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Tourists pour in, but there's no room!

Kishore Singh | April 09, 2005

In India's fast-crippling hospitality industry, the spotlight is momentarily on the ubiquitous but usually unsung rooms manager.

This front office functionary whose job it is to allocate rooms to hotel guests, and to ensure there is enough time for the minions in the housekeeping department to tidy up in between departing and arriving groups, is now under pressure to create more rooms within each day.

Travel agents, tour operators, even in-house hotel colleagues are applying pressure as the demand for rooms far outpaces supply. Hotel rooms are being hawked to the highest bidder at prices far above "official" rates.

Tour operators with groups and corporates with negotiated rates are being turned out from the reception with the terse message, "Sorry, no room." "It's blackmail," fumes Subhash Goyal," president of STIC Travels and of the Indian Association of Tour Operators.

"When anyone tries to sell cinema tickets in black, he's put behind bars, but in the hotel industry no one is being punished for selling rooms in black."

Goyal and those of his profession are finding themselves impotent as the tourism juggernaut has grown into a mammoth monster, swelling each day as it gorges on rooms and services, but has little left to burp over.

India Inc is on a roll, but the pace of growth has been unprecedented, and an industry that has often had the problem of over-supply, and has pleaded for concessions based on the poor showing in tourist arrivals, has now been stunned into stupefaction by a "problem of plenty".

It should make tourism industry professionals smile, but they're a worried lot, even as they put on appearances for the annual summit of the World Travel & Tourism Council in New Delhi this weekend.

The usual tourism jamboree of caparisoned elephants and evening galas is underway, but behind closed doors, they're already chanting the mantra of an industry that's doomed to fail.

For all its talk and bluster, the Indian tourism industry just hasn't been able to get its act right.

For years, it's grumbled about severely limited air seats into and within India. For years it's said the promotional material for selling India has been too poor.

For years it's made virtue out of griping for more. Like an ageing gigolo, it's now finding itself full of hype but with no capacity for performance. For decades, it has indulged itself with incestuous rounds of parties, bubblier than the liquor industry, more flamboyant than the fashion fraternity, endlessly engaging itself to the exception of a world outside.

And now it finds itself holding the bathwater, while the baby's escaped from its grasp.

There are many reasons for the sudden spurt in tourism volumes. Barely a few years ago, it had made a mockery of itself for daring to set targets of a million-plus tourists; this year it's concluded the fiscal with 3.37 million.

(It's another matter that almost 6 million Indian tourists fled overseas in the same period, but that's just as well -- there was simply no room for them back home!) "But let's not fool ourselves into believing our share of the world market has grown," points out Goyal.

"We're still only 0.4 per cent of world arrivals, up from 0.36 per cent." What makes it worse is that most South-east Asian nations get in the vicinity of 10 million tourists annually, and China now has 50 million for India's pathetic turnout.

And still, we don't have room for them. The Indian hotel industry has been caught napping, even as the Incredible India campaign built up a brand that suddenly became trendy in the West.

Civil Aviation Minister Praful Patel's diktat on open skies literally had the world pouring into India, and if trends continue, everything from private guest houses to people's homes may need to be pulled into use to accommodate the spillover.

No one's forecasting the likely growth just yet (they're busy counting the dollars), but the secretary general of the Federation of Hotels & Restaurants Association of India Shyam Suri says there's a clear requirement for 50,000 additional rooms in the classified category (India currently has 97,000 rooms) over the next three years.

Of course, this isn't likely to happen -- Delhi, which is to host the Commonwealth Games in 2010, still has to be allocate land sites for additional hotels.

Realistically," says Suri, "we'll probably get 20,000 new rooms because everybody and his uncle are currently building hotels, but it won't be enough."

Forecasting requirements, he hedges, then predicts that Delhi will need 5,000 additional rooms, Goa and Mumbai 3,000 each, Jaipur and Bangalore another 2,000 per destination, while cities like Chennai and Hyderabad have a requirement of 1,000 rooms each.

The spectre of shortage has already hit home. With the highest room tariffs in Asia -- and the poorest tourism infrastructure in the region, it might be added -- travel agents are wondering how long India's streak of luck will last.

The housefull signs aren't coming off the hotels despite summer having set in. At FHRAI, Suri's still making a case for state/private partnership with change in land use and tax incentives, but according to Arjun Sharma, chief mentor of Le Passage to India which has just announced German major TUI's 50 per cent stake in the agency's inbound business, "If you want to do something, you've got to make it happen."

And happen it will, he says, with international hotel chains that will tie-up with strong (and probably non-hotel) partners. "They'll deliver," he assures us, "but we'll have to lighten the bureaucracy a little. These partners will make sure that doors open to the industry majors in the country."

The reason the domestic industry failed to live up to its moment of reckoning, he says, is because of a sunset clause in taxation that allowed an earlier 50 per cent mandatory investment in tourism related activities to go puff.

"Therefore, there's been no fresh growth in capacity," he argues. "It's been the biggest deterrent to hotel investment." According to him, the integration of the Indian economy into the world economy was too rapid for the tourism industry to handle. "While business travel grew, the capacities didn't."

