The Hindu Business Line : Hotel chains zeroing in on Kolkata to set up shop

More room Growth in IT, industry sets off demand for hotels. Proposed investment in the Rs 2,000-3,000 cr range (excluding land cost). Intercontinental Group, Hilton Hotels, Marriott Hotels keen to operate here.

THE GRAND Great Eastern Hotel - a heritage building - under reconstruction on Old Court House Street in Kolkata. The hotel, now owned by Bharat Hotels, is slated for reopening at the end of next year. — Ranabir Ray Choudhury

Kolkata June 1 Perhaps reflecting the economic resurgence in West Bengal, major international and national hotel chains are on a spree to set open shop in Kolkata.

According to industry estimates, in the next three to four years the city will have nearly 12-15 star hotels, mostly in the business category, with a combined capacity of 2,000-2,500 rooms.

A majority of these hotels are proposed to be set up in the eastern fringes of Kolkata, in the Rajarhat and New Town areas, because of the availability of large plots, proximity to Kolkata airport and the planned industrial units in the area. The proposed investment is envisaged in the range of Rs 2,000-3,000 crore excluding the cost of land, which is rising.

When asked, Dr G.D. Gautama, Principal Secretary, State Tourism Department, confirmed the development. Major international hotel chains, including the Intercontinental Group, Hilton Hotels and Marriott Hotels and Resorts, have shown an interest in starting operations in Kolkata. Besides, existing players like the Peerless Group and Radisson Group have also lined up expansion plans.

In the line

A couple of hotels are expected to come up on the plot owned by the Airport Hotel, which recently changed hands from the MBD Group to the Dharampal Satyapal (DS) Group. Likewise, the erstwhile Great Eastern Hotel, which has been taken over by the Bharat Hotels Group and rechristened the Grand Great Eastern, is being renovated and is expected to be operational from December 2008. Real estate developers, including Emmar MGF and Ambuja Realty, also have plans to set up hospitality projects in the city.

Kolkata currently has about 25 star hotels, including four luxury hotels, with nearly 1,500 rooms. Surprisingly, in the last four years, not a single luxury hotel project was developed in the city. "Land was mostly the issue. Besides, there was uncertainty about demand for the product," said Mr Shubhendu Saha, Senior Manager, Investment Advisory, DTZ India.

Growth effect

"West Bengal is experiencing growth in the IT and industrial sectors. With the scope of other businesses expanding in the State, the demand for hotels has inevitably gone up," Mr Akshay Kulkarni, National Director (Hospitality & Leisure), Knight Frank India, told Business Line.

However, industry players feel that the fresh supply of rooms is not likely to have any immediate impact on the average room rates (ARR) of city hotels, which registered nearly 20 per cent growth last year.

"ARR in Kolkata is low compared to other cities and will not be affected by the fresh supply of rooms," Mr Taljinder Singh, General Manager, Taj Bengal, said.

City hotels currently have an occupancy level of nearly 75-85 per cent, with majority business coming from the corporate and MICE (meetings, incentives, conventions and exhibitions) segments.