Top sector for foreign direct investment in India

Did you know?

It costs between US$50-80 million to set up a five-star hotel in a prime locality in urban India. The gestation period is between 3 and 4 years. And guests will simply pour in!

Hospitality industry

Points to be noted:

  • Economic liberalisation has given a new impetus to the hospitality industry.

  • It costs an average of US$50-80 million to set up a five-star hotels with 300 rentable rooms in India. The gestation period is usually between three and four years. Movements in real estate prices have to be watched, though they have stabilised in the past three years or so.

  • Non-five-star hotels are obviously cheaper and have have smaller gestation periods, but international chains are expected to go into the five-star category.

  • The Indian hospitality industry is growing at a rate of 15 percent annually. The current gap between supply (61,000 rooms) and demand (90,000 rooms) is expected to widen further as the economy opens and grows.

  • The government forecasts an additional requirement of 200,000 rooms by the turn of the century.

  • A rapidly growing middle class, the advent of corporate incentive travel and the multinational companies into India has boosted prospects for tourism. India's easy visa rules, public freedoms and its many attractions as an ancient civilisation makes tourism development easier than in many other countries.

  • Many foreign companies have already tied up with prominent Indian companies for setting up new hotels, motels and holiday resorts. The entry of McDonald's, Pepsico's Kentucky Fried Chicken, Domino's and Pizza Hut have given an international glitz to the hospitality sector.

  • Several international chains including Sheraton, Holiday Inn, Intercontinental, Hyatt, Radisson, BestWestern, Days Inn, Hilton, Quality Inn, Ramada Inn, Meridien, Kempenski, Four Seasons Regent, Accor, and Marriott International are entering or expanding their hotel network in India.

Back to index