Though the first two quarters looked a little positive for the Indian hospitality industry, the following quarter almost negated the trend.
“Overall, it was quite flat,” sums up Mr Manav Thadani, Managing Director of hospitality consulting firm HVS (India). Occupancies were more or less stable, though it fell in some geographies due to the slowing economy and new supply, he says. In terms of rates, he says, there was moderate growth, but they were below inflation.
However, according to other industry observers, falling occupancy levels during the second-half of the year brought down RevPAR (revenue per available room) “considerably”. On average, almost four out of every 10 rooms were vacant throughout the year, they say.
Attributing the lower RevPAR to increased supply, Mr Nakul Anand, President, Hotel Association of India, and Executive Director of ITC Ltd, says though demand is yet to reach pre-recession levels thanks to the challenges that have gripped the European and US economies, the growth story in the Indian economy continues to be positive. New supply in the luxury and fringe five-star segments has impacted hotel performances in some geographies such as Delhi, Chennai and Bangalore.
According to him, the year 2011, by and large, lived up to expectations with business destinations leading the charge. Collectively, hotel chains would show at least 10 per cent growth in the top line, Mr Anand says, adding that the numbers are in comparison to a lower base in the previous year.
Long-haul travellers
The one business segment that is impacted when leading economies experience a recessionary trend is the drop in the number of long-haul travellers.
Though Mr Anand's take is that the weakening of the Indian rupee will encourage foreign tourists, Mr T. Natarajan, Honorary Secretary, South India Hotels and Restaurants' Association, says in reality, issues such as Mullaperiyar have lead to several last-minute cancellations by inbound tourists to the South.
The Taj seems to have had a different experience. Ms Deepa Mishra Harris, Senior Vice-President, Sales and Marketing, Taj group, says the demand is rapidly shoring up to pre-recession period levels. Substantiating her claims with data from the Ministry of Tourism, she says foreign tourist arrivals have gone up beyond 2008 levels.
According to official estimates, foreign tourist arrivals during January-November 2011 stood at 55.75 lakh — a growth of 9.4 per cent over the same period in 2010.
“We expect a 10–14 per cent increase in foreign tourist arrivals till January,” says Mr Vivek Nair, Vice-Chairman of The Leela Hotels group.
But, on the other hand, supply of rooms is expected to increase in the years to come, bringing rates under further pressure, as demand is not expected to match the supply.
Global brands
The year 2011 also saw many international brands announce their entry into India and many existing global chains expand their presence.
Mr Rajesh Punjabi, Vice-President, Development – India, Hilton Worldwide, says the company believes that there are opportunities across segments from the luxury and upscale to mid-market, focused-service hotels. “We are getting positive signals. During the year, we doubled our trading estate in India by launching six hotels,” he said.
Hilton introduced its upscale brands — Hilton and DoubleTree by Hilton, and its mid-market brands Hilton Garden Inn and Hampton by Hilton. “We also plan to launch the luxury hotel brands ‘Conrad' and ‘Waldorf Astoria' here,” he says.
Marriott International expanded its portfolio by four during the year, taking its total inventory to 3,200 rooms across brands such as the JW Marriott, Marriott, Renaissance, and Courtyard by Marriott.
“We have aggressive growth plans. We are on a journey to have 100 hotels and over 15,000 rooms in the next four years,” said Mr Rajeev Menon, Marriott International's India business head.
“Our pipeline is so strong that beginning 2012, we would pretty much open one hotel a month,” he added.
Mr Chris Moloney, Chief Operating Officer, South-West Asia, InterContinental Hotels Group, says “this year we have been able to strengthen our strategic partnerships.”
IHG, which currently has 2,500 rooms, has also made strides in increasing its development pipeline by signing a joint venture partnership with Duet India Hotels Group for 19 new Holiday Inn Express hotels.
Besides, it has signed six management contracts with the Amrapali Group to add six hotels under its Holiday Inn and Holiday Inn Express brands.
But what of prospects going forward? The year 2012 certainly looks more positive for the industry.
Mr Anand of ITC expresses “cautious optimism” about the outlook for 2012.
Ms Harris of Taj says the weakening rupee may help bring in more foreign tourists “as India as a destination has suddenly become more affordable,” she says.
Mr Thadani shares the same point of view. He says the weakening rupee, besides bringing in more foreign tourists, will also encourage more domestic travellers to travel within the country rather than overseas destinations. He adds that growth in 2012 will predominantly be driven by the leisure segment.