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India's Shortage of Hotel Rooms and Spike in Occupancy Rates Prompt
Global Luxury Chains to Seek Partnership Opportunities

By Lijee Philip, The Economic Times, IndiaMcClatchy-Tribune Regional News

Jan. 12, 2010--MUMBAI, India -- A handful of global luxury hotel chains are scouting for opportunities in India, thanks to the rise in hotel occupancy rates during the October-December quarter and the enormous potential in a booming market that doesn't have enough hotel rooms.

The list includes marquee hospitality names such as Las Vegas-based MGM Mirage, Toronto-based Fairmont and Southeast Asian brands Mandarin Oriental, Peninsula and Dusit.

"With India emerging as one of the fastest growing regions for corporate and leisure travel, global hospitality companies are looking to launch their new brands into the country," said Vivek Nair, vice-chairman and managing director of Leela Hotels, Palaces & Resorts.

Some foreign companies have initiated discussions to forge partnerships with real estate firms and Indian hospitality entities to set up shops in Mumbai, Delhi, Pune, Bangalore, Hyderabad and Chennai, a senior official of a Mumbai-based hotel chain said requesting anonymity.

ET could not get in touch with the foreign firms.

Meanwhile, room occupancies in nearly six top Indian cities have shot up to 65-70 percent in the December quarter from less than 50 percent in the year-ago period. "There is buoyancy in the market and we expect the trend to continue in next the next quarter," said Ajoy Misra, senior VP, sales and marketing, at Taj Hotels Resorts and Palaces.

Hotels are offering special packages, discounts and daily room rates to keep the momentum up.

Although room rates declined 10-15 percent in past six months, with corporate and leisure travel picking up hotels are expected to hike rates in near future.

Services and manufacturing sectors, which contribute over two-thirds of the hotel industry's revenue, have revived corporate travel.

"The next 3-5 years will see an influx of hotel expansion activities, as we are still grossly under supplied," said Achin Khanna, associate at HVS International, a hotel consultancy firm.


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