Jan. 22, 2006 - NEW DELHI -- The hotel industry which is reeling under a shortage of over 1.25 lakh rooms across the country may get some relief soon.

Around 155 hotels, which are under active development in various cities in the country, will help to bridge this huge gap. The figure does not include the economy hotels which are also set to grow in large numbers.

Leading the pack among the metros is IT hub Bangalore where 27 new hotels, service apartments and mixed-use developments are coming up with more than 6,100 rooms. According to HVS International, a consultancy in hospitality services, most of this supply will be seen 2008 onwards.

Meanwhile, 2004-05 saw an increase of 35.2 percent revenue per available rooms (Rev PAR) over 2003-04.

Explains Manav Thadani, managing director, HVS International: "While the demand for rooms has risen significantly in nearly all cities the current financial year, the room supply has only marginally increased in the key cities. This has led to a sharp increase in average room rates in Bangalore, Delhi, Goa, Hyderabad, Kolkata, Mumbai and Pune. The shortage will continue till the new developments come up and this might see a further 20-25 percent increase in average room rate."Besides the metros, the new hotels are coming up in tier II & III cities such as Agra, Kochi, Ahmedabad, Jaipur and Visakhapatnam.

According to the HVS annual report, Delhi is expected to have 27 new hotels with more than 4,900 rooms. Of these, 20 are coming up in Gurgaon.

"The growth will be supported by significantly improved road and transport infrastructure, privatisation of the Delhi airport and the demand for hotels rooms for the 2010 CommonWealth Games to be held here. There will be further increase in hotel activity, especially in the mid-market and budget segments, after the much awaited auction of sites by the DDA," says Thadani.

With tourist arrivals to the country showing positive growth over previous years for the first three quarters, it's been good for the hotel industry.

It has also resulted in more international brands entering the country with plans for hotel chains. Real estate developers too have shown keen interest in this sector and the FDI liberalisation in real estate has ensured better availability of finance.

A number of mixed land use development projects that include hotel, retail and commercial space have gained momentum. There will also be increased activity in the budget and mid-market hotels with international brands entering the market.

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