In a recent statement, the Indian Government has announced that it is going to decide on a proposal to allow foreign airline’s investment in the Indian Civil Aviation sector.
Being the 2nd most populous nation in the world and the economic growth hovering around 8% in the past several years, what does this mean to Hoteliers ?
Lets first start by looking at some numbers.
* Passenger traffic is expected to exceed 180 million by 2015
* 35 new airports are planned to be developed through PPP (Public Private Partnerships)
* Domestic passenger travel has grown from 14 million in 2001 to 46 million in 2010
* International passenger travel has grown from 14 million in 2001 to 34 million in 2010
* Indian Aviation Industry has grown at 18% per annum in the last six years.
So, the numbers are all looking good.
What are the key challenges faced by the Indian Civil Aviation Industry?
While there are several challenges that need to be tackled, some of the high priority ones are listed below:
*Raising cost of fuel (which obviously is a problem elsewhere too)
* Raising airport charges
* Connectivity to Tier II and Tier III cities
So, what does all these mean to Hoteliers ?
Increase in travel obviously means Increase in accommodation needs.
With the economy growing at a consistent pace, new affluent Indians will travel more, both for business and leisure. And thus a greater need for accommodation will arise.
Increase in accommodation needs in Tier II cities
While the major cities such as Chennai, Mumbai, Delhi, Bengaluru, Kolkata will see an increase in demand for accommodation, particularly established branded ones, the Tier II cities is where greater demand is going to be.
A chain of hotels, ideally suited for Tier II cities can be expected to be in good demand, since International chains will prefer to be in Tier I cities.
Increase in demand for Business than Leisure travel
As the industry grows, business travel maybe expected to grow faster than leisure travel. Air travel for leisure is still too early in India unless business travel can help grow it by encourage more leisure travel.
India has a long history, and is both culturally and spiritually very rich, so there may be increased demand for specialized packaged services in this space, specifically targeting International travelers.
So, International Hoteliers, if you are eying the lucrative Indian market, watch out for further developments happening in the Indian Civil Aviation sector in the next few weeks !