Classification is based on many criteria and classifying hotels into different types is

not an easy task. The hotel industry is so vast that many hotels do not fit into single
well defined category. Industry can be classified in various ways, based on location,
size of property etc. The main hotel chains of India are: The Taj Group of Hotels,
the Oberoi Group and ITC Welcome group.

Some of the international chains are Hyatt, Marriott, and Le Meridien etc. these
properties have also come up in India now.

1. Based on location
• City center: Generally located in the heart of city within a short distance
from business center, shopping arcade. Rates are normally high due to their
location advantages.They have high traffic on weekdays and the occupancy
is generally high. Example: Taj Mahal, Mumbai
• Motels: They are located primarily on highways, they provide lodging to
highway travelers and also provide ample parking space. The length of stay is
usually overnight.
• Suburban hotels: They are located in suburban areas, it generally have
high traffic on weekend. It is ideal for budget travelers. In this type of hotel
rates are moderately low.
• Airport hotels: These hotels are set up near by the airport. They have
transit guest who stay over between flights.
• Resort hotels: They are also termed as health resort or beach hill resort and
so depending on their position and location. They cater a person who wants
to relax, enjoy themselves at hill station. Most resort work to full capacity
during peak season. Sales and revenue fluctuate from season to season.
• Floating hotels: As name implies these hotels are established on luxury
liners or ship. It is located on river, sea or big lakes. In cruise ships, rooms are
generally small and all furniture is fixed down. It has long stay guest.
• Boatels: A house boat hotels is referred as boatels. The shikaras of Kashmir
and kettuvallam of kerala are houseboats in India which offers luxurious
accommodation to travelers.
• Rotels: These novel variants are hotel on wheel. Our very own "palace on
wheels" and "Deccan Odessey" are trains providing a luxurious hotel
atmosphere. Their interior is done like hotel room. They are normally used by
small group of travelers.

2. Based on Size of Property

The main yardstick for the categorization of hotel is by size the number of
rooms available in the hotel.
• Small hotel: hotel with 100 rooms and less may be termed as small hotels.
• Medium sized hotel: hotel which has 100-300 rooms is known as medium
sized hotel.
• Large hotels: hotel which have more than 300 rooms are termed as large
hotels.
• Mega hotels: are those hotels with more than 1000 rooms.
• Chain hotels: these are the group that have hotels in many number of
location in India and international venues.
3. Based on the Level of Service
Hotels may be classified into economy, and luxury hotels on the basis of the
level of
service they offer.

• Economy/ Budget hotels: These hotels meet the basic need of the
guest by providing comfortable and clean room for a comfortable stay.
• Mid market hotels: It is suite hotel that offers small living room with
appropriate furniture and small bed room with king sized bed.
• Luxury hotels: These offer world class service providing restaurant and
lounges, concierge service, meeting rooms, dinning facilities. Bath linen is
provided to the guest and is replaced accordingly. These guest rooms
contains furnishing, artwork etc. prime market for these hotels are
celebrities, business executives and high ranking political figures.
Example: Hyatt Regency, New Delhi.

4. Based on the Length of Stay

Hotel can be classified into transient, residential and semi residential hotels
depending
on the stay of a guest.
• Transient Hotel: These are the hotel where guest stays for a day or even
less, they are usually five star hotels. The occupancy rate is usually very
high. These hotels are situated near airport.
• Residential hotels: These are the hotel where guest can stay for a
minimum period of one month and up to a year. The rent can be paid on
monthly or quarterly basis. They provide sitting room, bed room and
kitchenette.
• Semi residential hotels: These hotels incorporate features of both
transient and residential hotel.

5. Based on Theme

Depending on theme hotel may be classified into Heritage hotels, Ecotels,

Boutique
hotels and Spas.
• Heritage hotel: In this hotel a guest is graciously welcomed, offered room
that have their own history, serve traditional cuisine and are entertained by
folk artist. These hotels put their best efforts to give the glimpse of their
region. Example: Jai Mahal palace in Jaipur.
• Ecotels : these are environment friendly hotels these hotel use eco friendly
items in the room. Example: Orchid Mumbai is Asia first and most popular five
star ecotel.
• Boutique hotels: This hotel provides exceptional accommodation, furniture
in a themed and stylish manner and caters to corporate travelers. Example:
In India the park Bangalore is a boutique hotel.
 • Spas: is a resort which provide therapeutic bath and massage along with
other features of luxury hotels in India Ananda spa in Himalaya are the most
popular Spa.

