According to consulting firm HVS India "The Indian hotel industry will create double the number of rooms from the present in 3-4 years by adding an estimated 55,000 rooms."
The development of new rooms is going to be led by regional real estate players and hospitality firms as most large real estate developers have abandoned or scaled down their expansion plans. The study revealed that fewer new rooms were announced last year but developers started work on a higher proportion compared to 2007-08.
Of the 94,115 rooms announced by various hotels and real estate developers for the year ended March 2009, 60% of the rooms saw some active development. Compared to this, in the previous year (April 2007-March 2008) companies announced plans to build over 1.14 lakh rooms of which 58% saw actual development.
"Despite the economic downturn, Indian hospitality will see the maximum development of rooms in the next 3-4 years. The rate of development of rooms would be much higher, something that we have not seen in the past ten years," said Manav Thadani managing director at HVS India.
He added that even as big real estate developers have shrunk their hotel plans, regional real estate developers as well as Indian hotel companies are continuing with their own expansion plans. Mumbai, Delhi NCR, Bangalore, Hyderabad and Pune were among the top five cities in terms of active development of new projects announced last year.
With revival in corporate activity, business travel is expected to bounce back sooner compared to the leisure travel market which is one reason why hotel construction is being pursued aggressively in Mumbai, believe hotel consultants.
On the other hand the five year tax holiday granted by government for hospitality projects in Delhi & NCR region to increase supply of rooms for the forthcoming Commonwealth Games is driving hotel construction in this region. But the HVS report points out that only 5,700 rooms of the 8,776 rooms being actively built are expected to open for the games next year.
Raymond Bickson, managing director of the Indian Hotels Company (IHCL), who is also the chairman of World Travel & Tourism Council, India Initiative( WTTCII) said that the Indian hospitality sector will witness improvement in the future.
"Thanks to the huge domestic market, the Indian hospitality sector is expected to continue to grow even as other markets like US and UK are witnessing a degrowth," he said.
Vivek Nair vice chairman & managing director of luxury hotel operator Leela Hotels & Resorts, said, "Occupancies in Gurgaon and Bangalore have already witnessed an improvement and I believe the winter season would result in better times for the industry."
Mr Nair added that the recent RBI notification which has delinked hotels from the "high risk category" of real estate business, will provide hospitality firms with easy access to funds for hotel development.