Hotel India: No vacancies

India's growing economy is creating shortages in many areas. The latest? Hotel rooms. New York Times reporter Anand Giridharadas writes that "demand for hotel rooms is soaring in India as its economy blossoms".

Foreigners are flooding in to cut deals, attend conferences or just discover the caves of Ajanta and the sands of Rajasthan. The rise of low-fare airlines is also bringing domestic air travel within reach of more Indians, who, until recently, had little chance of ever boarding a jet.

Yet for all those travelers, India offers only 110,000 hotel rooms. China has 10 times as many, and the United States 40 times as many. The New York metropolitan region alone has about as many rooms as all of India.

The shortage is pushing peak season rates for basic rooms into the stratosphere, by Indian standards, and attracting some of the world’s best-known names in hotels — Accor, Hilton, Wyndham, Pan Pacific — to invest heavily in India.

“There’s enormous potential here,” said Dennis Oldfield, the general manager for the Indian branch of Accor, a French group with 4,100 hotels worldwide. Accor has plans for up to 200 hotels in India within a decade.

...In Bangalore, rooms are so costly that traveling salespeople and other professionals often commute by air from as far as Mumbai, 620 miles away.

“They are making you fly to Bangalore every day in the morning and fly back every night because it’s cheaper than paying the hotel bill,” said Saurabh Gupta, an analyst in the Indian office of HVS International, a hospitality industry consulting firm.

Infosys, an Indian software giant with 66,000 employees worldwide, has built its own 500-room hotel next to its headquarters in Bangalore. By June, it expects to have 15,000 company-owned rooms across India — nearly an eighth as many rooms as the entire country has, and more than any Indian hotel chain.

Putting an employee up for a night at its Bangalore campus hotel costs Infosys $15, and the guest gets three-star treatment that would normally cost $150, by the company’s estimate.

“It’s much more efficient in India to do it yourself,” said T. V. Mohandas Pai, director of human resources at Infosys.

The high prices are all the more striking in a low-wage country like India. At a $500 rack rate for the five-star rooms favored by business travelers, a hotel employee earning minimum wage here would have to work about a year to pay for one night’s stay, versus about two and a half weeks’ work for an American earning minimum wage.

And even though the Chinese earn twice as much as Indians on average, India has the more expensive rooms, according to a recent edition of Travel Business Analyst, an industry newsletter. Comparing rooms of similar quality, suitable for business travelers, a room in Delhi cost $187 on average this year, versus $122 in Beijing; a room in Mumbai was $178, versus $150 in Shanghai.

High prices discourage tourists, industry specialists say, and the shortage of rooms, along with other infrastructure woes, offers one reason a country with the petal-covered lakes of Kashmir and the palm-lined shores of Kerala lags behind in tourism.

Compare India, a country of 1.1 billion people, to New York, a city of 8 million: New York attracted 6.8 million foreign tourists in 2005; India attracted 3.9 million.

In Bangalore, rooms are so costly that traveling salespeople and other professionals often commute by air from as far as Mumbai, 620 miles away.

“They are making you fly to Bangalore every day in the morning and fly back every night because it’s cheaper than paying the hotel bill,” said Saurabh Gupta, an analyst in the Indian office of HVS International, a hospitality industry consulting firm.

Infosys, an Indian software giant with 66,000 employees worldwide, has built its own 500-room hotel next to its headquarters in Bangalore. By June, it expects to have 15,000 company-owned rooms across India — nearly an eighth as many rooms as the entire country has, and more than any Indian hotel chain.

Putting an employee up for a night at its Bangalore campus hotel costs Infosys $15, and the guest gets three-star treatment that would normally cost $150, by the company’s estimate.

“It’s much more efficient in India to do it yourself,” said T. V. Mohandas Pai, director of human resources at Infosys.

The high prices are all the more striking in a low-wage country like India. At a $500 rack rate for the five-star rooms favored by business travelers, a hotel employee earning minimum wage here would have to work about a year to pay for one night’s stay, versus about two and a half weeks’ work for an American earning minimum wage.

And even though the Chinese earn twice as much as Indians on average, India has the more expensive rooms, according to a recent edition of Travel Business Analyst, an industry newsletter. Comparing rooms of similar quality, suitable for business travelers, a room in Delhi cost $187 on average this year, versus $122 in Beijing; a room in Mumbai was $178, versus $150 in Shanghai.

High prices discourage tourists, industry specialists say, and the shortage of rooms, along with other infrastructure woes, offers one reason a country with the petal-covered lakes of Kashmir and the palm-lined shores of Kerala lags behind in tourism.

Compare India, a country of 1.1 billion people, to New York, a city of 8 million: New York attracted 6.8 million foreign tourists in 2005; India attracted 3.9 million.

The Indian government also recognizes that, by some industry estimates, hotels employ 180 people for every 100 rooms, and it is now scrambling to expand supply.

Comments

[Pune Hotels]

India has witnessed a serious change in its hospitality trends since the increase in demand for more and more hotels .The average number of tourists traveling India has increased since 2005.Can India accommodate this mass tourist population?I think YES!!

[Resorts in Goa]

I agree. Tourism rates are increasing everyday in India while the hotel rooms are less.

[ashmita]

Hey, I agree with you totally. Tourism in India is at an all time high. For Indians, travelling to some Indian destinations like Kerala, Rajasthan etc is more expensive than an international trip. This shows the popularity of the tourism industry in India. However, some OTAs in India provide very cheap travel options- some are even guaranteeing the lowest hotel rates compared with other International payers...check http://www.yatra.com/blogs/2008/06/09/lowest-hotel-rates-guaranteed/ - this is just one example.

[Account Deleted]

I agree with you totally right article. Tourism in India is at an all time high. For Indian travelling to some Indian destinations like south india tour, Rajasthan tour etc is more expensive than an international trip. you can visit this link and try to take best of knowledge of india tour and India tour packages.

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