Hotel boom

Highlights

Hotel Boom. The hospitality sector in the city is in for a major boost where new hotel chains and independent hotels are likely to be established. A recent report by Cushman and Wakefield’s stated that nearly 4,057 rooms would be opened in the city and at least 50 per cent of them would be operational by the end of 2014.

Reports suggest nearly 4,057 rooms would be added in the city with 50% becoming operational by the end of 2014

The hospitality sector in the city is in for a major boost where new hotel chains and independent hotels are likely to be established. A recent report by Cushman and Wakefield’s stated that nearly 4,057 rooms would be opened in the city and at least 50 per cent of them would be operational by the end of 2014.

The report added that instability in the city due to bifurcation of the state in the last few years had not hindered the growth of the hospitality sector.

“Hyderabad currently has a total upcoming supply of 4,057 keys, of which 46% is in the midscale segment, 23% in the budget segment, 13% in the luxury segment, 12% in the upscale segment and 6% in the upper upscale segment. Approximately 50% of the upcoming supply is expected to open in 2014, which includes brands such as Formule 1 (174 keys), Mercure (128 keys), The Oberoi (220 keys) and Hyatt Place (148 keys)," said the report.

A hospitality consultant from Excellence Hospitality Projects Ltd said, “Hospitality is always a profitable business, provided one should have the patience to wait for the returns. In this industry, it is the long-term and medium-term returns that see the profits. One cannot expect immediate returns in this business.”

The report noted that the basic investment for a 3-star hotel, ranges anywhere between Rs 35 and Rs 45 lakh, while the investment for a 5-star hotel ranges anywhere between Rs 65 and Rs 75 lakh, excluding the land costs.

One of the reasons why hospitality in areas like Miyapur, Hitec City, Mehdipatnam and Gachibowli is booming is because of the IT crowd. The hotels profusely cater to Meetings, Incentives, Conferences and Exhibitions (MICE). As a result, the conference halls in these hotels would often attract packed bookings, while rooms never see full occupancy.

Industry experts observe that business in the city, in terms of room-occupancy, is at an all-time low. But, the hotels are making up for the losses by setting up new food and beverage schemes. Compared to the years 2006-07, where the city’s hotels saw occupancy rates of 70-75 per cent, in the years 2009-10, due to political instability and the economic slowdown, the rate of occupancy fell to a meagre 40 per cent.

Consultants, however, are optimistic that in the coming years, the occupancy rates would surely pull up, as the hotels too would decrease the rental prices, once they achieve their initial returns.

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