6. Based on Target Market

• Commercial hotel: They are situated in the heart of the city in busy
commercial areas so as to get good and high business. They cater mostly
businessmen.
• Convention hotels: These hotels have large convention complex and cater
to people attending a convention, conference Example: Le meridien,
Cochin, is a hotel with largest convention center in south India.
• Resort hotels: These leisure hotels are mainly for vacationers who want to
relax and enjoy with their family. The occupancy varies as per season. The
atmosphere is more relaxed. These are spread out in vast areas so many
resorts have solar powered carts for the transport of guest.
• Suite hotels: These hotel offer rooms that may include compact kitchenette.
They cater to people who are relocating act as like lawyers, executives who
are away from home for a long business stay.
• Casino hotels: Hotel with predominantly gambling facilities comes under
this category, they have guest room and food and operation too. These hotels
tend to cater leisure and vacation travelers. Gambling activities at some
casino hotels operate 24 hours a day and 365 days a year. Example: Las
Vegas in United State is Famous for Casino hotels

Star (classification)
The 4-star Manor House Hotel at Castle Combe, Wiltshire, England. Built as a private
house, and dating originally from the fourteenth century, the hotel has 48 rooms
and 1.5 km² (365 acres) of gardens.

• Restaurant ratings
Restaurant guides and reviewers often use stars in restaurant ratings. The
Michelin system reserves stars for exceptional restaurants, and gives
up to three; the vast majority of recommended restaurants have no
star at all. Other guides now use up to four or five stars, with one star
being the lowest rating. The stars are sometimes replaced by symbols
such as a fork or spoon. Some guides use separate scales for food,
service, ambiance, and even noise level. The Michelin system remains
the best known star system. A single star denotes "a very good
restaurant in its category", two stars "excellent cooking, worth a
detour", and three stars, "exceptional cuisine, worth a special journey".
Michelin stars are awarded only for the quality of food and wine; the
luxury level of the restaurant is rated separately, using a scale of one
("quite comfortable") to five ("luxury in the traditional style") crossed
fork and spoon symbols.
• Hotel ratings
"5 star superior" rating at Hotel Kempinski Vier Jahreszeiten, Munich,
Germany. The star classification system is a common one for rating
hotels. Higher star ratings indicate more luxury. The AAA and their
 affiliated bodies use diamonds instead of stars to express hotel and
restaurant ratings levels. Hotels are independently assessed in
traditional systems and rest heavily on the facilities provided. Some
consider this disadvantageous to smaller hotels whose quality of
accommodation could fall into one class but the lack of an item such as
an elevator would prevent it from reaching a higher categorization. In
recent years hotel rating systems have also been criticised by some
who argue that the rating criteria for such systems are overly complex
and difficult for laypersons to understand. It has been suggested that
the lack of a unified global system for rating hotels may also
undermine the usability of such schemes.
• Standards of hotel classification
Food services, entertainment, view, room variations such as size and
additional amenities, spas and fitness centers, ease of access and
location may be considered in establishing a standard. The more
common classification systems include 'star' rating, letter grading,
from 'A' to 'F', diamond or simply a 'satisfactory' or 'unsatisfactory'
footnote to accommodation such as hostels and motels. Systems using
terms such as Deluxe/ Luxury, First Class/ Superior, Tourist Class/
Standard, and Budget Class/ Economy are more widely accepted as
hotel types, rather than hotel standards. Some countries have rating
by a single public standard - Belgium, Denmark, Greece, Italy, Malta,
Netherlands, Portugal, Spain and Hungary have laws defining the hotel
rating. In Germany, Austria and Switzerland the rating is defined by the
respective hotel industry association using a 5-star system - the
German classifications are Tourist (*), Standard (**), Comfort (***),
First Class (****) and Luxury (*****) with the mark Superior to flag
extras beyond the minimum defined in the standard. The Swiss hotel
rating was the first non-government formal hotel classification
beginning in 1979. It did influence the hotel classification in Austria
and Germany. The formal hotel classification of the DEHOGA (German
Hotel and Restaurant Association) started on 1. August 1996 and
proved very successful (with 80% of guests citing the hotel stars as the
main criteria in hotel selection) which lead to the creation of a common
European Hotelstars rating system that started in 2010 (see below). In
France, the rating is defined by the public tourist board of the
department using a four star system (plus "L" for Luxus) which has
changed to a 5-star system from 2009 on. In South Africa and Namibia,
the Tourist Grading Council of South Africa has strict rules for a hotel types
granting up to 5 stars.

