UNDER DEVELOPMENT…
Hotel development in India is happening at breakneck pace. As we were putting this special edition of Sleeper Magazine together, every day brought fresh announcements of international brands expanding, new brands being launched, projects funded, and pipelines filled. Here we look at some of the key pieces of news to have emerged in recent months. We also get a fresh perspective on the Indian hotel design market from some of the international practices working in India.
Asia Pacific continues to drive global pipeline growth: 33% of world’s total pipeline rooms are in China & India
Research by Lodging Econometrics has revealed that India has the third largest pipeline of hotel developments in the world. The country’s pipeline grew for a fourth consecutive quarter to 456 projects/80,738 rooms in Q4 2010. With 50% of all projects and 53% of rooms under construction, Lodging Econometrics anticipates new
hotel openings to rise, with 95 new hotels/14,377 rooms forecasted to open in 2011, and then increase again in 2012 to a new cyclical high of 91 hotels/17,924 rooms. Most global hotel companies have a high interest in India and continue to announce growth strategies which should boost development metrics and feed pipeline growth.
2008
New Project Announcements 2009
2010 29,799 20,887 19,806 15,809 16,659 Rooms 16,326
KEY DEVELOPMENT METRICS - ANNUAL TOTALS Construction Starts
2008 2009 2010
Projects
88
142
169
90
103
113
HVS calculate investment required to fund supply pipeline
As shown in the table below formulated by HVS, the proposed supply pipeline will require a total investment of around `46,200 crores, or over US$10 billion for development, excluding cost of land acquisition. Even if a standard loan-to-cost ratio of 1:1 is assumed, it means that developers will need over `23,000 crores or US$5 billion in debt to finance the construction of these hotels.
TOTAL INVESTMENT IN HOSPITALITY (2010/2011 - 2014/2015)
Segment Breakdown of Active Supply Development Cost per Key (`) Investment per Segment (`)
Investment Breakdown per Segment (%) Total Investment in Hospitality (`)
16 10,918 15,000,000
163,765,749,600 35%
462,296,296,020 Source: Hotel Valuation Index and Compensation Survey, HVS, HICSA Edition 2011
Nationwide Occupancy and Average Rate Performance Luxury
First Class 19,093
8,500,000
162,290,685,300 35%
Mid-Market 18,585
5,000,000
92,923,667,250 20%
Budget 9,496
3,000,000
28,489,290,480 6%
Extended Stay 1,647
9,000,000
14,826,903,390 3%
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