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Hospitality boom makes room for a better deal

india Updated: Apr 28, 2012 00:30 IST
Deevakar Anand
Deevakar Anand
Hindustan Times
Highlight Story

The month of April has seen quite a flutter in the hotel and hospitality circuit of the city.

The global slowdown notwithstanding, back-to-back budget and upscale projects of well-known hotel chains have taken off in the last few days.

Launch of Hilton’s DoubleTree at Golf Course Road, Accor’s Pullman Gurgaon Central Park on MG Road and Carlson Rezidor joining hands with Bestech Hospitality for an upscale 4-star hotel at Sector 88 — all these top names have pushed the hospitality quotient of the Millennium City quite a few notches up.

Of the 27 CLUs (change of land use) permissions granted for upscale 5-star hotels in Haryana in 2007, 24 CLUs were given for Gurgaon alone. Nine of them have already been thrown open to the public.

Gurgaon has nearly 5,000 three to five-star hotel rooms at present and according to assessments by industry experts, another 4,000 are set to be added in the next five years.

But a spurt in the number of hotels has increased competition and affected business. Average occupancy in Gurgaon hotels has decreased from nearly 60% in 2008 to 40-50% presently.

Akshay Kulkarni, South Asia regional director (hospitality), Cushman and Wakefield, however, feels that the Gurgaon hotel market hasn't tanked yet.

“Within Gurgaon, there are lots of micro-markets,” he said indicating that all categories of hotels have their own clientele.

“It takes time for new businesses to establish themselves and improve occupancy,” he added.

The average room tariffs of 3-5 star hotels have also come down from R10,000-R12,000 in 2008 to R5,000-R6,000 at present.

Manbeer Choudhary, president of the Hotels and Restaurants Association of Haryana, said that “a drop in occupancy and tariffs do not spell well for the industry” and pitches for favourable policy changes like giving infrastructure status to the hotel industry as this will imply cheaper loans from banks and other benefits.

Dharmendra Bhandari, managing director, Bestech Group, which is coming up with a mid-segment hotel with Carlson Rezidor, said “having more number of hotels will not impact respective occupancy levels since each has its own segment of customers to cater to and as far as moderating tariffs are concerned, they anyway need correction.”

“Unlike in South East Asian countries where a 5-star hotel room costs around R7,500, the rates range between R13,000-14,000 in Gurgaon and NCR,” he added.

The primary demand for hotel accommodation in Gurgaon comes from the business segment, given the fact that the city houses more than 250 Fortune 500-listed companies, is close to the airport, has lower office rentals and is a major transit for people travelling to cities like Delhi, Agra, Jaipur and Chandigarh.

Kapil Chopra, executive vice-president at the Oberoi Group, points out that in the long run, it is the regular clientele that keeps the hotel business flourishing. “It's about understanding realistic prospects and offering good services. Hoteliers who fail on any of these accounts, will have to suffer,” he said.