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Hotel industry buzzing up to grab market share
Published on Wed, Oct 24, 2007 at 20:20 in 
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BOOMING INDUSTRY: Hotels in function have occupancy rates of 75-85 per cent through out year.
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New Delhi: Business travelers drive over 70 per cent of the Indian hospitality business and the race to accommodate them, and do it well, is hotting up. But with current demand outstripping supply, hotels in the big cities have managed to up their rates to match those in Paris and London.
India currently has 5,500, five star business hotel rooms and will face an estimated demand for 125,000 new rooms from business travelers over the next 7 years.
Hotels in function right now have occupancy rates of 75-85 per cent through out the year. This shortage has resulted in a 40 per cent hike in average room rates in the metros last year to almost 20,000 to 25,000 a night
The pricing of a hotel like this one is done on system called "rate of the day" based on demand.
As the rooms get taken the price goes up and on a busy day a room like this one in Mumbai or Delhi will cost as much as you would have to pay for one in Paris or London.
Several international brands are working towards solving our problem of under supply. New properties from Accor, Marriot, Hyatt, Trindent Hiltons, Four Seasons, ITC, The Taj Group are waiting in the wings but sky rocketing land prices and construction costs may come in the way of rate reductions.
Cushman Wakefield EMD - South Asia Sanjay Verma says, “This hospitality boom is coincident to the real estate boom we are seeing and that has thrown the land prices in a different spectrum which is specially for the hospitality sector is prohibitive from a viability prospective.”
As a solution hospitality chains are tying up with real estate developers who have land banks in cities of high demand.
Big developers Unitech, DLF, Emmar MGF and Reheja's have such partnerships and projects in the pipeline, but we'll have to wait at least three years before we see any rationalization in prices.
In the mean time, its becoming increasing difficult for five star plus-business hotels to justify these rates through the services they offer.
Delhi Hyatt Regency General Manager Roger Lienhard says, “We are getting compared to Europe, If you pay 500 euro in Paris and come here and pay the same 500 euro a night as a guest your going to ask what are you giving me for 500 euro. Then the guest will look out and say this is not Paris. "
The Hyatt has dedicated two floors of all its hotels to an exclusive club for business travelers with its own express check in, Wi-Fied lounge and meeting rooms, while the ITC has a floor dedicated to women traveling alone to make them feel safe and comfortable.
While other chains have added Wi-Fi facilities, spas and gyms to maintain there guest loyalties.
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