The "Incredible India" has emerged as a huge opportunity for real estate investors and hoteliers across all segments including, luxury and heritage, mid-market and budget hotels. However, the demand-supply mismatch continues to be of the order of 150,000 hotel rooms across the country, with the planned investment falling far short of the demand. Coupled with the unprecedented growth in tourism in the last 3-4 years, the huge shortfall has enabled the hotels in the country to register impressive performance numbers across all performance parameters such as occupancy, Average Room Rates (ARR) and Revenue per Available Room (RevPAR).
 
Growth Drivers And Inhibitors
Having been ranked among the top five tourist destinations in the world by several reputed agencies, India is creating a lot of impact on the global tourist map. There has been a dramatic increase in the number of both international as well as domestic tourista over the last few years.Increase in tourism is directly linked with the increase in the demand for hotel rooms. The other emerging growth factors are the growing IT/ITeS and BPO sector, growth in domestic as well as international connectivity,emergence of SEZs and hotel-specific zones, and improved transportation, communication and power infrastructure in the country.
 
Investment Opportunities in Hotel Infrastucture
Facing a severe demand-supply mismatch, the Indian hotel and hospitality sector offers tremendous opportunities in all categories of hotels.Industry estimates peg the immediate requirementat close to 150,000 rooms, which would required huge investments to the tune of over USD-17 billion.However, the planned investments as of date fall short of the demand..

Many international hotel chains have shown interest in the Indian market.Indian companies such as the Taj,Oberoi, Sarovar etc. have shown interest in setting up budget hotels, while international ones like Intercontinental, Marriott, Hilton etc. are also looking at bringing in their low budget brands.

Delhi is expected to register the maximum capacity addition of approximately 10,000 rooms on account of the huge demand due to the 2010 commonwealth games,followed by Mumbai,Banglore and Hyderabad.
 
Opportunity Knocks
The aviation industry in India will drive future tourism growth, with the continued increase of flights and options for travel. But the question remains, can the country's accommodation meet the increasing expectations of the global traveller? Hotel supply must catch up with demand whilst creating a healthier business mix. Mid-market properties especially need to respond to the growing middle class. But even as the hotel industry joins the airlines in responding to India's thriving economy and driving future tourism growth - infrastructure challenges could still prevent India from grasping its full tourism potential.

Encouragingly major government initiatives such as 'Incredible India' and tax policy revision are well underway. With the growth of the economy expected to continue, and considering the size and dynamics of the domestic market, Indian hotel performance will be exciting to watch over the coming years. Future performance should reflect a country of vast opportunities, especially as mid-market products develop to satisfy the country's thriving domestic market.
 
Infrastructure Growth
The Demand for hotels is driven by development plans leading to high-quality infrastructure to provide easy travel options. The country is enhancing its infrastructure for tourism,including basic infrastructure components ,such as airports, railways, roads, waterways, electricity, and water supply. Master plans are being implemented at state level to develop them further in the cities and towns. Hotel infrastructure is being developed mainly through public-private-partnership(PPP) to bring about a radical changes in the facilities and infrastructure in the high-growth regions. This indicates a new development in the manner the government is focusing on making the hotel industry more prosperous.
 
Investment Opportunities
Indian hotel & hospitality sector offers a number of opportunities primarily in the 3 star & 4 star categories as well as the premium segment. According to a market estimate by HVS International, as many as 40 hotel brands are expected to enter the Indian hotel industry in the next 5-7years, and a number of them will consider setting-up budget units.

India is facing competition from neighbouring tourist destinations such as China & Singapore.China & Singapore are the major hubs in the Pan-Asia Supply Chain and, hence, are likely to remain at the top of the list for business travel. China has the largest hotel development projects in the region, next to US. Singapore alone has over 48,000 rooms-nearly 50 percent of India's total capacity.However, India scores over both China & Singapore in terms of per tourist expenditure figures in the world.