'In one-and-half year average rate of hotel room will double,' says Lemon Tree Hotels' boss Patanjali Keswani
“My view is that in the next three to four years, till more supply comes in, you're going to have a period where every hotel company in India is going to make some crazy money,” he said while speaking at the Business Today Budget Roundtable 2023 held in New Delhi.
- Feb 6, 2023,
- Updated Feb 6, 2023 7:41 PM IST
Patanjali Keswani, CMD, Lemon Tree Hotels, is extremely bullish on the hospitality sector.
“My view is that in the next three to four years, till more supply comes in, you're going to have a period where every hotel company in India is going to make some crazy money,” he said while speaking at the Business Today Budget Roundtable 2023 held in New Delhi, as part of a panel titled Push for Industrial Growth.
He added that unless there was another Black Swan event, the next 4-5 years, the hotel industry would be in an upstate. He said in the hotel industry in a period of 10 years you make 80 per cent of your profits in two years, a bit like the commodity cycle. “And that's come finally after 14 years.”
Keswani added that growth will come from retail. “Nobody in their right mind wants corporate because they buy large amounts of inventory and give very low rates,” he said. On the other hand, retail protects expands your brand. “Retail customers don’t shift while corporate can turn around and say I now have a contract with someone else.”
With the services sector growing, hospitality benefits, he noted. “The hotel industry grows 1.5 times the services sector,” he added.
Supply, he said, will grow at roughly 3-4 per cent over the next five years as it takes that much time to get ready. “So, what I see happening is a 5 per cent demand growth and a 3 per cent supply growth and for every two per cent difference in favour of demand the hotel prices will increase. It’s like the oil industry, every one per cent increase in demand results in 10 per cent increase in price. So, if I project one and a half years from now, the average cost of hotel room will be doubled,” he said.
Patanjali Keswani, CMD, Lemon Tree Hotels, is extremely bullish on the hospitality sector.
“My view is that in the next three to four years, till more supply comes in, you're going to have a period where every hotel company in India is going to make some crazy money,” he said while speaking at the Business Today Budget Roundtable 2023 held in New Delhi, as part of a panel titled Push for Industrial Growth.
He added that unless there was another Black Swan event, the next 4-5 years, the hotel industry would be in an upstate. He said in the hotel industry in a period of 10 years you make 80 per cent of your profits in two years, a bit like the commodity cycle. “And that's come finally after 14 years.”
Keswani added that growth will come from retail. “Nobody in their right mind wants corporate because they buy large amounts of inventory and give very low rates,” he said. On the other hand, retail protects expands your brand. “Retail customers don’t shift while corporate can turn around and say I now have a contract with someone else.”
With the services sector growing, hospitality benefits, he noted. “The hotel industry grows 1.5 times the services sector,” he added.
Supply, he said, will grow at roughly 3-4 per cent over the next five years as it takes that much time to get ready. “So, what I see happening is a 5 per cent demand growth and a 3 per cent supply growth and for every two per cent difference in favour of demand the hotel prices will increase. It’s like the oil industry, every one per cent increase in demand results in 10 per cent increase in price. So, if I project one and a half years from now, the average cost of hotel room will be doubled,” he said.