Star hotels line up projects

Growing economy, soaring tourism prompt hospitality czars to seize the opportunity, reports Gurbir Singh.
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Published on Oct 21, 2006 04:43 AM IST
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None | By Gurbir Singh, Mumbai

To meet the needs of a rapidly growing economy and a sharp rise in domestic and international travel, as many as 32 new branded hotels are coming up in Mumbai—some of them in the closed textile mills—and 47 in the National Capital Region (NCR) in Delhi over the next five years. In Pune, at least 25 branded hotels with about 4,600 rooms are currently under construction.

The countrywide hotel boom could add on a gargantuan 55,366 new rooms—more than double the existing figure of 22,400. This data comes from HVS International, the respected international hospitality consultancy firm. The figures were released in Hong Kong on Friday.

If at least 40 to 50 per cent of these rooms are constructed by December 2008, the country will have 20,000-25,000 new hotel rooms ranging from luxury to budget categories.

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.

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, revealed Manav Thadani, managing director (MD) of HVS International.

Contrary to popular perception, there is an oversupply of hotel rooms. Market tracking by HVS International shows that despite a sharp rise in hotel rates, all-India occupancy figures touched a new high of 71 per cent.

“Many cities were completely sold out on a number of weeknights, resulting into a sharp rise in the rates. The highest increases were seen in the luxury segment,” says the report. This despite a 20-25 per cent annual hike in hotel tariffs.

According to the HVS survey, Mumbai will add 3,000 hotel rooms to the existing 7,400 while Delhi-NCR is likely to double its figure from the existing 7,000 to 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, “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 twin IT capitals of Hyderabad and Bangalore, which will see an increase in hotel supply rising five and four-fold, respectively.

However, the Commonwealth Games to be held 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. The pressure of the Commonwealth Games apparently led some hoteliers to believe that there was a severe shortage of hotels in Delhi. This in turn, has pushed the Delhi Development Authority (DDA) to auction mediocre sites, says the report.

The HVS International study identifies Goa as the most favoured leisure destination in India offering big opportunities for investors in hospitality business. Goa’s proposed hotel supply will rise 117 per cent but in actual terms, only 18 per cent will be developed, says the report.

While both domestic and international air traffic grew 17 per cent over the previous year, the number of domestic and international passengers has risen 15-fold to over 73 million in 2005-06 from 1970.

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