• European Hotelstars Union

The HOTREC (Hotels, Restaurants & Cafés in Europe) is a umbrella
organization for 39 associations from 24 European countries. On the
conference in Bergen 2004 the partners sketched a hotel classification
system in order to harmonize the national standards. In 2007 the
HOTREC launched the European Hospitality Quality scheme (EHQ)
which has since accredited the existing national inspection bodies for
hotel rating.
 Under the patronage of HOTREC the hotels associations of Austria,
Czech Republic, Germany, Hungary, Netherlands, Sweden and
Switzerland have created the Hotelstars Union. On 14 September
2009, the Hotelstars Union classification system was decided and
pronounced on a conference in Prague. Since January 2010 the system
is effective in most of these countries, Hungary will provide the legal
provisions in 2010, Switzerland will switch to the new system in 2011
based on the regular 5 year cycle, and the Netherlands will switch in
2011 for similar reasons. The Hotelstars Union classification defines
the same levels as the earlier German classification system with five
stars and Superior mark to flag extras. Instead of a strict minimum in
room size and required shower facilities (e.g. a bath tub in a four star
hotel) there is a catalogue of criteria with 21 qualifications
encompassing 270 elements where some are mandatory for a star and
others optional. For hotels with three to five stars, the Hotelstars Union
will use "mystery guests" to check the service quality regularly.

• World Hotel Rating

There is so far no international classification which has been adopted.
There have been attempts at unifying the classification system so that
it becomes an internationally recognized and reliable standard, but
they have all failed. It has been considered that, as it has been the
case in other areas (e.g. international accounting standards), hotel
classification standards should result from a private and independent
initiative. This may be the case of the World Hotel Rating (WHR)
project, which notably aims to set international classification standards
and rating criteria along the lines of a world star-rating system. It will
also establish an information platform on the hotel industry which will
be multilingual and multicultural. WHR intends to play a key role in the
development of quality hotel services, as well as equitable and
sustainable tourism, and the protection of the world's cultural and
natural heritage. In addition, WHR will develop labels to promote hotels
distinguished by specific features, such as a family and child-friendly
disposition. A test period is scheduled for 2010.

• Hotel classifications in Britain

In Britain, hotels are rated from one star to five stars, as in many other
countries. The RAC pulled out of accommodation grading in 2008 so
the only grading schemes in operation are those operated by the AA
(Automobile Association) and the national tourist boards; Visit England,
Visit Wales, the Scottish Tourist Board and the Northern Ireland Tourist
Board. The schemes were all 'harmonised' to ensure consistency
between the schemes. This applies to all accommodation types apart
from Self Catering that the AA have recently (2009) started offering.
The AA criteria is available on its website.[6] In addition to the usual
black stars (ranging from one (the lowest) to five (the highest), the AA
awards red stars to the highest-rated, which are deemed 'Inspectors'
Choice'. Each of the national tourist boards have grading explanations
on their web sites.
 • 'Six' and 'seven star' hotels
Some members of the hospitality industry have claimed a six or seven-
star rating for their operation. As no organization or formal body
awards or recognizes any rating over five star deluxe, such claims are
meaningless and predominantly used for advertising purposes.
The Burj Al Arab hotel in Dubai is widely described as a "seven-star"
property, but the hotel says the label originates from an unnamed
British journalist on a press trip and that they neither encourage its use
nor do they use it in their advertising.

