and global hotel brands such as Taj and Carlson will add 60,000 rooms, investing an estimated $10.3 billion, consulting firm HVS said. Currently, the country has around 66,000 branded hotel rooms.

"India is a mature market. The growth will be largely in mid-market and budget hotel segment as in the case of a matured market," Manav Thadani, chairman of HVS, said at a hotel investment conference in Mumbai on Wednesday. "Also, there is a long way to worry about oversupply concerns. Over 82,000 jobs are estimated to be created."

The hotels would require more than $6 billion in debt from commercial banks to fund the growth, he said.

Many local and overseas hotel brands have announced expansion plans.

Raymond Bickson, managing director and chief executive officer of Indian Hotels Co. Ltd, which runs the Taj chain, said his group would open 11 hotels with a total 2,000 rooms this financial year.

"For the last seven years, we were opening one hotel in every six weeks. Our aim is to become a company of $2 billion in revenue and have 20,000 rooms in the next three to five years," Bickson said.

ITC Ltd has said it will build 44 hotels in the next six to seven years with an estimated investment of '9,000 crore.

Another publicly traded hotel company, Royal Orchid Hotels Ltd, has announced plans to build seven to eight hotels this year, while budget hotel company Peppermint Hospitality India Pvt Ltd has announced 10 hotels for this fiscal year and another 10 for the next.

The number of foreign tourist arriving in India is expected to grow at an average annual rate of 8.2% in 2010-2019, according to a 22 March report by domestic brokerage Centrum Broking Pvt. Ltd.

"We believe the (2008-09) downturn in the Indian hospitality industry is over," analyst Rahul Gaggar wrote in the report.

"The strong pick-up in demand due to rising occupancies will boost revenues and profits, going forward," he said.

"The sector faced global recession, terrorism, and pandemics during financial year 2008-10 and average room rates plunged by 25-50%. With robust economic growth and higher tourist arrivals, occupancy levels are set to rise."

Hubert Joly, president and chief executive of the US-based Carlson Group, said India's annual economic growth of 8% or more makes it a key market for expansion.

"At present, India constitutes only 3% when we take total number of hotels that we operate globally," Joly said. "But when we take the total number of hotels under construction, India constitutes 20%."

He said Carlson, which owns more than 1,000 hotels across brands such as Radisson, Country Inn and Park Plaza worldwide, will add 19 hotels to its existing 34 in India by the end of this year. It plans to build 100 more hotels by 2015.


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