Food & Hospitality World takes a look at the hotel developments of 2015 and the expected growth in the New Year
Over the last 50 years, India has seen a rapid evolution of the Indian hospitality industry as consumers are constantly being exposed to new international brands, concepts and trends. Extensive consumer researches have shown that Indian guests have become value-conscious and are increasingly expecting their hotel experiences to be locally relevant. Furthermore, with the rising middle class projected to reach 200 million by 2020 and more than double by 2030, it has become all the more important to have quality hotels that cater to the growing segment of discerning travellers. And hence with the positive market sentiment, the tourism and hospitality industry is anticipated to generate revenues worth US$ 400 billion by 2022.
Presently, the demand is less and supply is more in a number of cities. But within the period of 12-14 months the position may change with demand picking up against the supply. In the next five years, the demand is expected to surpass the supply and industry would do better. Domestic travel is strong and remains to be the demand bedrock of the industry, and as the economy improves domestic business, leisure and MICE travel will grow rapidly spreading over to many cities and towns.
According to a recent report by HVS – 2015 Hotels in India Trends & Opportunities, in keeping with the outlook presented in the previous edition of this report, the nationwide RevPAR performance was recorded at Rs 3,324 in 2014/15, a sound growth of 1.5 per cent over that of the preceding fiscal year. The nationwide weighted occupancy (60.3 per cent) of hotels grew by 3.4 per cent, corresponding with a marginal decline of 1.8 per cent in the weighted average rate (Rs 5,510). Individually, each star category registered a year-on-year increase in RevPAR, with the hotels in the three-star category recording the highest growth of 3.5 per cent. The improvement in RevPAR is clearly occupancy-led, as the weighted average rates have either declined or remained almost stable across all categories, with the exception of two-star hotels in 2014/15.
The hotels in the two-star category noted a miniscule fall of 0.1 per cent in occupancy, but an increase of two per cent in the average rate. In 2013/14, the same category of hotels had grown their occupancy by 3.4 per cent and average rate by 11.6 per cent, pointing towards the favourable reception of budget and economy hotels in the country. The two-star category’s performance in 2014/15 indicates that going forward, while it is possible to achieve high growth in average rates, it will more often than not be accompanied by a drop in occupancy in the short-term, especially in markets with increasing branded supply.
The existing rooms supply tracked by HVS in the organised hotel market grew by 11 per cent in 2014/15 over the previous year totaling to 1,12,284 rooms as of March 31, 2015. This takes into account 9,588 new openings during the year, and the rest are an expansion of the sample set being tracked by HVS. Furthermore, the change in the total existing supply for 2013/14 is attributed to a deliberate filtration to display only quality branded supply. With regard to the 13 major markets highlighted in this report, Agra saw the highest increase in supply (32.9 per cent), adding to the relatively small base of hotels in 2013/14. It should be noted that the city still remains the second smallest hotel market in the country. Gurgaon witnessed a supply growth of 17.3 per cent in 2014/15, followed by Kolkata (12.8 per cent) and Bengaluru (11.4 per cent). In absolute terms, New Delhi currently has the largest number of branded hotel rooms (13,277), closely followed by Mumbai (including Navi Mumbai) and Bengaluru. Noida (including Greater Noida), with 1,322 branded rooms, retains its position as the smallest major hotel market in India.
Lets have a look at the recent developments that took place in different regions of the country in 2015.
Maharashtra
In 2015, Maharashtra and Mumbai witnessed hotel openings of reputed brands. Ginger Hotels launched its first hotel in Thane, Mumbai. The Smart Basics hotel which offers 46 rooms is located in the heart of Thane, and is well connected to major corporate hubs, shopping malls and tourist attractions. Closer to CSIA, Beacon Hotels opened the T2 Beacon Hotel in Mumbai. T2 Beacon Hotel, an economy category business hotel located in North Mumbai, is ideal for the business traveller. Located 10 minutes from the international airport and 20 minutes from the domestic airport, the hotel offers 27 well appointed rooms, well suited for the business traveller. The hotel is managed by Concept Hospitality and is a unit of Rani Group of Companies.
