‘I see opportunity in state capitals and in tier-II and III cities’

At the moment, rates are on the higher side in all major cities. At the same time, I would say that our average rate is lower in Agra than it should be, and higher in the NCR. That’s because more corporate clients are available in the NCR than in Agra, and demand from leisure travellers has not grown at the same speed.

• What proportion of demand comes from business and from leisure travellers?

That depends on the location. In the NCR, about 80 per cent business comes from corporate travellers.

• Are the rates charged by the Indian star-category hotels comparable with the international ones?

Rates in the five-star category here range between $200 and $300. If you compare rates in Delhi and Mumbai with those in New York, London and Tokyo, then we are not expensive. But if you compare our prices to the ones prevailing in other Asian markets, then our rates are at least 20 per cent higher.

• By when can one expect rentals to stabilise?

By 2012. By then, most of the inventory that is planned would come into the market.

• Will there be enough rooms in the NCR for the Commonwealth Games?

If the entire inventory that is planned gets built, then we should be able to meet the requirement. I would like to add that a lot of people are building hotels because of the tax incentives offered by the Government. Once all the supply comes in, I expect rental rates to slump around 2011-12. If the economy continues to grow at 7-8 per cent, then demand will once again match supply in a couple of years.

• For the hospitality sector, where does opportunity lie in the next 3-5 years?

We are losing a lot of revenue from domestic tourists because people prefer to holiday abroad. So we need to create the hospitality infrastructure to cater to this segment. Once you have laid a strong foundation, you can then take advantage of the growth in the number of foreign tourists. I also see opportunity in state capitals and in tier II and tier III cities.

• Why do you say so?

As business and industrialisation grow in the states, people will need to travel to state capitals. A lot of hotel rooms will be required there.

Another area of opportunity is new tourist destinations that are being created in India. Kerala and Himachal Pradesh have emerged as important destinations. We need to grow tourism beyond the Golden Triangle, and for that it’s very important to develop hotel infrastructure in new destinations.

• What are the difficulties in developing hotels in India?

A big impediment is the high cost of land. You can’t build budget hotels on such expensive land. The Government has to find a way to offer incentives to budget hotels — a major growth area — either by making land available at cheaper prices, or by offering higher floor space index (FSI).

• Both cost and availability of manpower are becoming an issue for the hospitality industry.

Yes, we are losing a lot of manpower to the retail industry. In the last two years, wage cost within the hotel industry has gone up by 60-70 per cent.

• How is the industry gearing up to meet this challenge?

Every major hospitality chain is either setting up its own training school, or tying up with a university. We have tied up with Brooks University for a four-year degree program. About 300 students are doing this course at IIMT, Gurgaon.