FDI Inflows to Hotel and Tourism

100% FDI is permitted in Hotels and Tourism under the automatic route. Travel and Tourism is a USD 32 billion industry in India with a contribution to 5.3 percent of India GDP. Many international hotel chains are setting up hotels in India and many international tour operators are establishing operations from India in recent years.

A Short Note on Hotel and Tourism Industry in India-

The hotel and tourism industry is growing faster for the past few years, bringing in large revenues through foreign as well as domestic tourists in various parts of the country.

There was a major surge in inbound tourism in India in 2006. There was a double-digit rise in the arrival of foreign tourists to India in the same year. The major rise in the tourist arrivals in India has led to an increase in India's share in world arrivals from 0.37 percent in 2001 to 0.53 percent in 2006. Tourism industry contributes to around 5.9 percent of India GDP and provides employment to around 41.8 million people in the country.

FDI Inflows to Hotels and Tourism in India-

The prosperous growth in tourism industry has led to a massive upsurge in the hotel industry in India with regard to the occupancy ratios and average room rates. The occupancy ratio has been estimated to around 75-80 percent and the average increase in room mates accounted for 22.25 percent as has been calculated during July-September 2007. Large scale global chains like the Hilton, Accor, Marriott International, Berggruen Hotels, Cabana Hotels, Premier Travel Inn (PTI) and InterContinental Hotels group have planned to make a large-scale investment in the hotel industry in India, which would add 65, 000 additional rooms in various hotels in India. With various modes of foreign direct investment in the hotel industry in India, it is likely to touch USD 11.41 billion within the coming two years. Besides, India will possess 40 international hotel brands by 2011. The US-based HVS International has decided to invest in the hotel industry in India along with large-scale global players like Ashford Hospitality Trust and IFA Hotels & Resorts who are also planning partnership to make investments.

Outbound tourists from India have also increased in recent years, with more and more Indians undertaking foreign trips. Many International tour operators have started operations from India tap the growing market of foreign tours from India. This has also led to increased Foreign Direct Investments (FDI) in the hotels and tourism industry in India.

Foreign Exchange Earnings from Hotels and Tourism in India

The foreign tourist arrivals have witnessed a growth of 12.4 percent during the first ten months of 2007 and touched 3.89 million as against 3.46 million during the same period in 2006. With the advent of foreign tourists, the foreign exchange earnings also witnessed a growth of 25.6 percent during January-October 2007 and reached USD 6.32 billion as against USD 5.03 billion during January-October 2006. The foreign exchange earnings grew by 14.6 percent in 2006 to reach USD 6.56 billion as against USD 5.73 billion in 2005.

Hotel Leela Venture

Last Updated on 4/23/2011