• Hotelstars
The European Hotelstars Union has created a profiling system based
on the earlier German hotelstars system that had widely influenced the
hotel classifications in central Europe. The main criteria are in quality
management, wellness and sleeping accommodation. In the catalogue
of criteria each entry is associated with a number of points - each
Hotelstars level requires a minimal sum of points besides some criteria
being obligatory for the level. The minimum requirement for the
Superior flag requires the same sum of points as for the next
Hotelstars level which however was not awarded due to at least one
obligatory requirement being left out.
Hotelstar Excerpt of the catalogue of criteria
100 % of the rooms with shower/WC or bath tub/WC - Daily
room cleaning - 100 % of the rooms with colour-TV together
with remote control - Table and chair - Soap or body wash -
Tourist
Reception service - Facsimile at the reception - Publicly
available telephone for guests - Extended breakfast -
Beverage offer in the hotel - Deposit possibility
The Superior flag is provided when the additional service
and accommodation provisions are not sufficient for the
Superior next Hotelstar. The bathroom facilities are usually at the
Tourist same level as for two stars hotels but built from cheaper
materials. The cost for regular inspection by independent
associations is waived as well.
In addition to the single star (*) hotels: - Breakfast buffet -
Standar Reading light next to the bed - Bath essence or shower gel -
d * Bath towels - Linen shelves - Offer of sanitary products
(e.g. toothbrush, toothpaste, shaving kit) - Credit Cards
The Superior flag is provided when the additional service
and accommodation provisions are not sufficient for the
Superior next Hotelstar. The Standard-Superior does usually offer the
Standar same service level as three star hotels but the interiors of
d the hotel are smaller and cheaper so that the three stars
were not to be awarded by the inspection body. A two star
superior does not require mystery guesting.
Comfort In addition to the standard star (**) hotels: - Reception
opened 14 hours, accessible by phone 24 hours from inside
and outside, bilingual staff (e.g. German/English) - Three
piece suite at the reception, luggage service - Beverage
 offer in the room - Telephone in the room - Internet access
in the room or in the public area - Heating facility in the
bathroom, hair-dryer, cleansing tissue - Dressing mirror,
place to put the luggage/suitcase - Sewing kit, shoe polish
utensils, laundry and ironing service - Additional pillow and
additional blanket on demand - Systematic complaint
management system
The Superior flag is provided when the additional service
and accommodation provisions are not sufficient for the
Superior
next Hotelstar. The accommodation facilities for a superior
Comfort
hotel need to be on a modern level and fully renovated
which is checked regularly.
In addition to the comfort star (***) hotels: - Reception
opened 18 hours, accessible by phone 24 hours from inside
and outside - Lobby with seats and beverage service -
Breakfast buffet or breakfast menu card via room service -
First Minibar or 24 hours beverages via room service -
Class Upholstered chair/couch with side table - Bath robe and
slippers on demand - Cosmetic products (e.g. shower cap,
nail file, cotton swabs), vanity mirror, tray of a large scale in
the bathroom) - Internet access and internet terminal - "À la
carte"-restaurant
The Superior flag is provided when the first class hotel has a
First proven high quality not only in the rooms. The superior
Class hotels provide for additional facilities in the hotel like a
Superior sauna or a workout room. The quality is checked regularly
by mystery guesting of an external inspection service.
In addition to the first class (****) hotels: - Reception opened
24 hours, multilingual staff - Doorman-service or valet
parking - Concierge, page boy - Spacious reception hall with
several seats and beverage service - Personalized greeting
for each guest with fresh flowers or a present in the room -
Luxury
Minibar and food and beverage offer via room service during
24 hours - Personal care products in flacons - Internet-PC in
the room - Safe in the room - Ironing service (return within 1
h), shoe polish service - Turndown service in the evening -
Mystery guesting
The Luxury star hotels need to attain high expectations of
Superior
an international guest service. The Superior Luxury star is
Luxury
only awarded with a system of intensive guest care.
Global Hotel Industry Landscape:
MKG Hospitality’s annual ranking puts the spotlight on some interesting changes to the
Top 10 hotel groups and the Top 20 brands. On 1 January 2011, four hotel groups broke the
barrier of 600,000 rooms in operation throughout the world thanks to a developmental strategy
focused on franchising. Even if the winning brands Holiday Inn and Holiday Inn Express put
Intercontinental Hotel Group in the top spot by a long shot, Hilton Worldwide has snuck up behind
Wyndham Worldwide for second place by less than 250 rooms (or a single major hotel). Virginia-
based Hilton has been working overtime to develop brands such as Hampton Inn and Garden Inn
into successful franchises in order to snatch the number two spot from the New Jersey group who
has seen development of its own brands such as Days Inn, Ramada, and even Super8 stagger.
Marriott is securely placed in fourth place with its leading brands (notably Courtyard) contributing
to its growth. Despite a growth that is also supported by its brands, Accor Group (who happily
broke the 500,000-room mark) remains some distance behind the first platoon and is now in fifth
place ahead of Choice International who is still trying to “clean up” its franchise network. With its
range of luxury and lifestyle brands, Starwood Hotels & Resorts also go up a notch ahead of Best
Western, downgraded to 8th place. Starwood Hotels is really counting on the development of
Sheraton and Le Meridien, which got a head start, and W, which has rippled the waters of Europe
and the Middle East.
Carlson Hospitality is reaping the benefits of the growth of its subsidiary Rezidor in
EMEA. The group is multiplying its openings of Radisson Blu and Park Inn. Hyatt Hotel
Corporations is holding on, now more than ever, to its tenth place. “The economic crisis has
increased the value of branding. This is a major argument for hotel groups counting on
franchising to widen their respective supply,” explains Georges Panayotis, President & CEO of
MKG Group. “One can expect, in the coming months and years, to see deeper changes at the top
of the ranking through new partnerships, and/or acquisitions. American groups have initiated that
strategic move, in the light of the marketing partnership between Wyndham Worldwide and Tryp
Hoteles, and the one between Marriott International and AC Hotels. As for the Accor Group, it has
not concealed that it expects to boost its organic development (30,000 new rooms each year)
through acquisition of locally well established groups. It has the financial resources to do so”.

