Date:12/04/2007 URL: http://www.thehindubusinessline.com/2007/04/12/stories/2007041204760500.htm

Back Hotel sector may see Rs 52,000-cr investment

Somasroy Chakraborty

Kolkata April 11 Over the next two years, close to 80,000 hotel rooms are expected to come up in various categories across the country, according to Mr M.N. Javed, Deputy Director-General, Union Ministry of Tourism.

Currently, India has some 1,975 hotels with over one lakh rooms.

However, it is estimated that there is still a shortfall of about 1,50,000 hotel rooms.

"It is estimated that over the next two years 70,000-80,000 rooms will be added across different categories throughout the country," Mr Javed told Business Line.

Industry experts said that such a development would attract investments to the tune of Rs 52,000 crore.

"A luxury deluxe room would require an investment of Rs 1-1.2 crore while the cost of a room in the budget category would be Rs 35-45 lakh," said Mr Lemuel Herbert, General Manager, The Park Hotels, Bangalore.

"On an average, 70,000 rooms across categories would require an investment of Rs 65 lakh per room," he added.

The boom in Indian hospitality has attracted global hospitality majors including Hilton Hotels Corporation, Starwood Hotels & Resorts, Intercontinental Hotel Group and Accor Hotels, who have either announced or expressed interest to set up shop in India.

According to industry experts, the steep rise in room rates and strong occupancy level in city hotels are the prime drivers of investments in this sector.

"There is certainly a need for quality hotel rooms in India. Global players have expressed keen interest in investing in the hospitality sector," said Mr Ankur Srivastava, Managing Director (India), Debenham Tie Leung DTZ, a global property consultancy firm.

"Indian hoteliers are in expansion mode. They are now also focusing on non-metro tier-I cities," Mr Herbert said.