Hotels & Hospitality Industry

 

Overview

The hospitality industry has been a supportive segment of tourism and has immense potential of attracting foreign exchange. The global hotel industry brings US$ 400- 500 billion of revenue per year with the travel and tourism segments having an annual economic impact of about US$ 6.5 trillion worldwide. Hospitality places itself in the top 15 sectors to attract foreign direct investments. The past 15 years has seen US$ 7.86 billion in FDI brought to the country. With 110,000 rooms and plenty of FDI on its way, this industry will increase multifold. India ranked 18th in business travel and has attracted wellness and medical tourists in big numbers. This industry has emerged as one of the key drivers of growth in service sector of India. It contributes 6.23% to the national GDP and accounts for 8.78% of total employment in India. Tourism and hospitality combined create more jobs per million rupees of investment than other segments of the country. This industry has on offer employment for all strata of professionals, from unskilled to skilled. A surge in niche tourism such as eco-tourism, luxury tourism, wellness and medical tourism has furthered helped this industry gain access to new customer bases.  

Indian hospitality industry has its major control in the hands of small and unorganized sectors. Major players in the domestic market are Indian Hotels Company Ltd., Hotel Leela Venture Ltd., EIH Ltd., ITC Hotels and ITDC.

 

Buy Industry Analysis

 

Outlook

The industry attracts significant amounts of foreign direct investment. Indian companies are also establishing themselves abroad. After big-ticket acquisitions in 2007-08, in the recent past this industry saw many deals in this industry such as:

 

  • Indian Hotels (by Tata Group collectively known as the Taj Hotels) sold Blue Sydney Hotel to Hind Group for US$ 30 million. IHCL acquired it earlier in 2006. Indian Hotels has done quite well in this matter as it acquired Campton Place Hotel, Ritz Carlton, The Pierre and Regent Hotel.

  • Sahara Group bought two iconic hotels in Manhattan – The New York Plaza and Dream New York for US$ 800 million. It had earlier acquired Grosvenor House in London in 2010 and recently purchased the gothic heritage country house known as the Dracula’s Den in Windsor.

  • Vantage Hospitality Group, USA signed a franchise with Mirava Hotel Management to introduce mid-market brands in India.

  • ITC plans to pool in US$ 1.42 billion in the coming future to broaden its portfolio to 150 hotels, 5 of them to be launched in various Indian cities by 2018.

  • Lalit Suri Hospitality Group will open its first international hotel in London.

  • Thai firm Onyx Hospitality and Kingsbridge India Hotel asset management firm will enter in to a Joint Venture of US$ 100 million to set up seven hotels throughout the country by 2018. An investment of US$ 47.5 million was made in Carlson Rezidor Hotel in Guwahati.

  • Goldman Sachs invested US$ 40.37 million in Vatika Hotels.

 

With a huge growth potential in travel and tourism in India, medical tourism is expected to grow big based on its CAGR of 27% over the past 3 years. Introduction of E-visa schemes VOA schemes and electronic travel Authorization has helped boost tourism industry that has benefitted hospitality sectors. Indian hotel and hospitality industry should see itself strengthening after a 100% allowance of FDI in through automatic route in tourism and hospitality sector.

Several factors are responsible for eroding profit margins for companies in the domestic hospitality sector. Supply overhang, increase in food and fuel prices and high interest rates have hampered profits and last year, many domestic companies faced stressed balance sheets coping with fear of acquisitions.

 

Future Potential

The hospitality companies can use the increase in food and beverage prices to their advantage. Potential might look subdued in the short run due to lack of demand, but in the end, an increase in mainstream tourism and niche tourism should bolster growth rates for this industry to new heights. Occupancy levels are low and concentrated in places like Mumbai. This should trickle down to the entire nation. New concepts, better grooming and educational promotion would add advantages to the Indian hospitality experience. With a strong support from tourism, hospitality should keep up the pace and offer richer incentives to tourists. A fall in inbound travel at a global scale should not be of much worry as long as domestic demand that has grown 10% last year through both business and leisure travel compensates the former.

 

The Government should focus on easing visa policy norms to support inbound travel despite the weakening of global economy. Foreign tourist arrival growth rose to 7.1% in 2014 from 5.9% in 2013. Lonely Planet has ranked India as the fourth most preferred destination among 167 countries. 2015 should mark a higher figure with introduction of various strategies like launching premium rooms, better hospitality grooming and management. Better global advertising campaigns may be helpful to reduce supply demand mismatch.

 

What this report contains:

  • A detailed overview of the industry

  • Structure of the industry from both, domestic and international perspectives

  • Related industries that this industry has inter-dependencies with and their understanding

  • Detailed analysis of industry segments in terms of the value and depth of corresponding market

  • Analysis & insights about the elements and critical success factors of this industry using strategic models

  • A forecast on the state of this industry in 2020, predicting the growth and movement patterns for 2016 - 2020

  • Our professional analysis on the future of the industry based on strategic actions adopted by major industry participants

  • Quantitative estimates and forecasts of the growth prospects of the industry using revenue and financial forecasting models

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