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India's Top Six Cities to Add Around 50,000 Rooms in the
Next 5 to 6 Years According to New Report

The Indian Hospitality Story 2012 & Beyond Shows New Delhi to
the Highest New Hotel Room Supply in the Next Five Years

By Madhurima Nandy, Mint, New DelhiMcClatchy-Tribune Regional News

Sept. 20, 2012--Bangalore: Hotels in India's top six cities will add around 50,000 new rooms in the next 5- 6 years, a report said on Thursday.

About 14,800 new hotel rooms are expected to be added by the end of the year, of which 2,000 rooms have already entered the market, according to the Indian Hospitality Story 2012 & Beyond, a report released in New Delhi by lobby group Confederation of Indian Industry and Cushman and Wakefield, a property consultancy.

The report evaluates the hospitality sector in Delhi, Mumbai, Bangalore, Hyderabad, Kolkata and Chennai.

"The demand has been strong from both foreign as well as domestic tourists," said Akshay Kulkarni, regional director of hospitality, South and South East Asia, Cushman and Wakefield. "Given the rather diverse nature of demand, the hospitality industry is also looking at creating adequate products to service the varied tourist requirements."

With a total room supply of 17,500 rooms in in the next five years, the national capital region is expected to see the highest hotel room supply. Mumbai with 10,200 rooms and Bangalore with 9,400 rooms will significantly add to the existing inventory, says the report.

The report says the addition of new inventory will largely be in the potential growth areas around airports, commercial growth corridors, industrial corridors and special economic zones.

Between January and June, hotels in these six cities saw an average occupancy rate of 58% with an average room rate of Rs 5,400. The current averages show a 4% drop in occupancy rate and 5% decline in room prices over 2011.

Chennai recorded the highest room occupancy rate of 64% during the first half 2012, followed by Mumbai at 61% and Kolkata at 60%.

Occupancy rates may see an upward trend in the second half of the year keeping the average room rates steady but since there is a substantial supply expected to enter the market over the next few years, the pressure on occupancy and room rates will continue, Kulkarni said.

"The phasing of the new inventory and gradual growth in the demand for hotels will help keep the rates at modest levels across the country. However, going forward we expect average room rates to improve in the next 12-18 months on account of stability in economy and expected growth in tourism in India," he said. "With more and more international brands operating in the country, the market will move towards being more organized and standardization of process including cost per room night."


(c)2012 Mint (New Delhi)

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Distributed by MCT Information Services

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