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BUSINESS:
HOTELS
Room
For Optimism
Despite
falling occupancy levels and declining profits, the industry is on an
expansion spree
By
Sheela Raval
When
sales fall, what would you do? Scale down business and stay away from
making fresh investments. The Indian hotel industry has turned this conventional
wisdom on its head. Since 1994, the average room occupancy has consistently
come down, forcing hotel chains to offer bigger discounts on room tariffs.
Yet that
miserable past has not dampened sentiments in the industry. Hotel chains
are expected to pour in nearly Rs 3,150 crore in acquiring new properties
and expanding existing ones over the next couple of years. Within two
years, 68 hotel projects are expected to come up across the country. These
hotels are across all categories-luxury, mid-market and budget. Development
activity has been particularly frenetic in Mumbai, Delhi, Bangalore, Chennai,
Goa, Calcutta and Kochi. Punjab, with its flashy lifestyle, affluence
and NRI connections, is also a favoured destination with hoteliers.
 |
| Several
Hotel projects entailing an investment of over Rs 3,000 crore are
coming up across the country |
Says Scott
Hetherington, executive vice-president, Jones Lang LaSalle Hotels (JLLH),
Asia, a leading global hotel investment banking services group based in
Singapore: "Despite the negative operating performance and a risk
of an oversupply in certain cities, investment sentiments remains positive."
A recent report prepared by JLLH on the Indian hospitality industry reveals
that ITC Hotels plans to double the number of its 3,000-odd rooms by March
2001 and has earmarked Rs 1,125 crore for its ambitious growth plan. EIH
Ltd of the Oberoi Group has chalked out plans to invest up to Rs 1,260
crore over the next few years to expand its chain of luxury and budget
hotels. Hotel Leelaventure has plans to make forays into Bangalore, Udaipur
and Goa with a capital expenditure outlay of over Rs 400 crore.
The Carlson
Group is planning to set up nine five-star hotels and six budget hotels
across the country. Asian Hotels Ltd, the only major player whose profits
grew in 1999-2000, has drawn up a Rs 450-crore plan to expand the Hyatt
Regency chain of hotels to Calcutta and Mumbai. The biggest of them all,
the Indian Hotels Company of the Taj Group, also has an aggressive growth
strategy and plans to add 17 properties to its existing portfolio of hotels.
Smaller groups have not stayed behind. Jaypee Hotels has started work
on a Rs 60-crore hotel project in Noida and is firming up plans for a
luxury hotel in Jaipur. The expansion spree will increase the number of
luxury-class rooms in the country by about 50 per cent, business-class
rooms by over 30 per cent and budget-segment rooms by 45 per cent, adding
more than 18,000 rooms across all segments.
Is there
room for such optimism in the present bleak scenario? Hoteliers certainly
feel so. The economic slowdown that forced the corporate sector to tighten
its purse strings in the latter half of the past decade is now history.
With most companies reporting robust profits this year, the hotel industry
expects the cutbacks on corporate travel to go. The industry is coming
out of a recession after three difficult years. Explains Krishna Kumar,
managing director of the Taj Group: "The industry seems to be on
a rebound. We expect this trend to gather momentum." K.B. Kachru,
senior vice-president of Carlson Hospitality India Inc, shares that optimism.
"The Carlson Group is bullish on India because we expect the situation
to improve in the coming months," he says.
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