For Mumbai, growth is a problem

Eight per cent GDP growth has left India’s financial capital with infrastructural problems that are making it hard going for tourism, reports CLARK KELLY
The Taj Mahal Mumbai

When it comes to India’s financial capital, Mumbai, the only tourism story worth telling is one of an infrastructure struggling to keep pace with runaway growth.

After several years of leaping along at a clip of eight per cent GDP growth, India’s infrastructure is finding it hard to keep pace – and in the end, particularly with tourism, this inability may lose it both friends and business.
The WTTC rates India as one of the five fastest growing tourism economies in the world, and this is clearly evident by the number of returning expatriates who complain about flying time to Mumbai increasing by half an hour or more – because increased congestion forced their aircraft to circle the city’s airport. And when your flight is only supposed to take three hours – to cover a distance such as Dubai to Mumbai – half an hour is a very long time indeed.
Part of this is to do with the afore-mentioned runaway growth, but a lot has to do with India tourism’s having stepped up its marketing and promotional efforts over the last few years. Last year, for example, the country was partner country at ITB Berlin and its Incredible India campaign was deemed successful enough to win a World Travel Award.
Most of it, though, stems largely from the growth that has seen industries develop at a pace unheard of in the pre-liberalisation era.
One such problem is a boom in domestic airlines, most notably in the budget sector. This means Indians are flying a lot more than they used to, and with ever increasing frequency. The rise of the cross-city jet set was reported extensively a decade ago, with Mumbai socialites thinking nothing of a two hour long flight each way for an evening out in Delhi; today the country’s 300 million strong middle class feels the same.
Over the last 18 months, the privately operated Jet Airways launched flights from Mumbai and Delhi to several international destinations, including Bahrain, Kuwait, Muscat and Doha. It is the first of several private domestic operators looking to break into international skies, further adding to congestion around the key gateway cities.
Tourist arrival numbers into Bollywood city are unavailable, but Maharashtra, the federal state Mumbai is the capital of, registered 1.65 million tourists in 2006, the year for which figures are available. According to the Maharashtra Tourism Development Corporation, Mumbai is the gateway for about 35 per cent of all foreign tourists visiting India.
Although India only gets five million foreign tourists (this was in 2007, as compared to 4.5 million in 2006), the country expects to welcome 10 million international visitors by 2010. To handle this the country will require at least another 100,000 hotel rooms (India counts a whopping 46 million domestic tourists).
A severe shortage of rooms means that hotels in Mumbai are the seventh most expensive in the world – and rising further.
According to a Smith Travel report released last month, hotel room rates across India in 2007 were up 48 per cent on the previous year, and a staggering 69 per cent in Mumbai. (However, a report by the UK’s Hogg Robinson Group estimated that rates in Mumbai had only grown 37 per cent in 2007).
The entire country only has about 100,000 hotel rooms, the Smith report added – this is about the same number as New York City.  At the end of 2006, Mumbai had just 7,940 rooms in 76 hotels with occupancy levels hovering at the 80 per cent mark, according to the American Express 2008 Asia Pacific Corporate Hotel Rate Projections and Market Forecast, which put Mumbai, Delhi and Bangalore among 21 cities in the Asia-Pacific region where demand for hotel rooms will continue to outstrip availability.
In Mumbai, there is expected to be a requirement for at least 30 per cent more rooms than are available at present.
Consequently, room rates are expected to grow at somewhere near the same levels in 2008, and the American Express study predicted that even corporate negotiated room rates in the city would climb by a sharp 40 per cent.
So what is the city – and the country – doing to ease the infrastructural nightmare?
In 2007, Mumbai’s Chhatrapati Shivaji International Airport catered to a total of 25.2 million passengers, both domestic and international. These numbers are expected to touch 28 million by 2010. Following privatisation of the airport in 2006, a modernisation plan was put into place to bring the gateway abreast of international standards. As part of the master plan, a brand-new terminal equipped the latest technology has been proposed.
With the upgrade, CSIA is expected to be able to handle passenger traffic of 40 million passengers when complete in 2010.
Meanwhile, a second airport has been proposed at Navi Mumbai (formerly New Bombay) and a technical feasibility report is expected this August. The first phase of the Rs100 billion ($2.5 billion) project, cleared by the country’s Union Cabinet last May, is expected to be ready by the end of 2012.
New hotels are also being built (see box), and a likely new law could mean easier finance for the hotel industry. Reuters recently quoted hospitality insiders as saying that expectations were running high that the hotel industry would get infrastructure status in the Indian budget – set to be announced as TTN went to press – and this would help the sector match surging room demand through easier financing.
Mumbai, as one of five Indian ports, is also being developed as a cruise tourism hub, so as to encourage high end tourism in the country. The ministry of tourism is to extend assistance for procurement of cruise vessels or boats for promotion of this new tourism initiative.
While all this action may indeed ease Mumbai’s tourism woes, for the moment at least, the city’s troubles are set to continue.