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Indian travelers expected to spend $136 billion by 2021

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The Indian traveler has come of age, spending approximately $94 billion in 2018, on around 2 billion domestic and international trips, helping the Indian travel and tourism industry achieve unprecedented scale.

The momentum is expected to continue and the industry will grow at a 13 percent CAGR to $136 billion by 2021, according to a report, ‘How Does India Travel’. The report outlines how India spends on travel, the influence of online channels in their purchase journey and potential growth opportunities for travel businesses till 2021.

Deep diving into the $136 billion spends, the report cites a 12 percent growth in transportation ($50 billion), 13 percent growth in lodging ($21 billion) and consumption, which includes spends on shopping, recreation and food, to grow at 13 percent ($65 billion) over the next three years. Additionally, as more people come online, smartphone penetration improves and use of digital payments goes up, the report estimates that Indian travelers will spend an additional $24 billion on online travel bookings over the next three years, a growth from 25 percent in 2018 to 35 percent in 2021.

Online is a significant source of research

Elucidating the planning journey of Indian travelers, both for business and leisure, the report calls out five phases of a customer journey – Interest, Research, Booking, Experience and Sharing. The report states that during key research-heavy phase of interest, research and experience, digital plays a pivotal role with over 86 percent of consumers being influenced by online channels. During this phase, travelers spend their maximum time on search, travel tour provider websites, price comparison websites, and travel articles. Online video too plays a significant role with 21 percent of travelers being influenced by this platform. In the booking and sharing phase, the report states that nearly 60 percent of customers book transport and lodging online, and over 50 percent share feedback online with social media being the dominant platform.

Talking about the market opportunities for online travel players, Vikas Agnihotri, Country Director – Sales, Google India said, “New users perceive that online channels are geared towards the more frequent flyers and experience-oriented travellers; and existing travelers research online but the lack of trust in payments and booking experience make them end up booking offline. If travel players tap these online users through personalised marketing, messaging and travel plans, they can further augment online travel bookings. This can be done by adopting digital technologies to influence customers early in the journey and moving from one-time engagement to ongoing relationships to have a positive impact.”

“There is a perception amongst consumers that online channels are geared towards premium customers, along with a marked distrust around payment and pricing terms. It is imperative for businesses to address these concerns in order to effectively tap into the growing base of users.” Arpan Sheth, partner Bain & Company said.

Decoding the Indian travelers

The report further identified the five cohorts of travelers in India, across business and leisure travel, and categorised each against their online research behavior:

Frequent flyers: Nearly 70 percent of them booked online, cumulatively spent $17 billion in 2018. They make their choices based on convenience, availability, brand preference and past experiences.

Budget business traveler: 86 percent of them researched online whereas only 60 percent book online, cumulatively spent $20 billion in 2018. This cohort makes their decisions based on cost of travel, availability and consultation amongst their personal business network.

Experience-oriented traveler: Around 70 percent of their bookings were done online and cumulatively spent $22 billion in 2018. They extensively research both online and offline for ‘authentic’ experiences and convenience of options; display high loyalty towards preferred brand of airlines or hotels and actively share experiences.

Budget group traveler: 90 percent researched online and 55 percent booked online, cumulatively spent $29 billion in 2018. They make multiple decision-makers in the process and take the final decisions based on minimal cost.

Occasional travel visiting friends/relatives: 92 percent researched online but only 60 percent booked online, spent $6 billion in 2018. They maximize family convenience within a budget and believe online terms and conditions are restrictive.

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India: Jet Airways’ demise leads to spike in airfares, massive hotel cancellations

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The abrupt shutdown of Jet Airways operations has left Indian tourism industry a worried lot as it has led to an average 25 percent spike in airfares across the sectors leading to massive hotel cancellations, says industry experts.

Some key sectors like Mumbai-Hyderabad, Mumbai-Delhi and Delhi-Mumbai have seen the fares flying by 62 percent, 52 percent and 49 percent, while the Bengaluru-Delhi sector has had the lowest impact with a 10 percent surge shortly before and soon after the grounding of Jet.

