As Indian Tourism Rises, Ihg Plans 7,800-room Expansion

In an attempt to capitalize on India's growing prominence as a vacation destination, Intercontinental Hotels Group--which already has 11 hotels in the nation--plans to develop an additional 31 hotels in major metro areas and secondary cities across India over the next several years, adding a total of 7,800 rooms.

Three brands are represented in the pipeline: InterContinental Hotels and Resorts; Crowne Plaza Hotels & Resorts; and Holiday Inn Hotels and Resorts. The hotels will be located in India's tier I and tier II cities, such as New Delhi in the north, Bangalore and Chennai in the south; and Mumbai and Pune in the west.

In a statement on its India pipeline, IHG said its preferred business model will be to manage, rather than own, the hotels. Three-quarters of IHG's development pipeline in India are Holiday Inns, and the new hotels will carry new features of the relaunched brand.

IHG is one of a large number of international hotel companies that have targeted India as a significant growth market, as foreign visitation and domestic travel drives demand for hotel rooms. According to a 2008 report on India's hotel market from HVS International, tourism in India is projected to grow at an annual rate of just under 8 percent until 2017.

However, the surge in both domestic and foreign travel has greatly increased the price of hotel rooms in India, and room rates are among the highest in the world. The report predicts, however, that increased hotel development from both international and domestic hotel companies will increase room supply to meet this growing demand, thus lowering room rates.

Some of IHG's development partners in India are Amrapali Group, Riverbank Developers, Today Group, Emaar MGF, KGA Group, L&T Arun Excello Commercial Projects Ltd., and Brigade Group

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