Overseas hospitality chains eyeing Pune, Ahmedabad

For long, the growth of hospitality industry in India's western region has revolved only around Mumbai— obvious reason being it is the financial capital of India, and requires quality accommodation for the large business traveller community that visits the city for work. But as businesses diversify to different locations and geographies, the demand for hotel rooms is also expanding to other cities in the region.

Ahmedabad and Pune are the latest buzz for most Indian and overseas hospitality chains which are looking to get a foothold in the corporate travel hotel accommodation space in India's western region.

AHMEDABAD

Ahmedabad, the capital of Gujarat, is an industrial base for sectors such as chemicals, textiles, pharmaceuticals and food processing industries accounting for more than 21 per cent of the total factories and employing around 18 per cent of the total workers in the state of Gujarat, making it the largest contributors towards the Gross Domestic Product (GDP) of the state, says a report from Knight Frank India.

The infrastructure and industrial development in and around Ahmedabad is encouraging and the city is said to become a major commercial hub in the western region after Mumbai.

It has more than 11 Special Economic Zones, 10 industrial parks and 12 industrial estates at various stages of implementation. Additionally, the Delhi Mumbai Industrial Corridor (DMIC) which will pass through Ahmedabad is expected to attract huge amount of investment over the next 10 years.

PUNE

In the last few decades, the main economic drivers of Pune's growth have been manufacturing and education sector. However, over the last 10 years, information technology (IT) has gained momentum with the city making it one of the fastest developing IT destinations in India.

From attracting ancillary engineering industries in the 1960s, today, Pune has witnessed the entry of auto-majors such as Tata Motors, Bajaj Auto and Bharat Forge Ltd. Manufacturing majors such as Kinetic Engineering, Force Motors, Daimler Chrysler, and Cummins Engines have a set up in the city, says the Knight Frank report.

At present, the automotive and the IT sectors are the driving force behind Pune's rapidly growing hospitality sector. The hospitality sector of Pune thrives primarily upon the business and corporate travellers. Developments in the corporate and the IT sector have propelled many new brands to venture in the hospitality sector in the past decade and especially in the last 3 to 5 years. In Pune, there are around 20 hotels in the upscale, midscale and economy category hotels that sum up to a total room inventory of 2,277.

A total of 15 new hotels consisting of 3,502 rooms will become operational in Pune by 2013 across the upscale, midscale and economy segment of hotels.

MUMBAI

Mumbai by the dint of being the financial capital of India and housing numerous national and international financial service providers has always been and continues to be the first choice for a business traveller. However, the traditional business centres in the city like Nariman Point, Cuffe Parade etc are no longer the only custodians of all economic activity. Lack of land and escalating real estate prices have forced business conglomerates to shift their bases to suburban areas like Andheri, Navi Mumbai, Goregaon etc.

With the seat of economic activity shifting, naturally the hospitality industry in the city is also acting accordingly. The emergence of cities within city has led to most fresh development in the hotels taking place in the suburbs of Mumbai.

At present, there are 69 operational hotels in Mumbai (3-star and above) and a total of 9,852 rooms, says Knight Frank India's report. The western suburbs of Mumbai house a variety of prominent upscale hotels.

GOA

Goa one of the leading tourist destinations in the world handles around 12 per cent of all foreign tourist arrivals to India and is one of the most popular holiday destinations for European travellers. Its attractive beaches, places of worship and world heritage architecture makes it “India's richest state, with a per capita GDP of two and a half times that of the country, as a whole”, says Knight Frank India report. It occupies a prominent position as India's premier iron-ore exporting port, besides tourism, other sectors like shipping, mining and fishing have been key economic drivers for Goa.

North Goa, owing to its proximity to the state capital Panaji, has well developed infrastructure, corporate houses and is frequented by tourists, while South Goa has experienced gradual and regulated developments.

This has led to major hospitality brands like the Taj, the Leela, the Marriot and the Intercontinental make an entry along prime stretches of Vainguinim, Miramar, Sinquerim, Candolim, Calangute and Baga in the north, and Arossim, Majorda, Varca and Raj Baga Beach in the south, it adds.

CONCLUSION

Terror attacks of November 2008 coupled with global economic recession had hit the Indian hospitality industry hard. The occupancies and average room rates tanked leading to enormous pressure on the profitability of hotel companies, as business conglomerates cut down international work related travel as part of cost cutting exercise leading to a dip in overseas business travellers into India. At domestic level too, firms restricted business travelling which further reduced the number of corporate travellers.

However, in the last 8-12 months, the hospitality sector has shown signs of revival. The supply of rooms which had got stuck, in the last two years again due to global financial crisis, is now expected to enter the market in the next three years. And the western region too, will benefit from this scenario.

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