City beckons Octave hospitality prospects

Young, independent hospitality company Octave Hotels on Thursday announced plans to grow in the burgeoning Bengaluru hotel market, as it eyes more properties in the next few years.

The Guwahati-based venture, which began its Bengaluru journey six years ago, currently runs one 40-key property — Octave Hotel — near Sarjapur, and is poised to open
another 40-key property near Marathahalli next month.

“We have seen immense growth in cities fuelled by the IT boom. Bengaluru is definitely the best choice to stay profitable. In the next three years, we plan to open three more hotels in the City, taking our total number of hotels to five, with over 300 keys,” Octave Hotels Managing Director Siddharth Goenka told Deccan Herald, adding that the new hotels will be either leased or managed.

Octave Hotels is involved in the business budget space, which predominantly involves properties with three-star amenities. The total investment planned is expected to be between Rs 30 lakh and Rs 50 lakh per key, Goenka said.

India is a fast-emerging hospitality hub. According to statistics shared by the Union Ministry of External Affairs in 2014, the Indian hospitality sector has been growing at a compounded annual growth rate (CAGR) of around 14 per cent per year. The business budget segment forms a large slice of it with numerous players.

“A challenge has always been in terms of competition, especially big chains. With the recent economic slowdown, a lot of players have been facing uncertainties with occupancies. Corporate occupancy rates have been trailing at 50 per cent of the actual rack rate. In certain catchment areas, owing to competition, the ARR (Average Room Rent) has dropped to below Rs 2,000 (in the business budget space),” he said.    

According to a report by hospitality research firm HVS, overall occupancy rates showed a marginal increase during fiscal 2013-14 at 58.9 per cent occupancy, a rise of 1.9 per cent from the previous year.

Octave Hotels remains optimistic. “In the last two years, we have enjoyed a turnover growth of 30 per cent and a 50 per cent increase in profits. Our online marketing initiative currently occupies 15 per cent of our inventory, which is likely to go up to 30-40 per cent in the next 3-5 years,” Goenka said. Also the company’s headcount of 70 will touch 300 following the expansion.