Newly anointed tourism secretary Ashok Mishra, in fact, suggests that the room requirement in the short term may be in the vicinity of 70,000, and that by 2007-10, India will require 1,60,000 rooms.

At a modest estimate, that will mean an expenditure of Rs 40,000 crore (Rs 400 billion), funds for which is not an issue according to Suri -- "the banks will lend the money".

What's probably important is having a minister as proactive as Patel has been in civil aviation. But Tourism Minister Renuka Chowdhury, despite all the hurry to get somewhere, seems to have achieved pretty little in the close to a year she's been in office.

With night bazaars, handicrafts and sorting out duty-free Scotch purchases as her chief agenda, she's failed to do anything concrete by way of policy, or to provide a trajectory of growth to match the civil aviation industry.

In fact, say industrywallahs, she'd be better off clearing the airports of touts, and cleaning up the monuments, instead of which she's been busy hogging the limelight on the kind of things that are best left to local councils and municipalities.

If anything, she should persuade local bodies to provide toilets at important tourist points ("Trust me, it's a big issue," warns hospitality consultant Charles Bennet.)

These, in fact, are issues the industry has debated ad nauseum at seminar after conference after debate -- any excuse to party? -- at their annual bashes.

Because of its inability to put up a single front, its many travel industry associations have made multiple representations, though the underlying message has usually been the same: visas on arrival for tourists, lowering of taxes, subsidies on land, cleanliness and hygiene at places of tourist importance, standardisation of taxes across states etc.

Invariably, these have been ignored by Parliamentarians who may have once benefitted from ITDC's presence in the industry, but failed to deliver, pleading lack of concurrence from the congress of ministries involved.

It's ironic, therefore, that the dismantling, almost, of ITDC should usher in the largest tourism opportunity for the country.

Yet, it's an opportunity that could just as likely go awry. Business travellers will continue to come as long as the economy is booming, but tourists tend to be sensitive to ambience and places.

And while they can accept even the exotica of poverty, the filth and filching of India could turn them off -- this time permanently. India's greed of wanting to make the most of what could be a year-round, year-on phenomenon, might just rob it of permanence.

For now, it's India's moment in the sun -- whether it gets the foreigners to bask in it, or chooses to crisp them to a burn, could determine the future course of a business estimated by WTTC to be worth Rs 1,84,600 crore (Rs 1864 billion) annually at current rates of opportunity.

Ranked to grow the fastest in the Pacific-Asia region, tourism might well be the panacea for India Inc's performance -- now if only there were more rooms available.

The traffic dispersal option

At this time, the last thing India needs is more marketing. In fact, says Navin Berry, co-ordinator, South Asia Travel & Tourism Exchange as he prepares to host the 12th annual buyer-seller mart later this month, "For once, the marketing teams can go on vacation."

However, he says the many ills that plague the tourism industry emanate from its inability to market itself when the need has presented itself in the past -- and will inevitably happen in future.

But hasn't the Incredible India campaign worked?

There's a tendency to confuse advertising budgets with marketing programmes. You need to promote not just your own products but also the destination.

Individual players can do this through cash or kind. For instance, post-9/11 we needed to sell stopovers, one-night free offers and so on. Incredible India is just a branding exercise, but marketing has still to take place.

Who should lead this marketing effort?

It can be anybody. It's only in the last 16 months that the industry has tangibly begun chasing volumes -- our supply has always been so little! And now the gateway cities are choked.

What's the solution?

To my mind, a radical shift would occur if 10 more carriers can be given rights to more cities in India -- Ahmedabad, Pune, Bhubaneswar, Nagpur, Lucknow, Jaipur Agra, and more flights to Kochi. These cities do have capacity, while we need to disperse capacity away from the current gateway cities.

What about the airports?

We need skeletal, efficient airports, not fancy terminals. Delhi airport, for instance, is quite efficient now. If we give rights for more flights to these cities, we'll have sorted out the situation by this summer for at least the next year-and-a-half.

But you can't promote India in summer.

It's not for anyone to say what's off-season or on-season. Simply promote the country at 45oC and let the tourist decide for himself whether or not he wants to come.

Who'll do the promotion?

Not another industry society or association, and not the Department of Tourism, which is already overworked. We need a full-time marketing department to do it and have to hire professionals. And for the ministry to contribute to the marketing effort, it must rid itself of its frustrating tender-raj.

Voices

  • "The Financial Times, UK, has 2-3 mentions of India daily, so suddenly it's fashionable to want to go there," Arjun Sharma, chief mentor, Le Passage to India.
  • "Because of the service tax in India, we're making it cheaper for Indian tourists to go to South-east Asia," Subhash Goyal, president, IATO.
  • "The problem is acute in Bangalore, Delhi is seeing supply falling short, but with 75-80 per cent occupancy we're pretty okay in Mumbai," Rajive Kaul, Taj Mahal Palace & Tower.
  • "The problem needs to be addressed on a war footing, as the prices have already skyrocketed due to shortage of accommodation," Jehangir Katgara, director, TCI.
Inputs by Arti Sharma in Mumbai


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