The hotel space in Gurgaon, the business hub in the national capital region, is heating up.
Oberoi Hotels on Tuesday inaugurated its first luxury hotel there, right next to the Trident property, under a management contract with Orbit Resorts.
Both, the new Oberoi Gurgaon and the earlier Trident, are built and managed by Oberoi but under an arrangement with Orbit Resorts, which owns the land under it.
The new hotel was built for Rs. 400 crore (Rs. 4 billion) and is to cater mainly to business travellers.
With hotels like Leela Kempinski and Westin already around, the competition is going to get stiff.
A new hotel is bound to have some impact, said Sanjoy Pasricha , vice-president sales and marketing, Leela group.
While Leela itself is still evaluating the impact on its business, "Trident has reduced its prices by 15-20 per cent already," he said.
Hotels will now have to assess the kind of packages they can offer after Oberoi's entry at the highest price point.
However, people eventually settle down with their preferred brands, he added.
"The immediate effect will be on the tariffs in the existing hotels, but in the long term it is a good thing, as there is not much supply in Delhi NCR," said P R Srinivas - leader, travel, hospitality and tourism, Deloitte India.
Calling it a positive development, Rajinder Kumar, former president, Federation of Hotels and Restaurants Association of India, said: "With another hotel coming up, pricing will become competitive in Gurgaon."
He said the inventory was getting larger in Gurgaon as it was an attractive centre for conventions. Also, at any point, when there's pressure in Delhi, people move to NCR, he said.
Estimates suggest that by 2012-13, other hotels that were in the pipeline in Gurgaon would also be opening.
Manav Thadani, managing director, HVS India (hospitality consultant), has a different view.
Gurgaon is a very strong market and other hotels are not going to be affected because of Oberoi, he said.
"Oberoi will come at the top. They go after rates and not occupancy. If at all, Trident may have to drop its rate. If it is charging Rs. 12-13,000, it may have to bring it down to Rs. 9,000," he added.
Last month, EIH Ltd, the listed company which operates the Oberoi and Trident brands, had closed a rights issue, raising Rs. 1,179 crore (Rs. 11.79 billion) through issue of shares.
Of this, Rs. 900 crore (Rs. 9 billion) will be used to retire debt and some part utilised for setting up flight kitchens in Delhi and Mauritius.
"We are a very asset-heavy company and want to build our focus on only managing hotels," said Arjun Oberoi, chief planning officer, Oberoi Group.
The company is planning to open five more hotels in India and abroad, with a mix of management contracts and equity.
The Group will open its Trident property in Hyderabad with 320 rooms, followed by a 250-room property in Dubai.
In 2013, another property in Hyderabad, with 220 rooms. By 2014, it expects to operationalise its property in Marrakesh, Morocco.
It is also going to operate a 70-room resort in Oman. The group is also exploring expansion opportunities in Europe.
The company has no plans to venture into the mid-market or four-star category hotels. It will stick to luxury and premium brands.
On whether the company plans to sell any of its 'trophy hotels', owned by the Group, the chief operating officer, Vikram Oberoi, said: "There are no thoughts on that yet. Mr (P R S) Oberoi (the chairman) has not taken any decision."
The new Oberoi hotel in Gurgaon has been built at a cost of Rs. 400 crore (Rs. 4 billion) and will largely cater to business travellers.