The Indian hospitality sector is witnessing one of its rare sustained growth trends. Demand has outpaced supply leading to a hike in the Occupancy Rate (OR) as well as average room rates (ARRs). Revenue per available room has increased by 29 percent over 2001-02 within a span of three years and ARR is projected to experience an annual growth rate of 13 to 14 percent over the next few years. Due to the spurt in tourist inflows, occupancy rates are expected to reach 83 percent by 2008-09, up from the present 72 percent. This paper evaluates the Indian hotel industry's current strengths, weaknesses, opportunities, and threats. First, the study identifies the key factors driving the growth and major hindrances, and then suggests the formulation of strategies at the government level as well as private players' level, keeping in view the growth potential and competition from international players such as Amanda, Satinwoods, Banana Tree, Hampton Inns, Hilton, and Mandarin Oriental.
The Indian hotel industry has kept up the growth momentum that started in the second half of 2004. It has come up with a robust performance even during the slow period of the industry cycle. India's strong Gross Domestic Product (GDP) performance, closer ties with developed world, economic liberalization, increasing private sector/foreign investment, its emergence as a Business Process Outsourcing (BPO) hub, continuing war on airfares, and growing infrastructure thrust by the government were among the contributing factors to this growth. Tourist arrival, occupancy levels, and room rates witnessed a strong growth during the past few years.
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