Hospitality sector catering realty Development
Along with retail, commercial and residential space, the hospitality sector may soon become a major driver of real estate development in Bangalore. The sustained rise in demand for star hotel rooms, high tariffs and the bouyant prospects for Karnataka's economy together offer a compelling argument for further investments in hospitality space. The result is a heady cocktail of pure play real estate developers, hotel companies and funds, all together or independently showing active interest in partnering efforts to build more hotels.
The city currently offers a modest star room inventory of 2,800 to 3,000 rooms, which has been proven grossly inadequate time and again. An estimated 8,500 rooms in the three and five star category and service apartment space is likely to be added over the next five years to exploit the boom with an investment of around 3,500 crore. Mushrooming of hotels in different pockets of Bangalore will virtually create sub-cities , add to the brand value of the locality where it surfaces, according to Herbert Lemuel, general manager of The Park. The hotels will be more than just providers of accomodation but will also serve to improve the quality and ambience of the layout.
Mayank Saxena, senior manager, Trammelcrow Meghraj, says the growth make-up will keep pace with the commissioning of the new international airport in Devanahalli, a stepping stone to accelerating the economic growth of the city. According to Jack Nazareth, director with Sobha developers, travel is growing at a phenomenal rate in line with the growth in business across all segments. The high pace of growth is sustainable as each stage of progress will feed on each other and graduate to the next level. There appears to be no sign of a slow down for the next 24 months especially if hotel infrastructure is added quickly, Nazareth adds. Typically, growth in one sector will act as catalyst for growth in another business activity. Oberoi Group's Aveep Sales Hemant Mehidiratta says Bangalore will continue to be the leading tech destination in India, and this position will be the driver for sustained hotel room demand at least in the mid-term . Unless this tech juggernaut gets derailed because of some bad decisions hotel investments should come good, he adds. New entrants to this market may include JW Marriott , Hilton, Shangri-la , Park Hyatt, Radisson, Ista and Ibis while expansions (either within existing premises or at new locations) are on cards from The Leela, Grand Ashok, The Park, Taj Westend, Taj Residency, ITC Sheraton, Fortune Park, Royal Orchid and Chancery. While investors are celebrating the boom, some old industry hands are keeping their fingers crossed. A leading hotelier said some of these hotel plans may not never emerge out of the drawing boards. If the surge in inventory leads to plateauing of room rates, some developers may eventually change their investment plans. n fact, analysts are already comparing Bangalore with Delhi and Mumbai where capacity expansion in big numbers softened the tariffs because filling the rooms became a bigger priority.
However, Saurabh Ratan, general manager, Taj Residency, says while the sharp rise of 10 to 20 percent in Bangalore room rates witnessed in recent years may not be sustainable for long, it will not in any way impact the prospects of hospitality business. The overall bouyancy in the market will keep driving investments in this space. The more optimistic observers are also drawing attention to the past 12 months when even Delhi and Mumbai star hotels have enjoyed the benefits of rising corporate and leisure travel to India. Last calendar India attracted 3.37 million overseas visitors and clocked foreign exchange earnings of under $5 billion, a number tipped to grow by 10 percent this year. By 2007, this figure is projected to climb to 4.7 million, which calls for significant investments in aviation and hospitality infrastructure especially in gateway cities like Delhi, Mumbai, Bangalore, Chennai and Hyderabad.
The city currently offers a modest star room inventory of 2,800 to 3,000 rooms, which has been proven grossly inadequate time and again. An estimated 8,500 rooms in the three and five star category and service apartment space is likely to be added over the next five years to exploit the boom with an investment of around 3,500 crore. Mushrooming of hotels in different pockets of Bangalore will virtually create sub-cities , add to the brand value of the locality where it surfaces, according to Herbert Lemuel, general manager of The Park. The hotels will be more than just providers of accomodation but will also serve to improve the quality and ambience of the layout.
Mayank Saxena, senior manager, Trammelcrow Meghraj, says the growth make-up will keep pace with the commissioning of the new international airport in Devanahalli, a stepping stone to accelerating the economic growth of the city. According to Jack Nazareth, director with Sobha developers, travel is growing at a phenomenal rate in line with the growth in business across all segments. The high pace of growth is sustainable as each stage of progress will feed on each other and graduate to the next level. There appears to be no sign of a slow down for the next 24 months especially if hotel infrastructure is added quickly, Nazareth adds. Typically, growth in one sector will act as catalyst for growth in another business activity. Oberoi Group's Aveep Sales Hemant Mehidiratta says Bangalore will continue to be the leading tech destination in India, and this position will be the driver for sustained hotel room demand at least in the mid-term . Unless this tech juggernaut gets derailed because of some bad decisions hotel investments should come good, he adds. New entrants to this market may include JW Marriott , Hilton, Shangri-la , Park Hyatt, Radisson, Ista and Ibis while expansions (either within existing premises or at new locations) are on cards from The Leela, Grand Ashok, The Park, Taj Westend, Taj Residency, ITC Sheraton, Fortune Park, Royal Orchid and Chancery. While investors are celebrating the boom, some old industry hands are keeping their fingers crossed. A leading hotelier said some of these hotel plans may not never emerge out of the drawing boards. If the surge in inventory leads to plateauing of room rates, some developers may eventually change their investment plans. n fact, analysts are already comparing Bangalore with Delhi and Mumbai where capacity expansion in big numbers softened the tariffs because filling the rooms became a bigger priority.
However, Saurabh Ratan, general manager, Taj Residency, says while the sharp rise of 10 to 20 percent in Bangalore room rates witnessed in recent years may not be sustainable for long, it will not in any way impact the prospects of hospitality business. The overall bouyancy in the market will keep driving investments in this space. The more optimistic observers are also drawing attention to the past 12 months when even Delhi and Mumbai star hotels have enjoyed the benefits of rising corporate and leisure travel to India. Last calendar India attracted 3.37 million overseas visitors and clocked foreign exchange earnings of under $5 billion, a number tipped to grow by 10 percent this year. By 2007, this figure is projected to climb to 4.7 million, which calls for significant investments in aviation and hospitality infrastructure especially in gateway cities like Delhi, Mumbai, Bangalore, Chennai and Hyderabad.
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