Financially struggling for months, Jet Airways decided to call it quits from Wednesday night, leaving 22,000 jobs at stake and inconveniencing lakhs of passengers both domestic as well as international as Jet was the single largest airline out of and into the country.

“The impact of grounding of Jet Airways is not only restricted to the airlines sector as tourism has taken a severe beating due to the massive surge in airfares during the peak demand season. The impact is unlikely to fade away anytime soon and may continue into the rest of the year,” Travel Agents Association of India (TAAI) president Sunil Kumar said Friday.

He said, both the domestic as well as international travel and related sectors are affected as travelers are cancelling their hotel bookings as airfares have surged by over 25 percent on average.

Leading tour operator Cox & Kings’ Karan Anand said the shuttering of Jet has upset the travel plans of many who have booked on Jet.

“This is the peak travel season and the airfares for the next 10-12 days are up by at least 25 percent as the capacity has fallen massively dissuading last minute travelers,” he added.

However, online travel aggregator Easemyyrip.com co- founder Nishant Pitti tried to downplay the impact saying airfares normally fluctuate as the aviation industry is always unpredictable.

“It is true that passengers are in panic now but going forward there will not be much impact as other airlines like Spicejet and Indigo are adding more planes into their fleet which will help balance demand-supply gap,” he said.

Train booking and discovery platform Confirmtkt cofounder Sripad Vaidya said due to the flight charges going up, there is a huge surge in people opting for trains and buses.

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Hard Rock International announces Hard Rock Hotel Bangalore

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With a portfolio spanning across 75 countries, including 27 unique hotel properties with 37 projects in different phases of development, Hard Rock International continues intensifying its international presence with the announcement of Hard Rock Hotel Bangalore, slated to open in Fall 2020. Joining Hard Rock Hotel Goa, the second Hard Rock Hotel in India will be located in the bustling city of Bangalore, known as the Silicon Valley of India.

“The city of Bangalore is full of culture and beauty and is the perfect location for our second property in India,” said Todd Hricko, senior vice president and head of global hotel development for Hard Rock International. “We are pleased to work with Convention Hotels India Private Limited who share in our vision, integrity and dedication to quality.”

Hard Rock Hotel Bangalore will feature Hard Rock’s signature musical design, highlighting the roots of the local culture with one-of-a-kind memorabilia placed throughout the 210-room hotel. The property, which will be licensed by Hard Rock International and managed by Convention Hotels India Private Limited, will also feature an array of signature brand offerings.

“We are so excited to be a part of bringing the Hard Rock brand to Bangalore,” said Prataap Wadhwa, managing director of Convention Hotels India Private Limited. “This project will provide an economically invigorating addition to the area, creating new jobs and catering to the IT professionals in the city.”

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How does India travel? Let us count the 94 billion ways

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Bain & Company and Google India are together launching a report on “How Does India Travel.” According to the report, the Indian traveler has come of age, spending approximately $94 billion in 2018 on around 2 billion domestic and international trips. This has helped the Indian travel and tourism industry achieve unprecedented scale, and the momentum is expected to continue with the industry growing at a 13 percent CAGR to $136 billion by 2021, according to a report.

Fueled by digital, Indian travelers are expected to spend an additional $24 billion on online travel bookings over the next 3 years. The report outlines how India spends on travel, the influence of online channels in their purchase journey, and potential growth opportunities for travel businesses until 2021.

Deep diving into the $136 billion spends, the report cites a 12 percent growth in transportation ($50 billion), 13 percent growth in lodging ($21 billion) and consumption, which includes spends on shopping, recreation and food, to grow at 13 percent ($65 billion) over the next three years. Additionally, as more people come online, smartphone penetration improves and use of digital payments goes up, the report estimates that Indian travelers will spend an additional $24 billion on online travel bookings over the next three years, a growth from 25 percent in 2018 to 35 percent in 2021.

