It is destination Hyderabad for the hospitality industry. The city of pearls is going to witness a spurt in high-end hotels in a span of four to five years.
According to Taj Krishna area director and general manager, Sanjay Sethi, the number of high-end hotel rooms is likely to go up by more than 100 per cent from the existing 1280 to 2650 by the year 2009-10. The major hotel groups that are keen to set up shop in the capital of Andhra Pradesh include the Oberois, Leela, J. W. Marriot, ITC and Park.
Besides, the Dubai-based Emmar group is constructing a 321-room star hotel which is expected to be completed by March 2006, well before the Asian Development Bank conference to be held in the city in May, next year. Minerva Grand, a business class boutique hotel, has opened its food and beverages outlets this month and is planning to keep its 105 rooms ready by mid-November.
At present, the Taj group has three five-star hotels, Taj Krishna, Taj Residency and Taj Banjara, in Hyderabad which account for 533 rooms. Besides, ITC Kakatiya Sheraton and Towers has 189 rooms, Viceroy Hotels has 272 rooms, Greenpark has 148 rooms and Hotel Manohar has 138 rooms.
Sethi foresees an addition of 1371 high-end hotel rooms in the next five years. Indications are that the Oberois, J.W. Marriot and ITC are looking forward to establishing a 200-250 room hotels each while the Leela group and Park are keen on taking up 150-room projects. At an estimated cost of over Rs 50 lakh per room ( including parking areas, lobbies, lawns, etc.) the combined investment in these projects is likely to exceed Rs 700 crore.
Thanks to the growing service sector industry, particularly the IT and ITES companies, the occupancy rate in star hotels in Hyderabad has increased to as much as 86 per cent in the past three years as against a mere 50-55 per cent earlier.
The occupancy rate is expected to go up further to 90 per cent in the next couple of years as the demand for hotel rooms would continue to outpace the supply during this period.
On the other hand, Sethi said, the occupancy rate would decline to 72-76 per cent once the new hotel projects commence commercial operations by 2009-10. Even after the decline, the business would be profitable as hotels were viable even at 55 per cent occupancy rate.
“However, when there is a sudden spurt in the supply, the growth of the aggregate rate of returns flattens and, sometimes, the graph may even go southward”, he told Business Standard.
In view of this, Sethi feels that the hospitality industry should not put all its eggs in one basket. “ We can’t heavily depend on the corporate travelers. We have to enter new businesses like tourism and leisure segments so that we can withstand even if the IT sector goes bust in future”, he added.
More room
High-end hotel rooms to increase from 1,280 to 2650 by 2009-10.
Emmar group’s 321-room star hotel expected to be completed by March 2006
Minerva Grand to keep its 105 rooms ready by mid-November.
Oberois, JW Marriot, ITC each planning a 200-250 room hotel
Leela group, Park keen on taking up 150-room projects