Concerning global brands, the ranking remains unchallenged. With its unique marketing
strategy, Best Western continues to strive, even if its hotel supply is crumbling. The same rings
true for Holiday Inn, who is finishing its intensive worldwide re-launch programme. Four brands
stand out because of their strong growth during 2010: Ibis and Mercure (Accor) followed by
Crowne Plaza (IHG) and Hampton Inn (Hilton Worldwide). All of these brands are betting that
continued franchising will strengthen their global ranking. It is very difficult to obtain statistics from
Chinese groups which temporarily prolong the inaccuracy of Jing Jiang’s results, the top ranking
Chinese operator, which is expanding its partnerships. As MKG Hospitality analysts explain, it is
clear that the renovation process of hotel supply, through the implementation of new quality
standards or the launch of new generation of hotel concepts, has penalized the largest networks
of franchise hotels which are finalizing their programmes in mature markets, i.e. Northern
America and Western Europe. After a short break during the economic crisis, development in
emerging countries is again a priority, considering the “poor” hotel infrastructure in Brazil, Russia,
India or China, where western hotel groups are battling to establish their positions.
Hotel Performance: Figures Reveal Stable Hotel Performance
After the turbulence of recent years, it seems that the UK hotel industry has stabilised
with RevPAR, Occupancy and Rate data remaining steady. New figures from PKF Hotel
Consultancy Services highlight the stability of February and March – news that will be
welcomed by UK hoteliers looking for sure signs of a recovery in the industry.
• Hotel Performance: London
In London, although room occupancy was down in February, by 4.7% from
79.3% in 2010 to 75.6% in 2011, rooms yield increased by 1.7% year on year. This can
be attributed to an increase of 6.7% in room rate from £120.28 in 2010 to £128.31 in
2011. Preliminary data for March suggests the capital is heading for a stronger month.
Room rate increased 7.4% from £114.53 to £122.98; room occupancy increased 1.5% to
81.8% and rooms yield increased by 9.0% from £92.35 in 2010 to £100.62 in 2011.

• Hotel Performance: Regions

In the regions, final figures for February show room rate increasing 1.8% from
£59.81 in 2010 to £60.91 this year. Room occupancy did decrease slightly from 65.3%
last year to 64.5% this year, but rooms yield was up overall from £39.09 last year to
£39.27 this year, an increase of 0.5%. Preliminary figures for March show that room rate
is up 1.4% to £61.39, room occupancy stayed flat at 67.0% and rooms yield has increased
by 1.3% to £41.13. “These are healthy figures for the industry and I expect, particularly
for London, that the figures will remain strong over the next few months with the Royal
Wedding at the end of April expected to bring in additional visitors to the capital,”
explained PKF partner, Robert Barnard. “However, the rest of the year is likely to be less
settled as the industry continues to be impacted by broader worldwide issues. London
should be less affected especially as it benefits from the build up to the Olympic
Games and the Champions League Final. The regions however, will more likely have a
slower recovery and be dependent on growth in the MICE and corporate markets.”

• Hotel Performance: Individual Cities

March figures for individual cities in the regions, show a relatively mixed picture.
Rooms yield has mostly increased, but in some cities this was down to a rate increase,
while in others an occupancy increase. For example, in Leeds, room rate declined 0.3% to
£62.84, but room occupancy was up 0.8% to 74.6%. This meant rooms yield increased
overall by 0.5% to £46.89. Meanwhile in Birmingham, room rate was up 4.2% to £62.47,
room occupancy was down 4.0% to 71.7% and rooms yield was up 0.1% to £44.76.

Hotel Performance: November Brought Stability

November was another strong month for hotel performance in London with increases,
compared to the same time last year, in room rate, room occupancy and rooms yield. The
regions also had a steady month, according to final monthly figures released by PKF
Hotel Consultancy Services. In London, room rate increased 10.5% from £133.54 in 2009
to £147.54 this year. Occupancy was up 0.3% from 85.8% in 2009 to 86.0% in 2010.
Overall, rooms yield was up from £114.51 last year to £126.88 this year, an increase of
10.8%. “November appeared to be a generally steady month across the board which is
great for the industry, “ said Robert Barnard, partner for Hotel Consultancy Services at
 PKF. Regionally, hoteliers posted a mixed, but mostly positive bag of results. Overall this
meant the figures were positive with increases in room rate, room occupancy and rooms
yield. Occupancy increased 4.0% from 66.8% to 69.6%; room rate decreased by 0.9%
from £63.16 to £63.74; rooms yield increased 5.0% from £42.24 to £44.34.

