Slowdown blues may have gripped sectors like automobile and real estate, but the hospitality sector is optimistic about business prospects, especially in Bangalore, evident from a slew of launches slated later this month.
While JW Mariott is set to launch its 297-room property (at Vittal Mallya Road) on September 25, Ritz Carlton will open its 277-room hotel on September 30, taking the branded room inventory to sizeable levels. JW Mariott had earlier launched its 324-room property in Whitefield, Bangalore in February this year.
The spike in room inventory, from about 9,900 currently, to almost twice in the next five years, according to general manager at Lalit Ashok, Bangalore, Amit Samson, is likely to result in a demand-supply mismatch. “While demand is growing at about 9 per cent, supply is higher at 10 per cent,” he said. This is likely to hit occupancy rates that in turn pull down average room revenue. The spike will also pull down room rates, he added.
The hospitality business in the city is estimated to be skewed in favour of business travellers who account for about 80 per cent of room demand.
According to a Hotel Intelligence Report by hotel investment services firm Jones Lang Lasalle Hotels, occupancy rate in Bangalore hotels swung from 67 per cent in 2008-09 to 55 per cent the next year, before bouncing back to 65 per cent in 2010-11.
Lalit Ashok, the 184-room property, which derives about 60 per cent of its revenues from hosting meetings, exhibitions and banquets, unlike other hotels that depend more on room revenues, saw a marginal rise in occupancy, from 55 per cent last fiscal to about 58 per cent during April-August this year. On year-to-date basis till August 31, 2013, the growth was around 27 per cent, Samson said.
Some hotel projects, however, are on hold. A spokesperson for Zuri hotels, which was supposed to build its 200-room property in Devanahalli (near airport) said, “The area has not developed to our expectations, we would therefore, wait for the area to be sufficiently inhabited.” Its Whitefield property comprising 162 rooms has an occupancy rate hovering around 70 per cent, she said.
The hospitality sector is likely to get a fillip with the Centre extending the “Tourist Visa on Arrival” scheme to Bangalore airport last month to foreigners arriving from 11 countries.
Passenger traffic in Bangalore airport increased by 4.76 per cent at 85.03 lakh passengers during January to August 2013, from 81.16 lakh during the corresponding period last year. International passenger traffic rose 4.12 per cent (y-o-y) to 17.21 lakh during January-August 2013, according Bangalore International Airport spokesperson Anjana Kher Murray.