Two years ago, Bangalore was the most preferred hotel destination in the country. It boasted of room rates that exceeded rates in Mumbai and Delhi by nearly 50% at the height of the IT boom in 2004-06. India’s Silicon Valley witnessed a spate of new hotel openings as investors and hotels majors rushed in to make the most of the growth opportunity.
A similar situation now seems to be building up in Delhi and its suburbs. The National Capital Region (NCR) now leads the country in terms of room rates and its lead over other cities is expected to increase further thanks to the upcoming Commonwealth Games. Scheduled in October this year, the games are expected to attract a large number of tourists and sports enthusiasts to the national capital.
According to a data furnished by Federation of Hotel and Restaurant Association of India, room rates for five-star and deluxe hotels in Delhi averaged Rs 6,916 per night in FY09 against Rs 6,513 in Mumbai and Rs 5,373 in Bangalore. The room rates continue to move northward in the NCR and it is estimated to have increased to Rs 9,210 during the December 2009 quarter.
In comparison, Bangalore market saw a 23% dip in room rates during the first nine months of FY10, while in Mumbai market room rates were marginally down, according to figures given in presentation of Indian Hotels Company.
This is good news for hotel companies such Asian Hotels, EIH and Hotel Leela that have a significant presence in the National Capital Region. The rise in room rates has now triggered a rush among hotel chains to increase their footprint in NCR and its satellite towns. Indian Hotels Company, Hotel Leela Ventures, EIH and Royal Orchid are coming with new hotels in NCR are cashing in on the rising revenue per available room in the city.
Also one reason in the city’s growing revenue per available room is its low susceptibility to business cycles unlike Mumbai and Bangalore. While bulk of customers in latter cities are business travellers, deluxe and luxury hotel in Delhi gets significant business from non-business segments such as diplomatic visits, government sponsored conferences, product launches and leisure travellers.
Such a diverse customer base has ensured that the city enjoys good revenue per available room throughout the year. The global financial crisis and the ensuing recession in the major economies in the world came as a blessing in disguise for the hospitality industry in Delhi.
With India escaping the global recession relatively unscathed, India has become one of the hottest investment destinations for global investors. And for a first-time foreign visitor to India, Delhi is on top of the priority list of must-visit places considering its status as the country’s
political centre, growing economic importance and its close proximity to the most-visited tourist destinations of Agra and Rajasthan.
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