• India opens doors for visitors and investors

India has announced new visa rules which will mean that visitors from 43 countries will be able to pick up their visas on arrival in the country.

The news came as domestic and international suppliers announced plans to expand in the country, which is looking to boost visitor numbers under new prime minister Narendra Modi.

The country, which is currently seeing its peak travel season, saw shares in domestic operators rise on news of the visa changes. Prior to the amendment visitors had to wait several weeks before learning whether they would be allowed to enter after submitting their applications at visa processing centres.

According to data from the Ministry of Tourism, there has been a 41.5% increase on the number of visas given in October this year compared with last year and foreign tourist arrivals into India increased about 10% on the year during October.

Shortly after the announcement, Hard Rock International reported plans to launch in the country, with the Hard Rock Hotel Goa, due to open in March 2015. The property will be managed by Spectra Hotels & Resorts, a joint venture between Convention Hotels India and Spectra Hospitality Services. The pair are currently looking at other opportunities within the country.

Prataap Wadhwa, director, Convention Hotels India, said: “Our vision to bring an energetic brand like Hard Rock Hotel to India’s experiential travellers will soon be a reality with the launch of Hard Rock Hotel Goa. Tourism is core to India’s growth and our association with Hard Rock will enable us to reach a new market of travellers.”

ITC Hotels, one of India’s largest hotel operators, also announced plans to invest around Rs 9,000 crore (USD1.5bn) in the next three to four years to expand its hotel portfolio to 150 hotels, from the current 102. Nakul Anand, executive director, ITC Hotels, told the local press: “Indian hospitality has been in a bad shape and it’s not just us. Having said that, I think the worst is over and there are good times ahead. If Modi is a magnet, then it means there could be more foreign direct investment and with that will be more business travel, which will have a three times multiplier effect.”

India – and its position in Asia – was given a show of support from Starwood Hotels & Resorts, which relocated its head office to the country for a month. Frits van Paasschen, the company’s president & CEO, told analysts: “Energy and optimism has swept across India since the election of Prime Minster Modi. One of our parameters of business confidence in any market is the local appetite for keeping their money in country.

“Global trend lines of rising world and global connectivity are playing out as dramatically in India as anywhere else. Alongside, India’s base in technology and business services, we’re seeing a rise in both entrepreneurship and investment. This is propelling millions of people into the ranks of India’s middle class every year and driving demands for travel infrastructure.”

Van Paasschen acknowledged that the country was “infamously challenging as a place to do business; all the more reason for us to get close to our leadership team there and see what they need”.

Eyes are on Modi to deliver what he promised in his election campaign – to reform taxes, subsidies and labour laws as well as improving relations with its neighbours in south-east Asia. During his campaign Modi identified the five Ts that would be the focus of building Brand India – technology, tourism, tradition, trade and talent.

At World Travel Market last month Shripad Yesso Naik, union minister of state for Culture and Tourism, said that the Ministry of Tourism had taken “several new initiatives including introducing visa-on-arrival for several countries, simplification of procedures for classification /reclassification of hotels and restaurants, improving infrastructure development, identification and improving major tourist circuits, intensification of promotional and marketing strategies to further build brand ‘Incredible India’”.

Enthusiasm is running high in India, although concerns remain. ITC is promising more luxury hotels and it is not alone. The country’s luxury hotel market – with its access to plentiful cheap labour – has long been the benchmark by which global luxury standards are set. But with a rising middle class there are questions as to whether the luxury sector is overbuilt.

In a recent study of the country, HVS reported that this was changing. Achin Khanna, managing director, consulting & valuation practice, HVS South Asia, said: “The ‘inverse pyramid’ with a higher number of existing hotels in the luxury and upscale space, symbolic of India’s organised hotel industry for years, is seen tilting with more mid-market and budget hotels being planned across the country (almost 66% of the proposed supply).

“The 2013/14 fiscal saw luxury and upscale hotels account for only 30% of the total proposed supply, in keeping with a subdued domestic business sentiment during 2010/11, 2011/12 and 2012/13. In our opinion, such a development will enable the industry to inch closer towards meeting the future room requirement in the country with mid-market and budget hotels coming up quicker and at lower costs than lodging products with a higher positioning.”

India’s ascendancy into thriving hotel market has been one of the great hopes of the last decade. The hope now is that it sticks.

 

HA Perspective [by Chris Bown]: The UNWTO continues to make the point that easing visitor access is a great way to encourage tourism and economic development. India appears to have listened and responded. A rise in visitor numbers will be greatly welcomed by those already running hotels in the country, for whom returns have been at best flat, in the last half dozen years.

The next issue will be making it easier to do business in the country. While some operators, such as Rezidor and IHG, are making progress, other brands find the challenges of transacting and getting through the bureaucracy sufficient to wait on the sidelines; Whitbread’s Andy Harrison used the word “challenging” when talking of Premier Inn’s first steps into the country. In this respect, the new administration should be a positive influence, too.

More foreign visitors will be great news for the country’s luxury hotel owners, who have seen flat performances over recent years. As soon as an upturn is sensed, expect many of those currently on the market to be quietly withdrawn.

Probably the best placed to see what’s happening on the ground will be Frits van Paasschen and his Starwood team, who decamp to India next March for a month. Starwood currently has 40 hotels open in India, with a pipeline adding up to 36: expect the latter figure to increase, following their immersion in the country.

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