In South Mumbai, Starwood Hotels & Resorts Worldwide opened the St Regis Mumbai. In partnership with Pallazzio Hotels & Leisure, the hotel marked the entry of the St Regis brand in India and South Asia. The hotel has 386 well-appointed guest rooms including 27 suites and, for extended stays, the property’s 33 residential suites feature a living room, fully equipped kitchen and the option of one or two bedrooms. The hotel has over 3900 sq metres of event space, including the alfresco Terrace Garden, a dedicated entrance and reception foyer.
To cater to the leisure, family and group segments of travellers, Novotel Imagica Khopoli, India’s first theme park hotel was also opened. Located adjacent to Adlabs Imagica and Aquamagica and nestled between Sahyadri Hills, the hotel is easily accessible from Mumbai and Pune through the Express Highway. Novotel Imagica Khopoli comprises of 287 rooms, four F&B outlets and a large banquet space ideally suited for families, groups and weddings. Another new kid on the block for leisure travellers has been the Rumourss Sky Villa & Resort, Lonavala. This resort has been built on the lines of Japanese tree house chalets. The villas are erected on a single iron mast at a height of about 30 to 40 ft.
Goa too saw the opening of two properties. Concept Hospitality under its brand The Fern Hotels & Resorts launched The Fern Kadamba, Hotel and Spa, Goa. The hotel equipped with 48 rooms reflect the heritage of Goa with strong, bright tones and art across the hotel. ‘V’ are family also launched two properties in Goa – Casa Verma and Tropical Woods. Casa Verma is situated in the heart of South Goa’s bustling Cavelosim beach area and sits within a gated community on the banks of the River Sal. While Tropical Woods is 10 minutes off the Panjim bridge in North Goa, and is perched up on top of a hill overlooking the vistas of River Mapsa backwaters.
Next in line was the Le Méridien Hotels & Resorts which opened Le Méridien Mahabaleshwar Resort & Spa in western India. The property features 122 well appointed guestrooms and suites, all complemented with private balconies. The resort offers 250 sq metres of banqueting space including a ballroom, four meeting rooms and a business centre. Tapping Central India was Starwood Hotels and Resorts Worldwide with the opening of Le Méridien Nagpur in Central India. Owned by Classic Citi Investments, Le Méridien Nagpur marked the brand’s 10th hotel in the country. Following an extensive renovation, the hotel has 133 modern guestrooms and suites.
‘New supply over next five years is likely to increase’
– Achin Khanna, MRICS managing director – consulting and valuation, HVS South Asia
How do you see the hospitality industry performing in 2016?
The Indian hospitality sector has seen occupancy improvement across the board in 2015. In fact, it was the first in over five years when nationwide occupancy crossed the 60 per cent threshold. Average rate declines too were arrested for the first time in many years. I am of the view that 2015 was the beginning of the next up-cycle and you are likely to witness growth in occupancy, average rates and consequently RevPAR in 2016.
Demographic wise, which cities do you see emerging for hospitality developments from 2016 and beyond?
Various secondary and tertiary markets present opportunity for growth and expansion of branded/structured hotels. To name a few: Amritsar, Ludhiana, Chandigarh, Jodhpur, Gurgaon, Bhopal, Dehradun, Baroda, Surat, Nagpur, Aurangabad, Vijayawada, Vishakhapatnam, Durgapur, Guwahati, Agartala, Bhubaneshwar, Coorg, Trivandrum and Kochi are ready and able to accept new supply. The top six cities too have potential for further supply absorption in certain micro markets. Overall, the Indian branded hotel sector is still relatively nascent in its growth story and we can expect sustained growth in both supply and demand in the medium to long term.
By when do you see the issue of supply and demand coming to an equilibrium?
New supply over the next five years is likely to increase at a far slower pace than it has historically grown. Demand for quality branded accommodation, however, is continuing to grow at an even tick. Resultantly, occupancies are likely to see year on year growth for the short to medium term. Average rates will also grow, albeit in a more paced fashion, when compared to the previous upcycle. Overall, supply-demand equilibrium is only seen in mature markets. In growing markets, one outpaces the other at different times. While supply outpaced demand over the last few years, the opposite is likely over the next three to five.
In terms of business, what could be the expected business growth strategies that could be considered by hospitality players?
Conversions of branded hotels have become more common recently. It presents a quick alternative for brands who would prefer to have more ‘boots on the ground’ in a quicker time frame and are not keen on waiting four to five years for new hotels to be built. From an ownership point of view also, acquisitions are likely to pick up pace. While organic growth by way of constructing and branding new assets will be likely to continue, conversions and/or acquisitions are therefore likely to become more prevalent in the present as well as the near future.
