4,000 more rooms for B’lore at Rs 1,500-cr investment

4,000 more rooms for B’lore at Rs 1,500-cr investment

The Economic Times

ALONG with aviation, hospitality business in India is another draw for big ticket investments. India’s hotspot in this space, Bangalore, is likely to witness near tripling of its threefive star room inventory in the next three-four years at an estimated investment of Rs 1,200-1,500 crore, according to trade sources.

According to industry estimates, around 3,500-4,000 rooms are likely to be infused into the market in the mid-term to meet the demand which continues to outstrip supply by a wide margin. The race to add more capacity in Bangalore is not surprising considering it promises the best yield in the market. It continued with its winning streak this February to top India’s average room realisation (ARR) chart in the five-star space at Rs 12,000. Compare this with Delhi which is a distant second at Rs 7,000-7,100 and Mumbai perched at a very modest Rs 5,200-5,300.

For most of 2004, Bangalore hotels rocked at an average room occupancy of 80% compared to 70% plus in Delhi and Mumbai (north and south put together). And it was not just the four-five stars but the three stars in India’s silicon capital which also clocked big numbers.
Bangalore’s capacity expansion is a mix of rooms being added on existing locations plus brand new properties. Hotels such as Leela Kempinski, Taj Westend, Grand Ashok and Royal Orchid are seeking to expand capacity in the present locations. Others like ITC Sheraton (Lavelle Road), Taj Residency and Atria (both Whitefield), The Oberoi (near Hebbal Lake), The Leela and Grand Ashok (both near Devanahalli Airport) are trying to put up brand new hotels in the city.

The list of first time entrants to Bangalore include JW Marriott, Radisson, Hyatt Regency, Microtel, Novotel, Courtyard, Hilton, Ista Lido and ITC Fortune Park which are said to be lining up a clutch of projects. American budget chain Microtel, promoted by the Pritzker family (owners of Hyatt Hotels), is in fact looking at putting up four hotels in Bangalore. ABS Hotels, which holds its franchise for India, says one hotel will come near the new Devanahalli Airport while the other will be located near the International Tech Park in Whitefield.

Bangalore’s room demand is driven by tech corporates who are ready to cough up the top dollar. While the hotel prices are closer to some of the more expensive international destinations, MNCs are unmindful as the overall advantage of Bangalore still outnumbers the accommodation costs. Besides, there is no alternative in the absence of quality rooms. The five-star inventory, including the two spa resorts, is placed at 1,500-1,600, while three-four stars bring in another 900-1,000 rooms to the pool. The Leela has been able to maximise its yields in this lopsided market clocking a record ARR of Rs 16,200 in February, followed closely by Taj Westend and at some distance by ITC Windsor.