Of the main UK regional cities, there were no real differences with most posting small
overall increases. Edinburgh did not fare quite so well however. Occupancy was down
1.6% to 74.1%, room rate was down 1.9% to 81.73% and rooms yield fell 3.4% to
£60.56. “Looking into 2011, I have mentioned previously that the government’s spending
cuts are likely to impact regional hotels,” added Barnard, “but on the flip side, for
London, the royal wedding could provide a welcome boost.”

• Hotel Performance Strong in the North

The Northern cities had good months. Manchester’s room occupancy was up
4.7% to 81.3%, room rate was up 2.8% to £81.58 and rooms yield was up 7.6% £66.32.
In Leeds, occupancy was up 4.3% to 78.5%, room rate was down slightly by 1.0% to
£65.26, but overall rooms yield was up 3.2% to £51.23.

Hotel Industry Trends for October 2010

Hoteliers in London enjoyed a robust October with increases in rate, occupancy and
yield, the picture was more mixed for the regions with some posting strong results, but
others falling back slightly, according to preliminary monthly figures from PKF Hotel
Consultancy Services. In the capital, room rate increased 12.8% from £115.56 in 2009 to
£130.37 in 2010. Occupancy was up 1.6% from 87.2% to 88.6% in 2010. Overall, rooms
yield was up from £100.78 in 2009 to £115.50 this year, an increase of 14.6%.
Regionally, hoteliers posted a mixed bag of results. Overall this meant the figures were
largely positive with increases in occupancy and rooms yield and only a small decrease in
rate. Occupancy increased 4.5% from 70.3% to 73.5%; room rate decreased by 0.5%
from £62.36 to £62.03; rooms yield increased 4.0% from £43.85 to £45.60. As in
September with the Labour Party conference, the Tory Party conference proved a big
draw to Birmingham’s hotels in October with room rate increasing by 7.9% from £56.23
in 2009 to £60.67 in 2010. Occupancy also increased, by 5.2% to 70.2% and rooms yield
therefore increased 13.6% from £37.50 to £42.58. Edinburgh had another solid month,
with room rate up 3.4% to £81.87, occupancy up 4.9% to 84.0% and rooms yield up 8.5%
to £68.74. Some of the Northern cities did not have such positive results. In Leeds,
occupancy was down 3.8% to 74.8%, room rate increased by 1.3% to £66.65 and rooms
yield decreased by 2.5% to £49.83. In Manchester, room rate was down 3.4% to £75.12,
occupancy was down 0.6% to 79.1% and rooms yield was down 3.9% to £59.42. Robert
Barnard, partner for Hotel Consultancy Services at PKF, commented, “The capital
continued to post robust results in October which suggests that global business travel
continues to strengthen.” “The regions are a mixed picture with some cities posting
stronger results than others. Overall, the figures are relatively positive, but as the public
sector cuts start to hit home, it is likely the regional figures will start to fall back again in
2011.”
Tourism and hospitality

Hospitality in India is based on the Sanskrit adage ‘Atithi Devo Bhava’ or

‘guest is god’. The concept was adapted by the Ministry of Tourism,
Government of India which aims at creating awareness about rich variety of
tourism in India. India is currently ranked 12th in the Asia Pacific
region and 68th overall in the list of the world's attractive
destinations, according to the Travel and Tourism Competitiveness Report
2011 by the World Economic Forum (WEF).
India is well known for its natural resources (ranked 8th) and cultural
resources (24th) with many World Heritage sites, both natural and cultural;
rich fauna, many fairs and exhibitions and strong creative industries. India
also has quite good air transport (ranked 39th), particularly given the
country’s stage of development, and reasonable ground transport
infrastructure (ranked 43rd), reports The Travel and Tourism
Competitiveness Report 2011 by World Economic Forum 2011. Investment
in travel and tourism in India is expected to reach US$ 34.7 billion in
2010 and US$ 109.3 billion by 2020.