Online is a significant source of research

Elucidating the planning journey of Indian travelers, both for business and leisure, the report calls out five phases of a customer journey – Interest, Research, Booking, Experience and Sharing.  The report states that during key research-heavy phase of interest, research and experience, digital plays a pivotal role with over 86 percent of consumers being influenced by online channels. During this phase, travelers spend their maximum time on search, travel tour provider websites, price comparison websites, and travel articles. Online video too plays a significant role with 21 percent of travelers being influenced by this platform. In the booking and sharing phase, the report states that nearly 60 percent of customers book transport and lodging online, and over 50 percent share feedback online with social media being the dominant platform.

Talking about the market opportunities for online travel players, Vikas Agnihotri, Country Director – Sales, Google India said, “New users perceive that online channels are geared towards the more frequent flyers and experience-oriented travelers; and existing travelers research online but the lack of trust in payments and booking experience make them end up booking offline. If travel players tap these online users through personalized marketing, messaging and travel plans, they can further augment online travel bookings. This can be done by adopting digital technologies to influence customers early in the journey and moving from one-time engagement to ongoing relationships to have a positive impact.”

“There is a perception amongst consumers that online channels are geared towards premium customers, along with a marked distrust around payment and pricing terms. It is imperative for businesses to address these concerns in order to effectively tap into the growing base of users.” Arpan Sheth, partner Bain & Company said.

Decoding the Indian travelers

The report further identified the five cohorts of travelers in India, across business and leisure travel, and categorized each against their online research behavior:

  • Frequent flyers: Nearly 70 percent of them booked online, cumulatively spent $17 billion in 2018. They make their choices based on convenience, availability, brand preference and past experiences.
  • Budget business traveler: 86 percent of them researched online whereas only 60 percent book online, cumulatively spent $20 billion in 2018. This cohort makes their decisions based on cost of travel, availability and consultation amongst their personal business network.
  • Experience-oriented traveler: Around 70 percent of their bookings were done online. and cumulatively spent $22 billion in 2018. They extensively research both online and offline for ‘authentic’ experiences and convenience of options; display high loyalty towards preferred brand of airlines or hotels and actively share experiences.
  • Budget group traveler: 90 percent researched online and 55 percent booked online, cumulatively spent $29 billion in 2018. They make multiple decision-makers in the process and take the final decisions based on minimal cost.
  • Occasional travel visiting friends/relatives: 92 percent researched online but only 60 percent booked online, spent $6 billion in 2018. They maximize family convenience within a budget and believe online terms and conditions are restrictive.

However, challenges remain in meeting the expectations of these travelers. Customers perceive online channels geared towards premium cohorts (frequent flyer and experience-oriented traveler), while mass cohorts, with $55 billion in spending, remain underpenetrated. There are about 160 million non-transacting active Internet users in India with only 5 percent of online travelers from Tier-2 or Tier-3 cities. There is a significant (20 percent) difference between the booking rates of premium cohorts and mass cohorts, the latter being also dissatisfied with online channels (~33 percent satisfied) vs. premium cohorts (~42 percent). The second challenge is in penetrating existing users who exhibit a marked distrust in use of online channels to make bookings, especially around payment and pricing terms and booking experience compared with offline channels. Consequently, their online usage drops between the research (>86 percent online influence) and booking phases (~40 percent offline bookings).

How travel businesses need to adapt to the needs of online consumers

The report cites five major shifts that marketers need to make to market to the online travelers – First, alleviate consumer concerns by improving the booking and payment experience to build a trusted brand and increase adoption. Second, they need to address the negative customer perception issues by mass customization to drive higher share in the segment. They also need to utilize consumer technology to penetrate mass segments (standardize, enable sharing), reach non-transactors (build offline presence), and create new user access.  Moreover, they need to find innovative and frugal ways to package the experience to increase both adoption and retention.  Finally, they need to create a robust digital backend to adapt to customer needs across the purchase journey.

“The contribution of travel and tourism’s spend in India has reached developed market levels, from 6.7percent of GDP in 2013 to 9.4 percent in 2018. This growth, combined with a rapidly growing internet user base and adoption of online bookings will lead to $24 billion in incremental revenues through online channels by 2021. In order to benefit from this trend, businesses need to actively increase new user adoption and increase penetration in the existing user base across the purchase journey.” Joydeep Bhattacharya, partner Bain & Company said.

