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AHMEDABAD.

As we head into the new financial year, the verdict is pretty much that some of the more established markets are now over saturated, and the focus is on developing tertiary markets and hitherto unexplored leisure destinations. Punam Mohandas speaks to a section of hoteliers for their views.

India is indisputably one of the most preferred travel destinations for international visitors, both leisure and business.

The hospitality sector alone is expected to see investments to the tune of over US$11 billion in the next two-to-three years; by 2011, it is estimated that 40 international brands will have presence in the country.

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Approximately 55,000 new rooms are anticipated to become operational by 2013 across the markets of Ahmedabad, Bengaluru, Chennai, Chandigarh, Goa, Hyderabad, Indore, Jaipur, Kolkata, Mangalore, Mumbai, Mysore, Nasik, New Delhi/NCR and Pune.

However, due to the recession, the consolidated performance of these cities indicate an AOR of 71% and ARR of approximately Rs6,800 in 2007, which declined to 66% and Rs6,700 respectively in 2008, with a stabilised AOR of 66% and a further decline in ARR to Rs6,600 respectively in 2009.

Some of these cities are already facing a saturation crunch, with supply outweighing demand. According to LN Sharma, director and chief executive officer, Golden Jubilee Hotels Ltd who is building the Trident and Oberoi hotels in Hyderabad, NCR no longer holds potential for the next few years at least.

“There will be an oversupply situation in NCR, except Delhi the main capital region, where business is likely to improve in the next five years,” he said. Preferring Bengaluru over Hyderabad, Sharma added that no other location for IT business is as successful as Bengaluru, despite its infrastructure bottlenecks.

Having said that, it is also an undeniable fact that India lags way behind other global cities when it comes to room supply. “On an all-India basis, we have less than 85,000 branded hotel rooms compared to 120,000 rooms in New York City alone,” agrees Priyakant Amin, director, Convention Hotels India (CHI), who is building five hotels under the Holiday Inn, Hyatt Place and Hilton Garden brands, in southern locations such as Goa, Bengaluru, Coimbatore and Mysore.
 

Starwood, which saw aggressive development in the last year, has its focus firmly on introducing luxury brands such as the W and St Regis into the cities of New Delhi, Mumbai and Bengaluru. “Our strategy is basically to penetrate into the primary markets where the brands are not represented yet,” says Nikhil Manchharam, vice president, acquisitions and development, Starwood Asia Pacific Hotels and Resorts.

Says Sanjay Sethi, managing director and CEO, Berggruen Hotels: “I think Kolkata, Hyderabad and Ahmedabad, still have scope for additional inventory in the branded budget/mid segment space. The current analysis includes Keys inventory coming into Bengaluru, Hyderabad and Pune. Therefore, we are looking at opportunities in Kolkata and Ahmedabad.

Markets are tougher and will remain to be so for a couple of years. Hotel companies will need to find innovative methods to remain competitive; the ability to be price competitive will be the differentiator between successful hotels and those that are not.”

Offering a counter view to the above, Harsh Varma, regional vice president India, Dusit Bird Hotels, thinks that the cities of Bengaluru, Kolkata, Hyderabad, Pune and Ahmedabad are not so hot, although he hopes Pune will bounce back, as Mumbai is unable to keep up with the next round of industrial development and Maharashtra will not allow itself to lose out.