Hotel industry to be constrained in near term: study
With around 3,620
new hotel rooms in the branded segment expected to be operational over the next
three years, the hospitality industry in Chennai is expected to be constrained
in the near term, though the adverse impact is expected to be short-lived,
according to a study from real estate services firm Jones Lang Lasalle, India
present, has 29 branded hotels with 4,656 rooms across different categories.
According to the Hotel Intelligence Report from Jones Lang LaSalle Hotels,
India, released in April, 2012, around 17 hotels with an inventory of 3,620
rooms in the branded segment are under construction. Besides, an inventory of
almost 2,500 rooms are presently in their various stages of planning and are
expected to be operational in the next 5-7 years.
“In the near term, we expect marketwide
average rates and occupancy levels to remain constrained as new supplies open
up in 2012 and 2013, with a high proportion of new rooms in the luxury and
upper upscale segments,” says the study. “However, the adverse impact is expected
to be short-lived with significant commercial and industrial developments being
planned across the city,” it added.
Of the upcoming new
rooms, almost 35 per cent of the rooms in Chennai are expected in the luxury
segment while 25 per cent of the upcoming supply would be in the midscale and
economy segment. Serviced apartment and upscale segments would contribute
around 4 per cent and 3 per cent respectively.
levels, which increased to 68 per cent in 2010-11 compared to 64 per cent in
2008-09 has been in a decline during the first three months of 2012. For the
year-to-date 2012, according to the report published in April 2012, the
occupancy levels registered a decline of 300 basis points to reach 65 per cent,
owing to the increase in the supply.
The average daily
rate (ADR) for rooms remained stable during the period, around Rs 6,100. The
ADR saw a decline in 2010-11 when the occupancy levels grew to Rs 6,100, almost
12 per cent down from the Rs 7,000 ADR in 2008-09.
The revenue per
available room (RevPAR) in Chennai reached Rs 4,400 in 2008-09, and later
started declining as the demand conditions softened and new supply entered
market. “However, with a continuous addition of branded supply, the market has
witnessed a decline in average rates. Because of this, there has been an 11 per
cent decline in RevPAR since 2008-09,” says the report.
The report also
states that the lodging demand in Chennai is dominated by the business segment,
contributing 70-75 per cent of the total demand, while meetings, incentives,
conferences and exhibitions (MICE) occupy 10-15 per cent and leisure 5-10 per
cent of the demand.
The metro, which is
home to industries such as manufacturing, automobile, auto-ancillaries, IT and
IT-enabled Services and shipping, has the potential for greater business
demand, it added