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IndiGo airline under safety audit by India’s civil aviation regulator

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India’s civil aviation regulator will conduct a special safety audit of the low-cost carrier IndiGo following concerns about the snag-ridden Pratt and Whitney (P&W) engines, which power the airline’s A320 Neo aircraft.

While an annual audit of IndiGo was due in April, a special Directorate-General of Civil Aviation (DGCA) review will also be done of the airline’s operations and engineering departments.

“We confirm that there is currently a DGCA audit of IndiGo, which is combined with the annual main base audit. IndiGo has received a limited number of show-cause notices. IndiGo has responded accordingly and we can only comment on this matter after we have a discussion with the DGCA,” the airline said in a statement.

An airline source, however, dismissed reports that show-cause notices had been served on two senior officials of the airline.

Indian carriers IndiGo and GoAir have been inducting the P&W engine-powered A320 Neo aircraft since 2016. The former has 72 of these planes and the latter has 30.

Problems in engine

There have been problems in different parts of the engine, including the combustion chamber, knife edge seal, lift-off seal, front hub corrosion and heating of oil near lift-off seal leading to smoke on board a flight, apart from vibration during climb.

The engine-maker maintains that the problems are taking place as the engines are new into operations.

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India’s Jet Airways halts all international and domestic operations

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One of India’s major airlines, Jet Airways, has announced it is temporarily halting flight operations on Wednesday after the carrier failed to secure the “critical interim funding” necessary for the company to remain afloat.

Jet Airways will operate the last flight on Wednesday as it cancels all its international and domestic flights, the airline said in a statement. It explained that it cannot afford to pay for fuel or other critical services to keep the operations going, as all its months-long attempts to seek both interim and long-term funding were in vain.

“Unfortunately, despite its very best efforts, the airline has been left with no other choice today but to go ahead with a temporary suspension of flight operations,” the statement reads.

Earlier this month, the airline’s fleet was significantly reduced to just five aircraft and it was forced to suspend international operations. On Wednesday, the Jet Airways website listed only 37 domestic flights and had an additional nine-page list of canceled flights, saying that the schedule was impacted by “operational reasons.”

The troubled company failed to receive a stop-gap loan of about $217 million from its lenders as part of a rescue deal agreed in late March, Reuters earlier reported.

“Bankers did not want to go for a piecemeal approach which would keep the carrier flying for a few days and then again risk having Jet come back for more interim funding,” an unnamed bank source in the negotiations on the debt resolution process told the agency.

The uncertainty over the crucial funding crashed Jet Airways stock on Tuesday, with shares plunging around 20 percent.

Employees have been hit hardest by the crisis in the company and have reportedly not been paid in months. The pilots even called on the State Bank of India (SBI) to release the necessary funds and appealed to India’s Prime Minister Narendra Modi to save 20,000 jobs which may be lost in the shutdown.

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How is Germany doing on its goal of 2 million Indian tourists?

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At an annual media meeting today, April 16, in Delhi, India, Romit Theophilus, Director of Marketing & Sales Office India for the German National Tourist Office (GNTO), said it was hoping for growth of 6 to 8 percent.

The ultimate goal of the GNTO is to increase its tally of Indian tourists to 2 million a year by 2030, up from the present figure of 921,123 visitors overnight in 2018, making for growth of 8.1 percent.

The famous Bauhaus art school, which opened in Weimar in 1919, is celebrating 100 years this year, and steps are being taken to promote this art, design, and architecture as part of this tourism drive. 2020 will see the 250th anniversary of birth of Beethoven.

The German National Tourist Office is promoting the concept of affordable hospitality, stressing that tourists can enjoy leisure and other activities at costs cheaper than other European nations. The focus on a summer cities campaign is on the urban city, romance, holidays on the water, sightseeing, as well as art and culture.

Jasper Wieck, Deputy Head of Mission for the German Embassy, added a new dimension, pointing out that the two countries, India and Germany, have emotional links and mutual affection dating back centuries. He recalled that Tagore had also played a part in Indo-German links and that the number of students from India in Germany had doubled in the last 5 years, standing at 17,500. In addition, yoga is being practiced by a significant number of Germans and studies on India are being offered in over 16 universities and institutes.

