by Vijaylakshmi
While the Indian hotel industry has been growing at a phenomenal pace with all leading hotel companies recording good double digit growth in revenues in the last two financial years, questions are being raised about how long the industry will be able to sustain this growth.
Putting speculations to rest, Patu Keswani, MD, Lemon Tree Hotels Limited, cited the case studies of the relation between the income per capita growth and travel and hospitality demand growth in different economies of the world and said that India is at an inflection point in terms of per capita income which would trigger travel and tourism demand further in the next decade or so.
He said that travel, tourism and hospitality spending of people become non-discretionary once the per capita income of the country crosses the USD 3000 to 3500 range. He cited the examples of China in 2007, Indonesia in 2013 and Vietnam now. When that happens air travel becomes the preferred choice over rail for a vast segment of the population and hotels become the preferred choice of stay, he said. Between 2006 and 2012, hotel stays grew 5-fold in China, Keswani said.
He said that more than the GDP growth of a country, there are other “high frequency indicators” that boost travel and tourism. In India’s case, all the high frequency indicators are favourable for the travel and tourism sector to leapfrog in the next five to ten years, Keswani said.
Counting the high frequency indicators, Keswani said that the airport capacity and the airline capacity in the country is poised to double in the next five years. Similarly, the highway network which has doubled in the last ten years is expected to further double in the next decade. The increasing preference for SUVs in India is another catalyst to stimulate road travel and demand for hospitality products.
Commenting on the talent crunch and high attrition in the industry, Keswani said that the industry has to leverage AI tools which have the power to change everything. He said that AI tools should be harnessed to replace low-skill jobs in the hotels and the savings from that should be used to better compensate the high-valued employees.
On the capital side, he said that institutional capital will take the lead in hotel investments in India going forward as against the HNI funding which has been the norm so far.
