Hoteliers rush to meet demand for rooms

Sangeetha Chengappa Bangalore | Updated on July 15, 2014 Published on July 15, 2014

Eye metros and Tier 2 cities for further expansion

To cash in on the next big wave of growth, hoteliers are gearing up to launch new properties in metros and tier 2 cities across the country.

At present, one-third of over 1 lakh branded hotel rooms in the country fall under the mid-scale and upper mid-scale segments, catering largely to the business traveller. While branded mid-scale rooms are sold at ₹4,000-5,500 a night, upper mid-scale rooms are sold at ₹5,500-7,000.

“Major metros and towns across the country can easily accommodate 4,500-6,500 mid-scale rooms in the $100 per room night price range,” Vineet Verma, Executive Director, Brigade Hospitality Services Ltd, told Business Line. Explaining that demand for this segment is growing as a result of cost-cutting measures by companies, he said: “We have signed a deal with the InterContinental Hotel Group (IHG) to build 10 hotels under its mid-scale brand, Holiday Inn Express, and will open a total of 1,500 rooms in a phased manner over the next six years.”

The hotels will be owned by the Brigade Group and managed by IHG.

Rapid growth

Sarovar Hotels & Resorts, which has 64 operating hotels in the country, has 20 projects under development, which will be completed by 2016. Of these, 13 projects are in the mid-scale segment.

“The next few years will witness rapid growth in the mid-scale and upscale segments. To cater to demand in the mid-scale segment, we will have a total of 1,032 new rooms under our mid-scale brand, Sarovar Portico, which will open in phases from 2014 to 2016,” said Anil Madhok, Managing Director, Sarovar Hotels.

Interestingly, the hotels are coming up in Tier 2 locations such as Jalandhar, Gandhidham, Jaisalmer, Thekkady, Ajmer, Bekal, Amritsar, Bhavnagar, Rishikesh and Shantiniketan.

Rising affluence levels, emerging micro markets and the increasing propensity to travel offer great opportunities for Starwood’s upscale brands Aloft and Four Points by Sheraton, said Dilip Puri, MD India, Starwood Hotels & Resorts.

Both hotels sell at an average price point of ₹6,600 to ₹7,200 per room night.

“We are principally an upscale, upper upscale and luxury operator and see a lot of growth in the upscale segment in India, which is a sweet spot for us,” he said. To add to its current footprint of 1,894 upscale rooms in 12 operating hotels, Starwood has another 12 hotels with 1,856 rooms under development, to be ready by 2015.

Growing demand

Over 50 per cent of the supply of branded hotel rooms in the country over the next five years will come from mid-scale and upper mid-scale room segments, observed Achin Khanna, Managing Director of Consulting & Valuation practice at HVS, South Asia. “Growing demand from leisure travellers and corporate travellers is driving demand for these segments.”

Builder/developers are going ahead with these segments as the per-room cost is less expensive, ensuring quicker return on investment. Banks are also willing to lend more easily to developers when they are assured of quick returns, he pointed out.

Published on July 15, 2014
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