When terrorists attacked Mumbai in November 2008 they left nearly 200 dead, the Oberoi and Taj Mahal Palace hotels severely damaged and a nation shocked at its own vulnerability.
The tourism industry quickly rallied, but was it enough to convince the world India was safe? On a visit to Mumbai last week it certainly felt as though business was proceeding as usual – albeit with enhanced security.
A steady stream of guests passed through the air-conditioned lobby of the Taj Mahal Palace, which reopened at the end of December with 268 rooms in the main tower wing. The banqueting hall followed on February 1 and the rest of the palace wing will open in phases throughout the year.
In this atmosphere, hoteliers are confident they can ride out the double whammy of recession and fears over security. The Indian government plans to double international arrivals to 10 million in the next two years and at the same time is trying to rectify what it sees as a shortfall of 150,000 hotel rooms.
The Commonwealth Games in Delhi in 2010 are a catalyst for the growth and tax breaks have been introduced for new hotel projects and family-run bed and breakfasts in the capital and heritage cities.
Vivek Nair – managing director of Leela Hotels and a former president of the Federation of Hotel and Restaurant Associations of India – outlined an ambitious $500 million expansion plan for the year ahead.
Last month the group opened a property at Gurgaon – Delhi’s northern business district. This month the Leela Palace opens in Udaipur, with Chennai to follow in the autumn and New Delhi in 2010 – a total of 1,099 rooms and, at Gurgaon, 90 serviced apartments. There are further plans for hotels in Hyderabad, Pune, Agra and Jaipur.
From key business cities such as Mumbai and Bangalore to the ‘golden triangle’ of Delhi, Jaipur and Agra, the expansion will allow Leela to keep international arrivals within the group, said Nair.
He acknowledged the economic downturn was as much of a problem as the perceived security threats, but Leela is not the only chain to meet the challenge with an expansion project.
In Mumbai alone, Sofitel, Westin and Oberoi all have properties under construction. The Marriott Renaissance is adding another 300 rooms to its existing 250, bringing a total of 1,500 new rooms to the city in the next two years.
“Conditions are tough but even if the market dips for two or even three years, it will be back. Look at Bangalore – development there took place directly after September 11 2001 and it has done exceptionally well,” he said.
The technological hub in the south of the country – dubbed India’s Silicon Valley – is certainly a boom town. Computer manufacturers and software companies such as Dell, Intel, IBM and Microsoft have offices there, as do Goldman Sachs, Rolls-Royce and countless others.
It’s also the home of India’s flourishing call centre industry. A share of Bangalore’s meetings, incentives, conferences and events market, then, could be seen as a licence to print money.
Flight capacity is another strength, especially with the entry of Kingfisher Airlines into the market. Better known in the UK for its beer, international flights are the latest venture from entrepreneur Dr Vijay Mallya, often referred to as the Richard Branson of India.
In September 2008, Kingfisher launched a Heathrow-Bangalore service and in January this year added Heathrow-Mumbai, competing with Air India, British Airways, Virgin Atlantic and Jet Airways.
UK and Europe general manager Rick Saggar agreed it was a tough time to launch an international route, but pointed out India, along with China, was one of the few world economies that was actually growing.
Load factors were “meeting expectations,” he said, although he would not be drawn on figures. “We expected to take market share off other carriers and we’ve done that.”
Such rapid expansion is indicative of the new India: not just a country of snake charmers and elephants, but an entrepreneurial nation in love with modernity.
Setting the scene
The ascent of Bangalore as a technological centre – no longer just a low-grade producer of circuit boards but the very latest Intel chips – is a source of national pride.
Visit now and you might sense a nation in transition, with ever-present poverty the only smudge on its gleaming, new office towers.
Sometimes the interpretation of a Western trend gets lost in translation – a nightclub called Bling wouldn’t exactly reek of sophistication in London; in Mumbai, it has queues out the door at the weekend.
In their appetite for luxury, however, India’s young professionals are a match for anyone in the west.
Street markets may be more photogenic and tourist friendly, but air-conditioned malls are now more popular with well-heeled locals.
Hoteliers, then, are steeling themselves for tough times, but not panicking. Leela Bangalore general manager Charles Foucault said it would be irresponsible to start slashing room rates.
He said: “We had a tough December – UK and US business was down by about half –but if you start selling rooms at $100 a night, try going back to $300.
“You might steal a few rooms from the competition, but getting up again when you’ve been on your back for 40 days? Ouch.”
Mumbai security update
Post-November 26 2008, India is on high alert. Expect thorough searches at airports and urban centres. Security measures include:
- Metal detectors and bag scanners at major hotels
- All cars and passengers are searched on arrival
- Thorough passport and visa checks – ensure your passport is up to date and your visa is correct
- Limits on photography in some public spaces – Mumbai’s Victoria Terminus, for example, was one of the terror targets
- Bags will be sealed on departure with cable ties to prevent reopening after check-in.
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