Hotel development poised for leap

By Our Staff Reporter

CHENNAI, DEC. 14. An estimated $700 million is expected to be injected into the Indian hotel industry over the next three to four years, according to Jones Lang LaSalle Hotels' India Hotel Report 2000. With an additional 4,000 rooms expected by 2004, concentrated in the five star deluxe and five star segments, it will continue to represent a major portion of room supply in India.

These findings form part of Jones Lang LaSalle Hotels' inaugural India Hotel Report, due to be released this month. The report provides a comprehensive survey of the country's five major hotel markets - Mumbai, New Delhi, Goa, Jaipur and Chennai. The U.S.- based Jones Lang LaSalle Hotels is the largest and specialist hotel investment services group in the world.

At a press conference here today, Mr. Michael Holland, Managing Director, Jones Lang LaSalle India, said with the recent economic recovery and improved hotel performance had drawn the attention of Indian and international chains. The hotel development had taken off with approximately 7,800 rooms currently under construction across the country.

The future growth in room supply was expected to be driven largely by key cities such as Mumbai, Delhi and Chennai, he said. Despite the fall in operating performance in these major commercial cities, improved economic performance was expected to stimulate marginal increases in room nights demanded (RND) during 2000-01. However, increase in supply would keep occupancies and average daily rate (ADR) under pressure, particularly in Mumbai and Chennai.

In the major leisure destinations of Goa and Jaipur, the premium hotel segment experienced growth in occupancy and ADR during 1999- 2000. Occupancy levels for the five star segments increased from 9 to 59.3 per cent and 27 to 73.4 per cent in Goa and Jaipur respectively. This results in average daily rate growth to $59 and $40 in each respective market.

Mr. Michael Holland said the hotel chains covered by the study were the Indian Hotels Company, EIH, Asian Hotels, Bharat Hotels, Oriental Hotels, ITC Hotels, India Tourism Development Corporation and Hotel Leelaventure. Together these chains account for over 25 per cent of the room supply and 60 per cent of revenue of the Indian hotel industry. Between 1992-93 and 1999- 2000, the combined revenue of these hotel companies grew at 21.8 per cent per annum. In 1999-2000, the combined net revenues of the eight hotel chains was Rs. 1,862 crores.

On the investment side, Indian Hotels plans to build over 2,000 rooms over the next four years under the Taj brand. Others were also planning to expand in strategic markets such as Mumbai, Delhi, Chennai and Bangalore. The Indian Government was increasingly seeking the privatisation of its hotel portfolios, as a result of poor performance of its asset portfolio.

Mr. Michael Holland said despite the negative operating performance and an oversupply risk in certain capital cities, investment sentiment, particularly for hotel developments in key strategic locations remained positive.

Send this article to Friends by E-Mail

Section  : Business
Previous : Raise tariff walls to stop Chinese dumping
Next     : IRDA must address market development - United
           India CEO