According to the Ministry of Tourism in India, foreign tourist arrivals are expected to grow to 5 million by 2007 and to double that, reaching 10 million by 2010. Domestic tourism is also expected to increase by 15% to 20% over the next 5 years. The cost of an average room in a hotel, guest house or other accommodation, is expected to grow at the same pace over the next few years. The main reason for the rapid increase in room rates is because demand exceeds supply. Not enough rooms are available yet to cater to the increased demand created by the growing Indian economy.

The Current Scenario

The tourism and hospitality industry in India is in a boom time due to the surge in business travellers and the apparent interest in India as a tourist destination. Foreign tourist arrivals in India reached a record high of 3.92 million in 2005, this is an increase of almost 19%. This resulted in receipts amounting to $5.97 billion from international tourism.

According to the Federation of Hotel and Restaurant Association of India (FHRAI), only about 100,000 rooms with 1,800 hotels are available in the country. Five-star hotels make up 27% of available rooms, while four-star and three-star hotels account for 7.5% and 22% respectively. Occupancy rates within the industry throughout all of the India averaged 64% in 2004-05. Average room rates increased by 21% between 2005 and 2004, with the fastest increase coming from the 4-star and 5-star categories.

Potential for Local Investment

The scarcity of rooms in cities like Bangalore has resulted in room rates as high as $300 per night. Most traditional media sources, as well as the Indian government, focus on the opportunities for foreign investment in the hospitality sector in India, but BangaloreAccommodations.com provides services to help local Bangaloreans invest in their local hospitality sector. Guest houses, serviced apartments and other accommodations are quickly filling some of the gap created by the shortage of hotel room.

These individually operated hospitality businesses offer high quality, low cost alternatives to the large expensive five-star and four-star hotel chains. Guest houses, serviced apartments and other accommodations are quickly filling some of the gap created by the shortage of hotel room. Most of these alternative accommodations offer attractive decor, a home-like atmosphere, and amentities like gardens, pools, high-speed internet where guests came connect their own notebook computers, and many other services.