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Too few guests,so not as many new hotels as city expected

Mumbai’s hotel industry has seen supply grow at only half the pace estimated earlier,with demand not yet having picked up enough since the terror attacks and the global economic crisis.

Written by Shalini Nair | Mumbai | April 23, 2010 11:28:05 pm

Mumbai’s hotel industry has seen supply grow at only half the pace estimated earlier,with demand not yet having picked up enough since the terror attacks and the global economic crisis.

The total rooms estimated for addition today is nearly half the number announced earlier,according to property consultants Jones Lang Lasalle Meghraj (JLLM). “One-fourth of the announced plans have fallen completely flat and the rest are hanging on the edge of viability,” a JLLM report says.

Occupancy rates remain far below pre-2008 levels. As per figures compiled by HVS Hotel Management,average occupancy was 75 per cent in 2007-08,fell to 61 per cent after the terror attacks,and has not improved much since,reaching around 64 per cent today.

“As compared to last year,the hotel industry has improved but it is not as bullish as it was in 2007-08. It is never going to bounce back to those levels,which was a super-boom period where hotels charged $500 a night. It is still a profitable industry but it is not for the faint-hearted,” said Sudip Jain,executive vice president of JLLM Hotels.

Many of the new hotels planned by 2008-09 will now be ready in 2010. Some will come up even later.

In 2006,Nirmal Lifestyle had announced a Rs-1000 crore project with new hotels in its complex at Mulund; that will be completed only by 2012-end. “The slowdown has obviously hit many of the projects. Hotels have a long gestation period of at least 10 years but on the positive side as of now Mumbai has the least supply of hotel rooms,” said developer Dharmesh Jain of Nirmal Lifestyle.

Manav Thadani,managing director of HVS India,does not expect hotel occupancy to reach pre-2008 levels until 2015. “Mumbai’s five and four star hotels were heavily dependent on international travellers,mostly those travelling on business. With global recession this has come down,” he said,adding domestic travellers have taken their place.

This,he said,is confirmed by the heavy fall in rates. Average room rates in Mumbai were around Rs 10,950 in 2007-08 and remained as high as Rs 10,700 despite the slowdown and terror attacks,but has now come down drastically to Rs 6,400. “Indian travellers do not agree to pay the rates that international travellers are willing to shell out. So in a bid to stay competitive,hotels have been greatly discounting their rates,” he said.

SLOWDOWN
Ibis,Taj:
Hotels near airport,planned for 2008-09,now likely in 2010
Sofitel: At BKC,2010 instead of 2008-09
Crowne Plaza: In Juhu,2010 instead of 2008-09
Shangri-La: In Lower Parel,2010 instead of 2008-09
Radisson Plaza: At Powai,2011 instead of 2008
Nirmal Lifestyle: Announced 1,000-cr project for hotels in Mulund in 2006,not coming up till 2012-end
DLF,Bombay Dyeing: Planned hotels on mill land,have shelved those projects. DLF in process of selling about eight plots nationwide,once meant for hotels
Parsvnath: Planned 50 hotels,stopped adding to land already acquired
Unitech: Sold Gurgaon Hotel project last year to raise funds and meet debts

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