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Ringing in hospitality in Bangalore

Anjana Chandramouly | Updated on September 10, 2011

Bangalore is all set to welcome Park Plaza Bengaluru, and European hospitality major Accor, that will open hotels in the IT hub of Outer Ring Road.



Thanks to a strong commercial real estate market, the Outer Ring Road, especially the stretch between Marathahalli and Sarjapur Ring Road, is witnessing significant interest from the hospitality industry. In what could be a proof of the potential for the sector in this stretch, two hotels would soon be opening their doors to their guests.

Come mid-September, Park Plaza Bengaluru, a joint venture between the US-based Carlson Group and Sarovar Group, would be officially opened, while European hospitality major Accor would open both its Novotel and Ibis brands — its upscale business hotel brand and international value hotel brand respectively — in this IT hub. Together, these hotels would throw open more than 750 keys by the end of 2011. Accor plans to formally launch its hotels by the end of this year.

The midscale and upscale section of the hospitality industry has the highest propensity to grow in India, “purely because consumers have become more price-sensitive and look at value for money. In addition, these brands also tend to have higher NOIs (Net Operating Incomes) that make them more lucrative to developers,” said Mr Akshay Kulkarni, Executive Director, Hospitality Services — South Asia, Cushman & Wakefield, a global real estate services firm.

CORPORATE CLIENTELE

As the locations suggest, the clientele would essentially be business travellers and the market mix would predominantly be corporate. These properties might see a slightly longer average stay than city hotels, due to their location. In terms of the overall market, because of the supply infusion, demand may take a little time to catch up, thereby seeing a drop in ARRs (Average Room Rate) and occupancy level, initially before these stabilise. “The corporate traveller segment is growing at a fast pace, and Accor will focus on the mid-market segment by opening various hotel brands in the city by 2012, that includes Ibis Bengaluru Techpark, Ibis Bengaluru Hosur Road, Novotel Bengaluru Techpark, Mercure Bicec and Formule 1 in Hosur Road and Whitefield,” Mr Jean-Michel Cassé, Senior Vice-President - Operations, Accor India, told Business Line.

In all, the group plans to open more than 700 keys in Bangalore this year, with the opening of two Ibis hotels and a Novotel. On the Outer Ring Road, Novotel will have a 215-room property, while Ibis would have 332 rooms.

Some of the MNCs that operate in the vicinity include Cisco, Accenture, Intel, JP Morgan, Honeywell, Symphony Services and Genpact. With very few upscale business hotels in the vicinity, hotels like Park Plaza Bengaluru, Novotel Bengaluru Tech Park and Ibis Bengaluru Tech Park hope to tap into this latent market and cash in on the early-mover advantage.

“All these companies were till now depending on hotels in Whitefield or the city centre. And corporate travellers don't want to commute long hours these days,” said Mr Alexander Schneider, General Manager, Park Plaza Bengaluru.

This five-star property, which has 234 rooms, will be officially opened in mid-September. According to him, much of the demand for these hotels would come from a five-km radius. The hotel is already operating 120 rooms (soft launch), and “we are enjoying 65 per cent occupancy currently,” he added. Rooms at this property would come at a rate of Rs 9,000-10,000 per night.

KEY LOCATION

Location is key for the Accor group, pointed out Mr Philip J. Logan, General Manager Delegate - Bangalore Hotels, Accor India. “Our objective is to provide prime location and consistent high quality service,” he said. The group's Bangalore properties would also hope to tap into the “huge European contingent, which will be a niche play for us,” he added. According to him, Bangalore has the largest European demand in the country. Rooms at Ibis Bengaluru Tech Park have been priced at an introductory rate of Rs 4,999 (excluding taxes).

With the state government stepping up its infrastructure development efforts on this stretch, real estate analysts point out that the social infrastructure in this zone would also keep pace. This stretch is expected to become a signal-free road by the end of 2011, with the completion of eight flyovers and two underpasses at various intersections between Hebbal and Silk Board junction, along the Outer Ring Road, being constructed by the Bangalore Development Authority. Besides, feeder roads are also being widened. All these would result in a better social infrastructure in this zone.

“We expect this area to have a total room inventory of over 1,200 rooms in the next 1-2 years,” said Mr Schneider. According to Mr Kulkarni, apart from these three hotels, approximately 600 other keys are in the signed/development stage on the Outer Ring Road. These hotels are likely to get completed by 2013. The development cost of these midscale and upscale brands is likely to be around Rs 60 lakh to Rs 75 lakh per key.

Published on September 10, 2011

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