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India’s tea gardens beckon tourists

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India, one of the top tea producers in the world, is experimenting with tea tourism in view of the growing interest shown by tourists to visit tea plantations and tea factories. Ambling through a sprawling tea plantation with greenery all around in the early hours of the day watching a group of local women plucking two leaves and a bud at a fast pace with their nimble hands and collecting them into baskets slung on their shoulders is a winning sight for tourists. India now leads to give tea-buffs and tourists a closer understanding of tea by organizing tea tourism at places like Assam, Darjeeling (West Bengal), Nilgiris belt in Tamil Nadu, and a few pockets in Kerala and Karnataka.

Tea tourism is defined as tourism that is motivated by an interest in the history, culture, traditions and consumption of tea. Estate bungalows amidst sweeping acres of manicured tea plantations have now been converted into tourist accommodations. Not just staying in the midst of tea gardens, tea tourists  are taken to a tea factory, where they get to experience how the fresh green leaves are brought into the tea factory for withering to the rolling, drying and shifting stages, grading and packaging and followed by  a tea-tasting session where they could sip some of the finest tea that is grown in that area.

A view of Tea plucking in a tea garden of Assam

Assam in the lead for tea tourism

The first name that crops up in mind for tea tourism is Assam, the largest tea producing region in India.  The Assam Tea Tourism Festival held at Jorhat every year is a big hit with tourists. Staying in a rustic  colonial-era planter’s bungalow has its own charm. Home to more than 800 tea estates in the state,  where amidst luxury and serenity one can drift back in time to days of that elegant colonial aristocracy.  The B & A Limited operates through seven quality Tea Estates in the India’s largest tea growing region of Assam. The Guwahati Tea Action Centre, one of the busiest tea trading facilities in the world, is a place not to be missed. Others  include Corramore Tea Estate, Teloijan Tea Estate and Khongea Tea Estate besides a host of others.

Another major development which is currently in progress is the tourist-friendly makeover of  world’s oldest and biggest tea research center at Tocklai (Assam), with edifices  that each have a story to tell. A.K. Barooah, director of the Tea Research Association, said recently that the Tocklai Guest House, a heritage building, was home to  British tea planters A tea museum will be built with suitable dioramas, models and displays. He said Tocklai can tie-up with other tea tourism enterprises like Kaziranga Golf Resort (Bura Sahib bungalow), Banyan Grove and Thengal Manor bungalow in Jorhat district, the Mancotta chang bungalow and Chowkidingee chang bungalow situated in the heart of Dibrugarh town.”

West Bengal is also fast catching up with Assam in promoting tea tourism. Its Chief Minister Mamata Banerjee last month mentioned that her government will consider tea tourism to benefit tea plantations in the state.

She said, “We have allocated more than Rs. 1,000 crore for the welfare of tea garden workers since 2011. Tea tourism is also under our consideration.”

The WB state government permits one acre of tea estates to be used for tourism purposes. Currently there are 87 operational tea gardens in Darjeeling district covering an aggregated area of about 19,000 hectares under tea plantation. Darjeeling surrounded by tea orchards that produce the famous light-colored and aromatic Darjeeling Tea has the right ingredients for tea tourism. Makaibari Tea Estate and Homestay in Kurseong, 37 kms from Darjeeling, is one of the top tea producing gardens in the world. In the vicinity of  Darjeeling is the Happy valley Tea Estate, one of the highest tea gardens in the world. Raj-era estates located in some of the most scenic destinations in India — the rolling Himalayan foothills of Darjeeling and Dooars beckon tourists. Some famous estates include Glenburn Tea Estate, Sourenee Tea Estate, Singtom Tea Estate and Resort, Ambootia Tea Garden, Barnesbeg Tea Estate and  Castleton Tea Estate among others. Goodricke Group Ltd. is offering tourism opportunities in one of its tea estates in  Darjeeling where it has five gardens.

