Global hotel chains turning to India for expansion
Monday, 06 November 2006, 20:30 IST
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London: Global hotel chains are increasingly targeting booming emerging economies for expansion, with India and China set to become 'major battlefields' for future growth, according to a report by consultants Price Waterhouse Coopers (PWC). "As emerging markets turn into the growth engines of the 21st century, slower growth at home has led investors and hotel companies to pursue aggressive expansion abroad - China in particular has become one such battleground for operating system power," said the report. The Inter Continental Hotels group, which owns the Crowne Plaza and Holiday Inn brands, has, for instance, announced a goal of 125 hotels in China by 2008, PWC said. French hotel group Accor, owner of the Sofitel brand, plans to open 200,000 new rooms by 2010, with two-thirds of them in emerging markets like China, Turkey, Morocco and Algeria. Groups like Whitbread, Marriott and EasyGroup have also outlined ambitious plans for other emerging markets in the Middle East, North Africa, Turkey, Russia and Asia. The report highlighted India as another such potential growth area, noting that expansion by international chains would meet a severe supply shortfall. It said India would need an additional 100,000-125,000 rooms over a five-year horizon. The country is estimated to have just 92,000 hotel rooms, compared with 135,000 in the Chinese city of Shanghai alone, according to boutique investment group Dawnay, Day, which is investing 200 million pounds to develop a hotel chain in India. Robert Milburn, Britain's hospitality and leisure leader at Price Waterhouse Coopers LLP, said: "Traditionally, emerging markets have been seen as a competitive source of labour, services and natural resources but increasingly they represent new and important markets in their own right, especially for the travel and hotel industries. "Emerging markets now account for over half the world's population and have achieved an average economic growth rate of 7 percent in recent years." Many developed countries' economies are slowing, global competition is intense and growing pressures on operating margins have forced organisations to look to new markets for new customers and profitable growth. Milburn added: "India, for example, has an estimated demand for up to 125,000 hotel rooms over the next five years which more than doubles the existing capacity. It will be those companies that plan successfully now and get in early that will reap the rewards. "But there are many risks to consider. Out of every ten retailers entering Asia each year, seven are leaving so the hotel industry needs to heed this warning."
Source: IANS
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