Contribution to the economy

The hotel and tourism industry’s contribution to the Indian economy

by way of foreign direct investments (FDI) inflows were pegged at
US$ 2.35 billion from April 2000 to February 2011, according to the
Department of Industrial Policy and Promotion (DIPP). India’s hotel
pipeline is the second largest in the Asia-Pacific region according to Jan Smits,
Regional Managing Director, InterContinental Hotels Group (IHG) Asia
Australasia. He projected the Indian hospitality industry to grow at a rate of
8.8 per cent during 2007-16, making the country as the second-fastest
growing tourism market in the world. The domestic hospitality sector is
expected to see investments of over US$ 11 billion by 2012, with 40
international brands making their presence in the country in the next few
years. According to the Tourism Satellite Accounting (TSA) research, released
by World Travel and Tourism Council (WTTC) and its research partner Oxford
Economics in March 2011:
• The direct contribution of travel and tourism to GDP is expected to grow by
8.1per cent per annum (pa) to US$ 76.65 billion (2 per cent of GDP) for 2011-
2021 period, while the total contribution is expected to be US$ 82.61 billion
in 2011 (4.5 per cent of GDP). It is forecasted to rise by 8.8 per cent p.a. for
2011-21, accounting for 4.9 per cent of GDP.
• Travel and tourism is expected to generate 24.93 million jobs directly in 2011
(5 per cent of total employment). This includes employment by hotels, travel
agents, airlines and other passenger transportation services. By 2021
industry will account for 30.44 million jobs directly, an increase of 5.51 million
(22.1 per cent) over the next ten years.
 • The industry is expected to attract capital investment of US$ 27.67 billion
rising by 8.7 per cent pa to US$ 63.47 billion.
• Visitor exports are expected to total US$ 15.23 billion in 2011, rising to US$
30.18 billion in 2021.

Foreign Tourist Arrivals

The important highlights regarding foreign tourist arrivals (FTAs) and foreign
exchange earnings (FEE) from tourism in India during the month of March
2011 are as follows:
FTAs during the month of March 2011 was 5,07,000 as compared to FTAs of
4,72,000 during the month of March 2010. A growth rate of 7.4 per cent in
March 2011 was recorded.
FTAs during the period January-March 2011 were 1.73 million with a growth of
11.1 per cent, as compared to the FTAs of 1.56 million with a growth of 10.6
per cent during January-March 2010.
FEE in during the month of March 2011 were recorded at US$ 1227 million as
compared to FEE of US$ 1,209 million during the month of March 2010. The
growth rate has registered 1.5 per cent in FEE in March 2011 over March
2010.
FEE from tourism during January-March 2011 were US$ 4,184 million with a
growth of 8.4 per cent as compared to US$ 3,858 million over the
corresponding period in 2010.

Government Initiatives/ Policy

The Government has allowed 100 per cent foreign investment under the
automatic route in the hotel and tourism related industry, according to the
Consolidated FDI Policy, released by DIPP, Ministry of Commerce and
Industry, Government of India. The terms hotel includes restaurants, beach
resorts and other tourism complexes providing accommodation and /or
catering and food facilities to tourists.
The term tourism related industry includes:
• Travel agencies, tour operating agencies and tourist transport operating
agencies Units providing facilities for cultural, adventure and wildlife
experience to tourists. Surface, air and water transport facilities for tourists
Convention/seminar units and organizations.
• The Government of India has announced a scheme of granting Tourist Visa
on Arrival (T-VoA) for the citizens of Finland, Japan, Luxembourg, New
Zealand and Singapore. The scheme is valid for citizens of the above
mentioned countries planning to visit India on single entry strictly for the
purpose of tourism and for a short period of upto a maximum of 30 days.
During 2010, a total number of 6,549 Visa on Arrivals (VoA) were issued
under VoA Scheme.
• The tourism master plan, the first for Karnataka, envisages initiatives to
attract private investment ranging from US$ 2.2 billion to US$ 4.4 billion in
the next three to five years. The plan is prepared based on the Vision 2020
document prepared and adopted by the Karnataka State Planning Board. The
master plan is aimed at making Karnataka the number one destination for
tourism in the country by 2020, according to Mr G Janardhan Reddy, Minister
for Tourism and Infrastructure Development.
 • The Union Ministry of Tourism has included Medical Tourism under the
Marketing Development Assistance (MDA) Scheme. The Ministry of Tourism
has sanctioned US$ 27,742 as MDA to 10 Medical Tourism Service Providers
during current year, as per the press release by Press Information Bureau
(PIB) dated November 15, 2010.
• The Ministry of Tourism has sanctioned 781 projects in 34 States/ Union
Territories (UTs) in the country amounting to US$ 511.82 million during the
last three years up to June 2010, as per a press release dated October 18,
2010.

