‘Asian travellers will be the next big thing’

Overall, the hotel industry has seen business improve by around 20% this fiscal, says Nakul Anand, president, Hotel Association of India. He talks to DNA about the scenario in the industry and the association’s top priorities. Excerpts:

How does the environment in the hospitality business compare to the previous year?
Business has certainly grown, mainly owing to the lower base last year. Overall, the industry has seen business improve by around 20%, which was largely expected. We could have seen more, but one has to remember that at the premium-end, we are largely dependent on source markets, which are still to recover from the recession. Occupancy levels in premium hotels would have grown by 3-4% while increase in average room rate (ARR) is roughly around 14-15%.

However, I’d like to reiterate that the base was very low last year. Having said that, the first quarter of this fiscal looks much better with hotels registering overall growth of 15-25%. I am certain the business environment is improving significantly and recovery is pretty much on the cards.

How are the travel and tourism numbers looking?
India registered 5-odd million international travellers over the last couple of years. However, it would be very difficult to pin-point what is the exact percentage between business and leisure. While we have been trying hard to get a clearer picture, as an industry, to be very honest we still don’t have a fix on that.

In terms of source markets, the US and Europe have always been our Top 2. But over the last over a couple of years, we have seen a significant number of intra-regional travel from within Asia. We have started to see increased travel from countries like China, Japan, Korea, Malaysia, Singapore etc. My personal belief is that intra-regional travel within Asia will contribute significantly to the Indian travel and tourism pie in the coming years.

What’s the demand-supply scenario in the country?
I’d say we roughly have 100,000-odd hotel rooms in the organised sector. While there is a debate on what is under construction, my belief is that anything between 35,000 and 50,000 new rooms are in the various stages of completion. If we have to achieve 10 million tourist arrivals, we would require anything between 200,000 and 250,000 hotel rooms. However, the World Trade Organisation (WTO) estimates that 2020 will see close to 1.6 billion tourists and India should strive for at least 1% market share which translates to 16 million tourists.

A slew of hotel developments have been announced. Does this indicate a revival?
I think we will have to look at it in two phases. During 2005-07, we saw major developments plans. Announcements of 30 hotels and 50 hotels had become a trend. The recession brought some sanity in the market. A lot of those plans have been washed out and those entering this business for valuation have burnt their fingers. It will be safe to assume that of the development pipeline being spoken of these days, a significant percentage is serious and realistic.

What were the key topics discussed at the HAI conclave in Delhi?
As an association representing the Indian hospitality industry, we have identified a few priority areas that need to be addressed for the betterment of the trade partners and our guests. In the process we came up with an acronym that very clearly outlines the association’s objective of taking the Indian hospitality to newer ‘HITES’ (Human resources, Infrastructure, Taxation, Environment, Safety).

Take quality human resources. With the kind of pipeline we have for the next 8-10 years, the industry will require between 55,000 and 60,000 trained manpower, so you can imagine the kind of shortage we are talking about.

The other important aspect is infrastructure status. That will help bridge the significant demand-supply gap. Everyone knows that India is under-roomed compared to other developing nations in Asia. The only way to sort this situation is by allowing access to land parcels at reasonable rates, appropriate floor space index (FSI), incentives and easy access to funding to ensure quicker breakeven. All this is only possible once the industry is given infrastructure status.

Other areas the association is focusing on include lack of uniformity of taxation, positioning as an environment friendly industry and finally the security aspects. On the security part, I would like to emphasise that 26/11 was India’s 9/11 and it really took us by surprise that how vulnerable we were as an industry.