Delhi
The capital saw a few hotel openings in 2015. The Taj Group opened Vivanta by Taj – Dwarka, New Delhi, featuring 250 rooms including 17 designer suites and a Presidential Nirvana suite. Next on the block was Golden Tulip Hotels launching its new property – Golden Tulip Vasundhara Delhi NCR in the premium and luxury category. Golden Tulip Vasundhara offers 162 rooms and 10,000 sq ft of banquet space.
ITC Hotels launched the ITC Grand Bharat, Gurgaon-New Delhi Capital Region. The 104 suites retreat is set amidst a 1.2 sq km estate, with premium presidential villas, exclusive accommodation with a stand-out, 27-hole Jack Nicklaus Signature Golf Course. V Resorts launched its first property in NCR spread over six acres while the Park Inn by Radisson IP Extension opened in the capital with 76 rooms and suites equipped with modern amenities. Park Inn by Radisson IP Extension has a meeting space of 605 sq ft.
Rajasthan
The Park Hotels launched the second property of its Social Catalyst brand ‘Zone by The Park’ in Jaipur, Rajasthan. In Jaipur, Zone by The Park, is a 47 room property centrally located at Madho Singh Road, Bani Park. While the newly-opened Shakun Hotels & Resorts features 76 guestrooms including a club floor with floors located from level fourth to seventh of the building with views of Nahargarh Fort, State Assembly Hall and Aravalli Hills. For meetings and events, the hotel proposes a total of 14000 sq ft area with the latest modern technology, including a 1300 sq ft air patio.
Crowne Plaza opened its new property in the heart of Jaipur – Crowne Plaza Jaipur Tonk Road. The property provides 218 rooms and 20 suites in total. The indoor and outdoor banquet venues offer flexible meeting options that can accommodate upto 1,200 guests.
Uttar Pradesh
Hilton Worldwide opened the DoubleTree by Hilton Agra which features 104 guestrooms, including four suites. Second on the block was Hotel Polo Towers Group, which launched the 51 room Hotel Polo Max and Food Court in Allahabad.
Telangana
The Lemon Tree Hotel Company opened its third property – Lemon Tree Hotel, Gachibowli in Hyderabad. The 190 rooms and suites hotel has a specially designed suite for its differently-abled guests. The hotel comes equipped with a 1500 sq ft conference venue.
InterContinental Hotels Group launched its first Holiday Inn Express in Hyderabad. Holiday Inn Express & Suites Hyderabad Gachibowli is located in the heart of the city’s IT and financial district and close to Hitech City as well as the HITEX Exhibition Centre. Holiday Inn Express & Suites Hyderabad Gachibowli is the third Holiday Inn Express in India. The 232-room hotel also includes 39 suites comprising of 30 Junior Suites. To cater to business travellers on the go, the hotel also offers a self-service business centre and three meeting rooms.
D&J Grande opened in the original business district of Hyderabad, the Kandaswamy Lane, Sultan Bazar. Its promoting company is Kapadia Hotel & Resorts, which is headed by Sushil Kapadia. The hotel offers 34 Deluxe Rooms and four Deluxe Suites.
Karnataka
Shangri-La Hotel, Bengaluru opened doors in September 2015. This 19-storey hotel sits between the central business district and the blue-ribbon residential suburbs of Bengaluru with 397 rooms. Capable of accommodating up to 900 guests is the 739 sq metres Grand Ballroom on level one with seven function rooms on level two – connected by a staircase and glass elevator. InterContinental Hotels Group has opened Holiday Inn & Suites Bengaluru.
West Bengal
The City of Joy in West Bengal didn’t have too many hotel openings in 2015 as compared to other metro cities. However, it did see Royal Orchid Hotels launching Regenta Orko’s Kolkata. The hotel offers choices between standard rooms, club twin rooms, club rooms and the suite. The hotel has over 3500 sq ft of banquet space.
