Hotel industry in India is set to grow rapidly to meet the rising demand. Indian Hotels is well-positioned to take advantage of this surge with its properties spread across geographies and spanning various price points. In this recent interview to Business Line at the company's newest property, Vivanta by Taj at Bekal, Kerala, Mr Raymond Bickson, Managing Director and CEO, Indian Hotels Company Limited, pointed out that Indian Hotels has been growing at rates much faster than its competitors.

Excerpts from the interview with Vanitha Srinivasan of Hindu business Line:

How are occupancy levels in the hotel industry today? How does Indian Hotels plan to take on the competition?

In 2003, India had 62,000 rooms, while in the beginning of 2011 there were 1,67,000. India has, at present, occupancy levels of 65-68 per cent. In the last 10 years, the levels have doubled. We are now sold out five days a week in a year.

India's hotel market has to grow to meet the increasing demand. We will need 400,000-500,000 rooms to meet this demand. To cite a few examples, China, which has 2.8 million rooms, plans to build 600,000 more; the US with 5 million rooms, plans to increase it by another 400,000.

Dubai has had 10 million tourists in the past year, and Singapore 11 million, compared to six million in India. The Indian Government expects the tourist traffic to increase to 15 million by 2020. We will probably hit the target before that. The country is still growing and, to accommodate that, we need more inventory.

In a new destination like Kerala, there is not much competition with just two players in the market. Some markets like Hyderabad, Pune, Delhi and Gurgaon are more saturated than others. Cities such as Mumbai, Delhi and Kolkata have several Central Business Districts sprouting around them, necessitating the need for more inventories.

As we are one of the oldest companies in the country, we have locations the new brands will not get. They can never get a Taj Mahal Mumbai or a Lutyens Delhi.

How have occupancy levels moved for Indian Hotels this year?

While the first and second quarters of 2011 were really good for Indian Hotels in terms of occupancy levels, the third quarter was rather flat. The fourth quarter has again been a busy one with improvement in the occupancy levels and average room rates compared with the previous year.

On the whole, the performance has been better than last year. The reason for this is that the western markets are recovering from the slowdown. Our hotels in the US have been growing; our numbers in 2012 are around the 2008 levels. Hyderabad has seen a drop in revenues per room.

Was that one-off or due to increase in room supply in the city?

In Hyderabad, we have properties only in Banjara and Begumpet. As of now, we do not have a hotel in the Hi-Tech city, though we plan a Ginger and a GVK Taj there soon.

With these properties in place, the revenues should regulate themselves in the next two-three years. What is of real concern is the market in Chennai. It has huge inventories in place like the Chola, New Leela, JW Marriot and Le Meridian. We need to get more aggressive.

Given this scenario, what are your expansion plans?

Expansion is mainly in the overseas luxury segment. In the last five years, we have opened hotels in Boston, New York, Sydney, San Francisco and Cape Town. We plan to open one in Morocco and one in Beijing this year.

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