South India also catching up fast

Besides the Northeast belt, in south it is Tamil Nadu which is home to some of the largest tea-growing belts in the country. Nilgiris in Tamil Nadu is the largest tea producing district in South India, and its tea is  renowned for its aroma and flavor. With Tamil Nadu producing  65% of tea in South India spanning an area of 65,000 hectares, the Nilgiris area offers great scope for tea tourism. Valparai, a quaint hill station located about 100 km from Coimbatore, is teeming with tea plantations. Billimalai Tea Estate at Glendale, about 10 kilometers from Coonoor, is a perfect place to experience  how tea is processed.

Munnar in Kerala is rustic belle of hill stations where acres and acres of tea plantations feast one’s eyes. A visit to country’s first Tea Museum at Nallathanni Estate is highly recommended at it narrates the history of tea production in the region. The Kundala Tea Plantation in Munnar offers tourists the tea making process in great detail. Tea Sanctuary here is home to refurbished vintage colonial style bungalows amidst misty tea plantations. Considered the  highest altitude tea plantation in the world, Kolukkumalai, near Munnar, is known for  preserving the British heritage in tea-making at the factory here. Wayanad in Kalpatta district produces substantial amount of tea whose lush green tea gardens are a feast for the sore eyes. The Wayanad Tea County in the midst  of the picturesque  395 acre estate, many  vantage viewpoints, and trekking routes is a better option.

In Karnataka, Coorg, and  the Baba Budan Hills in Chickmagalur are tea-producing regions, but tea tourism is yet to catch here.

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Indian Hotels Company launches new hotel brand

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The Indian Hotels Company Limited (IHCL), South Asia’s largest hospitality company, today, announced the launch of a new hotel brand – “SeleQtions”, which is a collection of named and distinctive properties.

SeleQtions was launched with 12 hotels across the country. The vision for the brand is to celebrate individuality, by offering unique experiences through landmark hotels that have their own legacy and charm.

Speaking on the occasion, Puneet Chhatwal, Managing Director and Chief Executive Officer, IHCL said, “SeleQtions will allow IHCL to cater to a broader audience of travelers who prefer staying in hotels with a distinctive character. SeleQtions also includes hotels that have a slice of history, defining location or a differentiated theme. We believe the brand has immense potential to grow.”

The 12 hotels in the first phase include properties present in seven key lodging markets of India: President, Mumbai; Ambassador, New Delhi; The Connaught, New Delhi; Blue Diamond, Pune; Cidade de Goa; Tajview, Agra and Devi Ratn, Jaipur. The other hotels are Pratap Mahal Ajmer; Savoy, Ooty; Gateway Coonoor; Gateway Chikmagalur and Gateway Varkala.

For those hotels which are independent – IHCL offers its robust infrastructure including global reservation systems, Taj InnerCircle loyalty program and sales and marketing support.

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Pride Group of Hotels unveils Pride Resort and Convention Centre Rajkot

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The Pride Group of Hotels, which manages 14 Hotels and Resorts across India announced the inclusion of “Pride Resort and Convention Centre Rajkot” as the 15th property under the Pride Umbrella. The resort is conveniently located on Rataiya Road, Ishwariya, Rajkot. It is well connected through Rail, Road and Air to all major cities. Pride Resort and Convention Centre Rajkot will bring in a True Indian Touch in the Hospitality Industry in the City and will soon become the preferred venue for leisure & business travelers, conventions and events.

Announcing the launch, SP Jain, Managing Director, Pride Hotels Ltd. says, “We are extremely pleased to unveil Pride Resort and Convention Centre at Rajkot, our 15th property in the country. This is also our third property in the State of Gujarat. We are extremely upbeat on the growth prospects in the region having successfully managed our properties in Ahmedabad and Vadodara. The city of Rajkot has seen steady growth in inflow of travelers from India and across the world. Pride Resort Rajkot with its imposing ambience, banqueting& conferencing facilities and host of hospitality services will appeal to guests looking for the ideal destination for Business Meets, MICE, Theme Weddings and Leisure”.

Located in a serene ambience surrounded by lush greenery, Pride Resort and Convention Centre Rajkot offers 99 spacious rooms that encompass 31 deluxe rooms, 31 Executive rooms, 31 Premium rooms and 6 suite rooms.

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