April to September is the slack season for Indian hoteliers, but this year 7 out of 10 rooms are booked and a one-night stay in the big cities costs up to 75 percent more than the going rate across the United States.The industry suffered a global tourism recession in the aftermath of the Sept. 11 attacks, and took a fresh hit from December’s tsunami, but thanks to a strong economy and growth in business and leisure travel, a vigorous recovery is in hand.

Room prices look set to increase further, as demand outstrips a frenzy of new construction. “The outlook is very good. Occupancy has never been this high in the off-season, and rates are bound to go up because they haven’t come down during the off-season,” said Ajoy Misra, senior vice president of sales at Indian Hotels Ltd., India’s biggest independently-listed hotels firm.

Indian Hotels’ 8,600 rooms produce an average revenue of $62 per day, against $80 per room from the 12,000 rooms of Singapore’s Raffles Holdings dotted around Asia.

Raffles’ shares surged this week after it agreed to sell its entire hotel business to US investment firm Colony Capital for $859 million. The company cited strong asset values and active takeover activity in the buoyant sector.

India is at the centre of the boom.The nation will need an estimated 60,000-80,000 additional hotel rooms over the next five years according to industry data, with economy hotels and serviced apartments the most urgent requirement.Indian hotel firms are scrambling to expand, while international players are eyeing the market keenly.Indian Hotels, which operates the Taj luxury and business chain, plans to build 150 of its IndiOne economy hotels over five years for $328 million.India’s InterGlobe Enterprises and France’s Accor formed a joint venture in March to develop about 25 Ibis economy hotels across India and South Asia for more than $195 million.

But analysts see a squeeze developing in the meantime. “Over the next two years, we are going to see a consistent increase in occupancy, which will in return reflect on average room rates,” said Abhijeet Kundu at Angel Broking. “Only when more supply comes in will we see some pressure on room rates.” That growth could be hampered by the rising cost of urban real estate, cumbersome taxation laws and uncertainty of land ownership.Indian hotels have benefitted from a boom in business travel, helped by rapid growth in the outsourcing industry, lower air fares and reduced tensions with nuclear rival Pakistan.Business travellers make up more than 60 percent of occupancy in top-end hotels and nearly 80 percent in premium hotels in big cities.Tourism is playing its part too. Some 3.4 million foreign travellers visited in 2004, and that number is expected to rise 10 percent annually.

Trade body HVS International estimates occupancy in Indian hotels was at nearly 75 percent in the year to March 2005, up from 65 percent the previous year. Average room rates in the big cities were $126-$156, compared with only about $90 across the United States, according to data from Smith Travel Research. Average rates in Bombay rose by nearly a quarter in the year to March, and by 40 percent in Bangalore.

Hotels are also tapping corporate demand for extended-stay serviced apartments in big cities and a need for budget options in suburbs and places of pilgrimage, which has been met by unbranded offerings so far. Demand from niche markets such as the extended-stay segment will give hotels a base demand that ensures a certain minimum level of occupancy even over weekends and slow seasons, according to HVS.

Tech hub Bangalore is so squeezed that Infosys Technologies Ltd. is setting up a 500-room “residence”, complete with French restaurant, on its sprawling campus. “We were finding it difficult to get accommodation. In addition, the (commute) time is long and marked with traffic congestion. Hence it made sense,” an Infosys official said.

Rina CHANDRAN