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With ITC Grand Chola, Park Hyatt and Leela Palace gearing up for launch in the next couple of weeks, the city of Chennai is all set to add close to 1,000 new luxury rooms. This may, according to industry experts, lead to a marginal fall in room rates in the city for some time.
While the 600-key ITC Grand Chola is planning to launch 450 rooms in the first phase and Leela Palace 250 rooms (of 326), Park Hyatt will throw in another 100 (of its 201 rooms) initially. Incidentally, the General Managers of all three hotels are of French origin.
At a time when the economy is slowing and hotel occupancy levels are expected to take a beating, every single room added will have a three-pronged impact — on occupancy, rates and staff attrition, says T. Nataraajan, Honorary Secretary, South India Hotels and Restaurants Association (SIHRA), and CEO, GRT Hotels and Resorts, a hotel chain in the South.
Chennai currently has 15 five-star hotels with a little over 2,800 rooms operating at an average rate of Rs 6,500, and the occupancy levels are hovering around 65 per cent. With over 30 per cent more rooms getting added by the end of September or early October, most hotels may have to consider downward revision of rates and may need to go that extra mile to retain staff till things settle down, he says. As it is, hotel rooms in the city are sold at 30-45 per cent discounts on the published tariff.
Agreeing with this point of view, Pascal Dupuis, General Manager of Leela Palace in Chennai, says in the short term there would be price rationalisation. “However, in the long term, the industry would grow with additional inventory creating new demand,” he said.
Yann Gillet, General Manager, Park Hyatt, says the market will surely get tougher. But each of the brands will have its own strength that will drive the market. According to him, Park Hyatt’s F&B will be a major draw.
However, Philippe H. Charraudeau, Vice-President and General Manager, ITC Grand Chola, says there will be no price rationalisation as room rates in the city are already low.
The opening of three international brands will promote travel into the city from all over the world. “We are targeting domestic and international conferences, because of our MICE facilities, which promise to bring more business into the city than ever before,” he says.
According to him, the Chennai market has shown rapid growth over the last few years in almost all sectors, creating a large influx of both domestic and international travellers.
> ravikumar.ramanujam@thehindu.co.in
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