Tuesday, December 26, 2006

The great Indian hotel room shortage

Infosys, an Indian software giant with 66,000 employees worldwide, has built its own 500-room hotel next to its headquarters in Bangalore. By June, it expects to have 15,000 company-owned rooms across India — nearly an eighth as many rooms as the entire country has, and more than any Indian hotel chain.

Putting an employee up for a night at its Bangalore campus hotel costs Infosys $15, and the guest gets three-star treatment that would normally cost $150, by the company’s estimate.

“It’s much more efficient in India to do it yourself,” said T. V. Mohandas Pai, director of human resources at Infosys.

That's Anand Giridharadas reporting in the NYTimes. He offers several interesting comparisons and perspectives:

India offers only 110,000 hotel rooms. China has 10 times as many, and the United States 40 times as many. The New York metropolitan region alone has about as many rooms as all of India.

In Bangalore, rooms are so costly that traveling salespeople and other professionals often commute by air from as far as Mumbai, 620 miles away.

The high prices are all the more striking in a low-wage country like India. At a $500 rack rate for the five-star rooms favored by business travelers, a hotel employee earning minimum wage here would have to work about a year to pay for one night’s stay, versus about two and a half weeks’ work for an American earning minimum wage.


  1. Narasimhan said...

    Dear Abinandan,

    Without going into the details how the cost savings happen, isn't the industry doing what the government was doing earlier?

    I remember, in the early nineties every industry captain used to stay "the government has no business running hotels", but now an IT company runs its own hotels. Ofcourse now it is cost saving.

    With Regards

  2. Rahul Siddharthan said...

    Narasimhan -- surely you aren't suggesting that government travellers should stay at the Ashok, or that the government would save money by running PSU 5-star hotels? If these hotels were profitable, indeed you'd have a point, but they were bloated, shabby and loss-making (like nearly all government operations).

    Most government employees, when travelling, stay at guest houses at government-run institutions. These are inexpensive and quite adequate.

    As for Infosys, I don't know whether they're right about saving money by running their own hotel -- it's no different from running your own guesthouse, with somewhat lavish facilities. But here's the point: they're not using my tax money to do it. Therefore, why should I care?