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80 new luxury hotels coming to Delhi, Mumbai

The hotel industry is booming with about 47 new hotels coming to Delhi in the next 5 years, reports Gurbir Singh.

india Updated: Oct 21, 2006 02:43 IST

To meet the needs of a rapidly growing economy and a sharp rise in domestic and international travel, there as many as 32 new branded hotels coming up in Mumbai some of them in the closed textile mills, and 47 in the Delhi NCR region over the next 5 years.

Even Pune has 25 branded hotels and 4,600 rooms under development. The countrywide hotel boom could add on a gargantuan 55,366 new hotel rooms – more than double the existing stock of 22,400.

Even if, as expected, 40 to 50 percent of these are under construction or achieve completion by December 2008, the country will have 20,000 to 25,000 new hotel rooms ranging from the luxury to the ‘budget’ class by the end of the decade.

Some of the international brands that are part of the hotel growth programme in Mumbai include Four Seasons, Mandarin Oriental, Sofotel, the Aman chain and Marriott, while in Delhi the big names are Crown Plaza, Novotel, Grand Hyatt and Leela Ventures.

Bangalore, on the other hand, will see three Shangri-La hotels, the Golden Tulip brand, a Novell and a Radisson, said Manav Thadani, MD of international hospitality consultancy firm HVS International.

Contrary to the popular perception that there is an oversupply situation for hotel rooms, market tracking by HVS International – the hospitality consultancy and appraisal firm – shows that despite a sharp rise in hotel rates, the all-India occupancy touched a new high of 71 per cent.

“Many cities were completely sold out on a number of weekday nights, resulting in hotels taking their rates up sharply. The largest increases were seen in the luxury segment,” says the report. This is despite hotel tariffs being hiked annually 20-25 per cent.

According to the HVS survey, Mumbai will add on 3,000 hotel rooms to the existing 7,400 while Delhi-NCR is likely to double its stock from the existing 7,000 to as many as 14,000 by 2008.

“HVS surveys indicate that the supply of hotel rooms is far too inadequate in Mumbai Chennai, Hyderabad and Goa,” said Manav Thadani, adding that: “Delhi, Jaipur and Bangalore however will have to exercise caution as there are too many proposed projects.”

Predictably the biggest growth expected is in the two IT capitals of Hyderabad and Bangalore that will see an increase in hotel supply rising five-fold and four-fold, respectively.

However, the Commonwealth Games in 2010 has powered the largest actual growth of hotel development in the Delhi-NCR region.

Gurgaon and neighbouring Noida will see the bulk of the development in the form of 47 new hotels and 10,800 rooms adding on.

The pressure of the Commonwealth Games has led to a perception of severe shortage in Delhi which in turn has pushed the Delhi Development Authority to auction sites that are mediocre, says the report.

“Due to the the hype in proposed hotel shortage a few recent auctions have gone at prices which do not justify hotels to be financially viable.”

The HVS International study identifies Goa as the favoured leisure destination offering big opportunities for investors in the hospitality business. Goa’s proposed hotel supply will rise 117 per cent but a low 18 percent will actually get developed, says the report.

The hotel boom, according to Thadani, is riding on a robust 8.4 percent growth of the economy that has opened up international business interaction and travel.

This is supported by a big growth in tourism and air travel. The number of domestic and international passengers has risen 15-fold to over 73 million in 2005-06 from 1970, while both domestic and international air traffic grew 17 percent over the previous year.

First Published: Oct 21, 2006 02:43 IST