Medical Tourism
In India, medical tourism is a sunrise sector valued at more than US$ 310
million. Currently, India receives more than 100,000 foreign patients a year.
The Confederation of Indian Industry (CII) expects the sector to grow to US$ 2
billion by 2012.
Medical tourism in India has emerged as the fastest growing segment of
tourism industry. India’s share in the global medical tourism industry is
expected to reach around 3 per cent by the end of 2013, as per a new market
research report Booming Medical Tourism in India by RNCOS. The report also
highlighted that medical tourism is expected to generate revenue worth US$
3 billion by 2013, growing at a CAGR of around 26 per cent during 2011–
2013. The number of medical tourists is anticipated to grow at a CAGR of
over 19 per cent during the forecast period to reach 1.3 million by 2013.
There are over 3,371 hospitals and around 754,985 registered practitioners
catering to the needs of traditional Indian healthcare. Indian hotels are also
entering the wellness services market by collaborating with professional
organisations in a range of wellness fields and offering spas and ayurvedic
massages.
Wellness tourism a sub-set of medical tourism comprises of Ayurveda
treatment, spa therapy, yoga and meditation. A niche segment, it draws high-
end inbound tourists. Kerala is the most popular wellness destination in India,
but other states are also emerging in this segment. There is a huge demand
for wellness treatments, especially Ayurvedic and herbal Ayurveda
The BCG Group plans to build a multidisciplinary health facility, BCG
Healthsquare in Palarivattam in Kochi, Kerala, by August 2011. The
company’s long-term plan is to set a 750,000 square feet health village with
an estimated cost of US$ 88.91 million.

Hospitality

The Indian hospitality industry is projected to grow at a rate of 8.8 per cent
during 2007-16, placing India as the second-fastest growing tourism market
in the world.
The Indian hotel room market for 10 metros is estimated to expand at a
CAGR of 17 per cent to US$ 2.66 billion during 2010-13, according to a study
by Knight Frank India. In terms of the number of rooms sought per day, the
hospitality sector is estimated to grow at a CAGR of 10.3 per cent.
Lebua Hotels & Resorts, a Thailand-headquartered luxury hospitality chain,
with properties in Bangkok and New Zealand, plans to enter India. The chain
 further plans to take the management contract route - at managing hotels in
India and giving them its brand name.
Hotel chain operator, Royal Orchid Hotels Ltd has invested about US$ 67.95
million to open six new properties across India by December to add to its
chain of 16. The new properties would result in an addition of about 900
rooms and the total room tally would go up to about 2,200 by December
2011, as mentioned by Keshav Baljee, President, at the Hotel Investment
Conference, South Asia.
InterContinental Hotels Group, the world’s top hotelier, has signed a joint
venture (JV) partnership with Duet India Hotels Group to develop its Holiday
Inn Express brand in the Indian market. InterContinental will make a multi-
year investment of US$ 30 million in the JV to develop 19 new Holiday Inn
Express hotels across India. InterContinental currently has 12 hotels in India.
Marriott plans to open 30 hotels in India by 2013.
Royal Orchid Hotels Ltd has announced its entry into Hospet, near the 500
year old world heritage site of Hampi. The Royal Orchid Central Kireeti is the
first branded hotel servicing the UNESCO world heritage site of Hampi.
East India Hotels (EIH), which runs the Oberoi hotels, is actively looking to
expand in Europe and intends to open three out of its next five hotels outside
India even as it continues to see opportunities in the domestic market.
The Road Ahead
The demand for travel and tourism is expected to reach US$ 431.7 billion
by 2020.
Ministry of Tourism has sanctioned 169 rural tourism sites in 28 States/Union
Territories (UTs). The scheme of rural tourism was started by the Ministry in 2002-
03 with the objective of showcasing rural life, art, culture and heritage at rural
locations and in villages, which have core competence in art and craft, handloom,
and textiles as also an asset base in the natural environment.
Moreover, the Ministry has initiated several measures to promote Medical and
Health Tourism which includes promotion in overseas markets and production of
publicity materials like brochure, CDs and films etc. and their distribution in target
markets.
A workshop on promotion of Wellness Tourism was organised in New Delhi in
association with Department of AYUSH, Government of India and National Board for
Accreditation of Hospitals and Healthcare Services on February 15, 2011.
In order to promote tourism in the South Asian region, Mr Subodh Kant Sahay, Union
Minister for Tourism has called for more cooperation amongst the countries.
Inaugurating the 18th South Asia Travel and Tour Expo (SATTE) 2011 in New Delhi,
Mr Sahay said it is the opportune time for all tourism organisations and stake
holders in the region to get together and address issues that are common and
relevant for the growth of tourism in the region.
SATTE plays an important role in showcasing the tourism potential of the South
Asian region and provides a platform for tourism stakeholders in the region to
interact with buyers from across the world with the objective of promoting tourism
to the region. 32 countries are participating in the SATTE in 2011.
Ministry of Tourism aims to create a comprehensive and coordinated framework for
promoting golf tourism in India, capitalising on the existing work that is being
carried out, and building upon the strength of India’s position as the fastest growing
free market economy.