India’s skyrocketing hotel prices figure at Berlin tourism show

By Manik Mehta, IANS

Berlin : For many Indian exhibitors at Berlin’s International Tourism Bourse (ITB), the world’s largest tourism show, their country’s skyrocketing hotel room prices could seriously hit the inbound leisure tourism traffic.

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India’s tourism industry, plagued for decades with inadequate infrastructure, seemed to have got some respite when the government, in the course of its liberalisation policy, announced that it would build up the infrastructure.

But infrastructure development has been painfully slow, as many exhibitors in Berlin said.

D.K. Machingal, chairman of the Kadappuram Beach Resort in Thrissur, Kerala, said a country as big and diverse as India had great potential to attract more than just five million tourists as it did in 2007, a negligible figure when compared to 20 million visitors and above recorded by Malaysia, Singapore and Thailand.

“Even smaller nations such as Malaysia, Thailand and Singapore attract more leisure tourists than India,” Machingal told IANS at the Berlin show.

A major reason for the low arrival numbers was the “high and totally unrealistic hotel prices,” according to Machingal who promotes traffic from German-speaking countries to his resort for Ayurveda treatment.

Machingal also said that promotion of tourism, a major source of revenue, should be assigned to an autonomous agency that should have tourism experts drawn from the private sector.

“One can learn from Singapore which is doing a great job promoting tourism to the city and seeks active participation of the private sector. The Indian government should concentrate on building up the infrastructure and create the urgently needed facilities rather than merely spending money on publicity and marketing,” he added.

Many Indian exhibitors, who described the Indian tourism ministry’s allocation of huge sums of money each year on marketing and publicity as the proverbial “horse-before-the-cart” kind of strategy, said money could be better spent if infrastructure, particularly hotels, were created rather than publicizing a destination which could not offer basic amenities such as
reasonably priced hotel rooms.

“You are wasting precious resources on publicity and marketing for tourists to come and have a good laugh at our country with poor infrastructure and hotel room capacity,” another Indian said.

Ashish Kishore, head of the hotel and rental operations of the Gurgaon-based, also called for an expeditious increase of hotel capacity.

Yatra.Com, which claims to have a monthly turnover of the equivalent of some $17.5 million, mainly from domestic tourism, has been contracting rooms in hotels to thwart the soaring prices.

“The government should check whether hotels provide amenities in accordance with the prices they charge,” he said. Many hotels, in his personal view, were imposing high prices simply because there was a demand from the corporate sector which could afford to pay such prices.

Ashwini Kakkar, executive vice chairman of Mumbai-based Mercury Travels Ltd, pointed to the growing disparity between India’s inbound and outbound traffic.

“While incoming traffic is around five million, the outbound traffic at seven million will continue to grow by leaps and bounds. The outbound traffic will grow rapidly while inbound traffic will face hurdles for some time until the hotel room crunch is eased,” Kakkar said in an interview.

This disparity – or “deficit” – between incoming and outgoing traffic will grow further in the years ahead because outbound traffic is growing much faster than inbound traffic.

“India is investing some $6.2 billion in new hotel properties. All the hotels are expected to be completed by the third quarter of 2010, increasing the number of hotel rooms from 110,000 to 260,000.

“Hotel prices in India, rising from $300 up for a night in five-star hotels should come down once there is abundance of rooms available,” Kakkar said.

The long-term impact of the high hotel prices, seen by many as an aberration of India’s tourism sector, could be severe on India’s inbound tourism as word of mouth, more effective than the ministry’s paid publicity in the print and broadcast media, gets around about India’s chronic hotel room shortage.

Kakkar described this year’s ITB as his company’s “best participation” because of the volume of enquiries he had received despite the fact that an ongoing transportation strike has very nearly crippled Berlin’s lifeline.

In Kakkar’s view, the huge Indian diaspora spread across the world was going to become more and more important in the future as a source of inbound tourism.

“The NRIs living in many countries are a rich source of inbound tourism. These people are keen to discover their roots and visit places in India from where their forefathers came,” he maintained.

Wellness was another promising segment inherent with good business potential. But like others, Kakkar also lamented the very high hotel prices.

“I have visited Malaysia and Thailand which have beautiful infrastructure. They have five-star deluxe hotels which are far cheaper than some of the three or four star hotels in India, let alone five-star properties whose prices are very high,” he said.

Besides the high-pitched presence of Jet Airways at Berlin, India’s other private airline Kingfisher was also present at the show.

“The German market is very important for us because many German visitors to India use our domestic flights,” said Arjun Dasgupta, the deputy general manager of Kingfisher.

Perhaps one of the interesting products marketed at the show was the Deccan Odyssee by the Maharashtra Tourism Development Corporation, which has created a parallel product to the successful Palace on Wheels luxury train of Rajasthan.

Deccan Odyssey, which has been operating since 2003 and offers good insights to the traveller within Maharashtra and Goa, has appointed general sales agents in a number of Western countries as well as in Asia.

“We also offer facilities for conferences in our train and can provide a large hall with a comfortable seating capacity for 40 or 45 participants,” said D.V. Dalvi, the operations officer of Deccan Odyssey.

“We can also organize fashion shows for an exclusive public in our train,” he added.