Table 1 - Nationwide Occupancy and Average Rate Performance Occupancy


ABLE 1: NATIONWIDE OCCUPANCY AND AVERAGE RATE PERFORMANCE Year Ending March 31st


2006/07 2007/08 2008/09 2009/10 2010/11


CAGR Source: HVS Research


saw a revPAR decline, due mainly to the addition of significant supply which limited occupancy gains.” (See Table 2). “The 2010 gains are tempered by the fact


that 2009 comparison figures were weak and rates in particular have fallen from a very high base point,” say STR Global, adding that a more realistic analysis can be seen when comparing with 2008 peak performance figures. This clearly shows the ground that still needs to be made up. For example, ADR in Bangalore during 2010 lags that of 2008 by 37.34% and for Mumbai the difference is 30.33%. Despite this, the opportunities in India are


second to none. In an interview with Sleeper India, Vijay Thacker, Director, Horwath HTL- India, confirmed that the market is “grossly undersupplied”. “By our count in January 2011, we had around 160,000 hotel rooms in the country... that is pathetically small in the context of the global competitive scenario.” With a pipeline of 80,000 rooms set to be delivered over the next three to five years, will this be enough? “If you look at the aviation traffic that’s going to come, the increase in road traffic, and therefore the increase in demand, this country should have about 375,000 new rooms in the next ten years,” says Thacker, indicating a shortfall of some 135,000 rooms, “I don’t see anybody thinking and planning on that kind of scale.” Manav Thadani believes that this shortage


could continue for the next ten to twelve years given the projected demand. Major international hotel groups, including IHG, Marriott, Hilton, Hyatt, and Starwood, have significantly ramped up development pipelines, partnering with local developers and aspiring to have an impact on the burgeoning domestic market. However, new research by HVS (1) shows that in the majority of cities, demand continues to


outweigh supply in the mid-market and luxury / first class. The report states: ‘Going forward, we expect continued demand growth, with the Indian economy projected to grow by about 8% in FY2012, almost double the 4.2% growth forecast for the economy as a whole. The major cities are in fact expected to attain double-digit growth in their economies over the next few years, which bodes well for hotels in these markets.’ So why is India’s hotel market seeing


such growth now? According to Thacker, saturation in other parts of the world such as China has forced hotel groups to look for new opportunities. India has emerged as a frontrunner and as such has seen a surge in development. The main source of this growth, in contrast to most markets, is the domestic traveller. “The domestic market has picked up very strongly,” comments Thacker, believing that this was the “saving grace” of India’s hotels in the face of the downturn. “I think the domestic segment is going to be a big, big player in the years to come,” he says, adding that the latest count of foreign tourist arrivals (5.58 million) was poor given the size of the country. Whilst Thacker sees the value of the


By our count in January 2011, we had around 160,000 hotel rooms in the country... that is pathetically small in the context of the global competitive


scenario. Vijay Thacker, Horwath HTL-India


71.4 68.8 60.3 65.0 68.0


% Change -0.1


-3.6


-12.4 7.8 4.6


0.1%


7,989 7,837 6,426 6,800


Average Rate ( ) 7,071


% Change 29.9


13.0 -1.9


-18.0 5.8


5.5%


RevPAR ( ) 5,049


5,496 4,726 4,177 4.624


% Change 29.7


8.9


-14.0 -11.6 10.7


5.7%


Table 2 - Year-on-year percent changes 2010 v 2009 (Indian Rupees) Occupancy


TABLE 2: YEAR-ON-YEAR PERCENT CHANGES 2010 v 2009 (INDIAN RUPEES) ADR


Bangalore Chennai


Delhi NCR Goa


Hyderabad Mumbai


Source: STR Global 21


15.0 11.2 8.2 8.6 1.9 4.8


-10.6 -3.4 -0.1 2.6


-5.0 -3.9


RevPAR 2.8


7.4 8.1


11.4 -3.3 0.8


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