INVEST INDIA : Opportunities in the World's Largest Democracy

Tourism

OVERVIEW

SIZE

Travel and Tourism is a US$41.8-billion industry in India, 5.3% of GDP
4.9 million international tourist arrivals in 2007, an increase of over 9% from the previous year
382 million domestic visits estimated in 2006; the domestic tourism market grew at about 12% CAGR in the last 5 years
Only 109,000 rooms in 1,980 hotels across the country registered in 2006*
- Five-star hotel rooms constitute 27%, four-star 7.5% and three-star 22%
All India industrywide occupancy of over 66.9% in 2006-07
- Scarcity of rooms in several cities such as Mumbai, Delhi and Bengaluru has resulted in rates of over US$300 per night

STRUCTURE

The industry is dominated by 4-5 large Indian hotel owner-managers – The Taj Group, Oberoi, ITC, Leela and Bharat Hotels
Most major international chains like Sheraton/Starwood, Inter Continental, Hyatt, Marriott, Hilton, Le Meridien, Carlson, Shangri-La, Four Seasons are represented by management or franchise contracts. Aman and Accor plan to own hotels as well.
Others such as Ritz Carlton and Mandarin are in the process of establishing their presence in India, primarily through management contracts
The branded segment represents approximately 30,000 rooms or 30% of the total hotel stock
Compounded growth in the last 5 years, in terms of rooms added, was the strongest in the five-star deluxe category at 6%

POLICY

100% FDI is permitted in Hotels and Tourism, through the automatic route
Hotels in Delhi set up before 2010 have been granted infrastructure status with special tax concessions

* Registered with the Dept. of Tourism.

Key Statistics - India
Travel & Tourism Revenue (US$ billion, 2006)	41.8
Inbound Tourist Arrivals million nos. (2007)	4.9
Inbound Tourism Revenue (US$ billion, 2007)	7.7
Average Spend per Tourist (US$, 2007)	1566
Domestic Tourism (million visits., 2005)	382
Outbound Tourism (million nos., 2005)	7.18
Hotel Industry – number of hotels (2006)	1,980
Hotel Industry – number of rooms (2006)	1,09,392

Source: WTTC Country Reports, FHRAI, HVS, Dept. of Tourism

OPPORTUNITY


Kerala is one of the most preferred destinations for the international tourist	India’s luxury hotels offer world-class services

OUTLOOK

Foreign tourist arrivals are targeted to grow to 10 million in 5 years
Domestic tourism is expected to increase by 15% to 20% p.a. over the next 5 years
Rapid growth in average room rates is expected to continue until sufficient new supply comes on stream
- Average room rates increased by over 15% in 2007; the fastest growth rate was in 4-star and 5-star segments

POTENTIAL

Favourable demographics and rapid economic growth point to a long-term secular uptrend in the domestic demand for hotels – for business and leisure
International inbound traffic is expected to grow rapidly with increasing investment and trade activity
- WTTC has identified India as one of the fastest growing countries in terms of tourism demand
- India has benefited from an aggressive promotion campaign and an out-performing economy
The growth momentum in domestic and international travel is expected to receive a further boost with more budget airlines/lower air-fares, open sky policies and expected improvements in travel infrastructure (roads, airports, railways)
There are opportunities in all price and value chain segments due to the shortage of hotel stock; plans are on to increase quality accommodation from the current 110,000 rooms to 200,000 rooms by 2011
- Hotel-asset construction and ownership
- Low penetration of brands (about 30%) provides opportunities for management contracts and franchising with local hotel owners/developers
- Serviced apartments in major cities – no chain operating in all cities, very little stock
- Need for world-class MICE infrastructure in major Indian cities
- Significant requirement of hotel stock and tourist infrastructure for the Commonwealth Games in New Delhi in 2010

For additional information: Ministry of Tourism (http://tourismindia.com), Federation of Hotel & Restaurant Associations of India (http://www.fhrai.com)