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Ruchi Ahuja & Sreejiraj Eluvangal | December 29, 2005
For the hospitality business, 2005 has been a dream year. Occupancy was never so good (bookings stretch to 2007 in some hotels) and room tariffs hit a new high - some hotels in Delhi are charging up to $280 (Rs 13,000) a room, while similar hotels in Singapore are ready to settle for less than half.
With an estimated shortage of as many as 90,000 rooms (five-star and above), it has become a seller's market after a long period when discounts on tariffs were the order of the day.
And the party is expected to continue in 2006, with just 5,000 new rooms expected to be added to the supply during the year. Industry experts feel the momentum of growth will last till the Commonwealth Games in 2010.
Hotel companies' financial results and their soaring stock prices tell the story. For the financial year 2004-05, Indian Hotels' net profit rose to Rs 105.86 crore (Rs 1.06 billion), compared with previous year's Rs 60.65 crore (Rs 606 million). The stock has risen about 80 per cent in 2005 and has seen a 52-week high of Rs 996.55 per share.
EIH Ltd's net for the financial year 2004-05 has risen to Rs 33.12 crore (Rs 331 million), compared with previous year's Rs 28.17 crore (Rs 281 million). The stock has appreciated by 55 per cent this year and has seen a 52-week high of Rs 572.65.
No wonder then that almost all the leading hotel chains of the country have announced new projects. Indian Hotels will put up four new hotels. Bharat Hotels is also working on four new properties after acquiring the Great Eastern hotel in Kolkata. Hotel Leelaventure has acquired land in Chennai and Hyderabad for new hotels.
A boom town like Gurgaon, according to the Haryana chief minister, is building no fewer than 20 new hotels. Yet, there won't be enough rooms for all. Hotel industry insiders expect a 10-15 per cent rise in tariffs during the year. "In 2006, the industry will grow by another 15-20 per cent," says Lalit Suri, chairman and managing director of Bharat Hotels.
From 3.8 million in 2005, the government expects tourist arrivals to touch 4.4 million in 2006, 9.90 million by 2011 and 15.98 million by 2014. "We need to work on making India a round-the-year destination," said Amitabh Kant, joint secretary in the tourism ministry, but this level of traffic is clearly straining the system.
The World Tourism Organisation has ranked India fifth among the world's tourist hot spots and the fastest growing tourism destination.
International hotel chains have therefore made a bee-line for India. Shangri La has just opened in Delhi, and Hilton has tied up with Oberoi and is scouting for new properties. The Regent chain and Aman resorts from Thailand are among the others investing in India.
The coming year may be notable for another reason: acquisition of overseas properties by Indian hotel chains. Indian Hotels recently bought a hotel in Australia after bagging the Pierre in New York.
Lalit Suri of Bharat Hotels is eyeing assets in Dubai and London, while East India Hotels has been looking for an upmarket hotel in the US."Indian hotels need assets in the West to show their customers the quality of services they can offer in India," says an East India Hotels functionary.