It is one of the largest foreign exchange earners, to the country and also one of the largest employers, both directly and indirectly. The hotel industry in India can be divided into eight segments based on the norms set by the Ministry of Tourism. They are 5-Star Deluxe, 5-Star, 4-Star, 3-Star, 2-Star, 1-Star, Heritage and Unclassified. However, the 3-star, 2-star, 1star and unclassified hotels in India are spread across the length and breadth of the country and are highly fragmented in nature, whereas, the upscale, mid market and heritage categories are highly organized. The upscale category hotels are primarily present in the metros and the tier 1 cities and are now targeting the tier 2 cities for expansion. http://www.bharatbook.com/
The industry is characterized significantly by small unorganized players, labour-intensive operations, seasonality, cyclicality, highly capital intensive nature and highly sensitive to the external factors like economy, terrorism and political status.
The demand for the hotel rooms is driven by the rise in the number of the domestic and well as the foreign tourists. The demand for the foreign tourists is driven by the level of growth in Global GDP, increased business activities of other nations with India, growing number of tourist destinations, rise in trade and sporting events, marketing efforts like “Atithi Devo Bhava” & “Incredible India”.
Domestic tourist arrivals are the backbone of Indian Hotel Industry (http://www.bharatbook.com) as the number of domestic tourists is more than 100 times as compared to foreign tourists. Domestic tourists are of 2 types, leisure travelers and business travelers. Growth in leisure travelers is driven by rising personal discretionary income, evolving lifestyle, growing number of multi earner families, weekend vacation culture, improvement in rail, air as well as road connectivity, diverse topography and rich cultural heritage. Drivers of domestic business traveling are rise in trade and commerce, increasing geographical spread of companies, growing MICE culture.
In the upscale category, global majors in the hospitality industry like IBIS, Westin, Novotel, Ritz-Carlton, Sofitel, Pullman, Ista, Aloft, Dusit D2, Shangri la are planning to enter India or expand their existing operations.
Players like Lemon Tree, IBIS, Park, Sarovar and Ginger have identified that there is dearth of quality rooms in the mid market segment across the country, especially in the tier 1 and tier 2 cities. Approximately, 55 per cent of the upcoming inventory is expected to be in the mid market and economy segment. Entry of such organized players is expected to improve the quality of offerings and bridge the wide gap between mid market and upscale category.
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