Tamil Nadu
The state of Tamil Nadu saw the launch of InterContinental Chennai Mahabalipuram Resort and Svatma – The Heritage Residence in Thanjavur. The 105 room InterContinental Chennai Mahabalipuram Resort offers a full range of facilities and amenities to guests. The resort’s indoor and outdoor venues are ideal for conferences, meetings, and special occasions. While Svatma – The Heritage Residence opened in Thanjavur, Tamil Nadu comprising of a central restored heritage building built as a family residence some 100 years ago. Svatma’s 38 suites follow the architectural framework of the heritage building.
Gujarat
Gujarat saw the influx of many properties like CG Hotels and Resorts launching its business hotel under The Fern Hotels & Resorts portfolio. The new property was launched in Mundra in the Kutch district of Gujarat. The Fern Residency-Mundra offers 74 guest rooms.
A new addition to the WelcomHeritage portfolio is WelcomHeritage Mani Mansion in Ahmedabad. WelcomHeritage Mani Mansion is a 94 year old heritage property that was once home to the Dalal family. It was built by the legendary social worker and acclaimed businessman, Manibhai Dalal in 1923 and was formerly known as ‘Corporate Suites – The Heritage Home Stay’. WH Mani Mansion is a boutique heritage hotel with 21 suites providing an experience of the ancient era in Ahmedabad.
The Hyatt Hotels and Resorts also opened Hyatt Regency Ahmedabad, featuring 210 guestrooms including 19 suites, ranging from 355 to 1,614 sq ft. The hotel boasts of more than 14,000 sq ft of meeting and event space.
‘2016 is expected to carry on The momentum garnered in 2015’
– Anuj Puri, chairman and country head, JLL India
How is the Indian hospitality sector expected to perform in 2016?
The hotel real estate sector in India is witnessing a renaissance movement from being primarily a development driven sector to an emerging transaction environment. Traces of improving hotel trading performances in 2015, following a six year period of intense economic downward pressures exasperated by steady hotel supply increases have today placed the hotel real estate market in a unique position – ripe for acquisition and consolidation of hotel real estate supply. The year 2015 alone witnessed nearly nine transactions excluding partial equity stake buyouts; a significant increase over the number of transactions witnessed in the years of 2014 and 2013 combined. The year 2016 is expected to carry on from the momentum garnered in the year 2015 predicated on the u-shaped recovery in the economy that is becoming ever so visible.
Pilgrim destinations
In 2015, pilgrim destinations across the country witnessed a robust influx of hotels with a few major brands opening up their properties in Tirupati, Katra, Shirdi, Haridwar, Kundapur among others. For instance, KEYS Hotels recently launched its 17th hotel—Keys Hotel Vihas at Tirupati. Hotel Keys Vihas is at convenient distance from Tirumala Temple and is equipped with 58 spacious rooms and three suites. The hotel offers two halls, each with the capacity of accommodating upto 120 guests and equipped with state-of-the-art audiovisual technology, dedicated for meetings and team events. Ginger Hotels launched its first hotel in Katra at the foothills of the holy shrine of Shri Mata Vaishno Devi. Roots Corporation entered into a management contract with B V P K Hotels for managing the 80-room hotel. Ginger Katra has the option of accommodating upto four guests in the family rooms. The Smart Space rooms offer a choice of standard rooms, family rooms or suites.
Daiwik Hotels recently launched its second property in Shirdi. Daiwik Hotels Shirdi has 56 well appointed rooms across four categories – Standard, Superior, Family Deluxe and Junior Suite. It also comes equipped with a banquet hall, conference room, business centre facility, and Pilgrim Assist Desk. While Tux Hospitality has expanded its mid segment affordable luxury brand of hotels with Ganga Sadan by Hive, Haridwar. The hotel offers 36 rooms and suites.
VITS Hotels Worldwide added another property in the coastal town of Kundapur with the launch of VITS Pratham Udupi, which offers 24 well appointed rooms and one villa. It boasts of an array of facilities that include a well equipped conference room, business facilities and a large open wedding lawn that can accommodate 2000 guests. Royal Orchid Hotels opened a hotel under its upscale arm Regenta in Haridwar. Regenta Orko’s Haridwar is the first property from the group in this pilgrimage city. This hotel has a combined banquet space of 4,800 sq ft for business meetings and social engagements.
CG Hotels and Resorts also launched a business hotel under The Fern Hotels & Resorts portfolio. The new property has been launched in the temple town of Amritsar in Punjab. The Fern Residency-Amritsar offers 48 guest rooms.