Tag Archives: Indian hospitality

Pune budget hotels market – rising to the challenge

Posted on by Track2Realty

By: Mandeep Lamba, Managing Director – Hotels, JLL India

Mandeep Lamba JLL, India real estate news, Indian realty news, India property market, Track2Media Research, Track2Realty, Indian hospitalityOver the past decade, the Pune hotel sector has emerged a formidable competitor to other the hospitality markets in the country, growing from a negligible base of branded hotel rooms in 2005 into becoming one of India’s top five hotel markets in 2014. Over the course, it has weathered multiple storms ranging from significant supply increases to multiple bouts of economic uncertainty, both globally and regionally.

Without a doubt, these storms have negatively impacted the overall trading metrics of average rate and occupancy. However, a far more positive fact not visible prima facie is the double-digit percentage increase in the night demand for hotel room over the past five years. This was largely been driven by the influence of the multiple business sectors thriving in Pune, ranging from IT / ITeS to manufacturing, healthcare as well as numerous educational establishments. Traditionally, these have consistently provided the right kind of fodder for success for economy hotels in any market.

Since 2007, the branded economy hotel supply in the country has increased at an average rate of 21% year on year, growing from a meagre base of approximately 2,200 branded economy rooms to over 10,400 economy hotel rooms – a nearly 5-fold increase. The growth was driven by a healthy mix of both global and regional hotel companies. While the Bangalore hotel market today accounts for the largest share of branded economy hotel rooms in the country, Pune comes in a close second with nearly 1,050 branded economy rooms.

As such, the city’s branded economy hotels sector accounts for 18% of the total branded supply in the market, above the national average of 15% of the total branded supply in the country. Over the next five years, Pune will witness an increase of more than 20% in branded economy hotel supply in city.  

While there is significant untapped potential for the economy hotel sector in the country, major impediments arising from inadequate infrastructure, unavailability of quality land parcels, high interest rates and the multiplicity of required approvals and licenses continue to bow down the sector.

 Pune economy hotels – existing inventory

Hotel Location Class Inventory
1 Keys Park Estique Airport Economy 115
2 Ginger Pune Pimpri Pimpri-Chinchwad Economy 101
3 Ginger Pune Wakad Wakad Economy 128
4 Ibis Pune Airport Economy 162
5 The HHI Pune Airport Economy 45
6 Keys Hotel Pimpri Pimpri-Chinchwad Economy 101
7 Keys Hotel Cypress Airport Economy 43
8 Formule 1 Pimpri Economy 147
9 Formule 1 Hinjawadi Economy 104
10 Premier Inn Kharadi Economy 109

Source: Track2Realty

Budget 2014–A damp squib for the hospitality sector

Posted on by Track2Realty

By: Mandeep Lamba, Managing Director–India, JLL Hotels & Hospitality

Mandeep Lamba JLL, India real estate news, Indian realty news, India property market, Track2Media Research, Track2Realty, Indian hospitalityTrack2Realty: For the first time in recent history, the government in power had announced tourism as one of its four pillars for growth. Consequently, the hospitality was looking forward to significant new provisions in Budget 2014.

However, quite like in most previous years, the government failed to give hospitality any notable relief and stimulus for growth. Despite its 6.6% contribution to the GDP and the fact that it created close to 40 million jobs in 2012-13, the Indian hospitality sector continues to be a story of neglect from our policy makers.

Even today, India receives only about 0.5% of the global tourist arrivals despite being a country rich in history, culture, natural splendour and diversity. The fact that it has still not been equipped to receive a better share of global tourism receipts is puzzling and frustrating.

What Was Delivered

The budget gave tourism some mention and indicated plans for long-term growth by way of developing India’s pilgrimage and heritage tourism circuits (PRASAD & HRIDAY schemes) and also provided for the development of a world-class convention centre in Goa via the PPP route. While these are welcome initiatives, these provisions will take between five to ten years to impact the growth of domestic and international tourist travel.

The introduction of electronic visas and visas-on-arrival initiated earlier this year can be a major game-changer for Indian tourism with respect to foreign travel into India.

The time-bound directive to implement e-visas at nine major airports within six months is perhaps the best news that this budget has delivered. This can have far-reaching consequences once implemented.

The improvement and modernisation of railways, proposed new airports of international standards and the thrust on improved road connectivity augur well for the hospitality industry. These along with other policy announcements regarding increased FDI in several sectors and clarity on setting up of REITs, are catalysts for growth.

What Was Ignored

The sector is desperately in need of incentives in Tier 2 and Tier 3 cities to make hotel investments there reasonably attractive

The sector also needs better borrowing terms through the infrastructure lending route, and relaxed ECB norms

The sector needs to be spared from double taxation through service and luxury tax/VAT at the state and centre levels. Indian hospitality was looking forward to rationalisation of taxes and ease of raising capital.

No economy can hope to achieve and maintain any degree of sustainable growth and buoyancy without its tourism and hospitality sector being given the necessary importance and corresponding stimuli. As of now, the Indian hospitality sector is still trying to shake off the lingering effects of the serious downturn it has been experiencing for almost six years.

In short, from the perspective of the Indian tourism hospitality sector, Budget 2014 failed to deliver. The industry must continue to survive primarily on the basis of die-hard optimism that it will eventually be given its rightful importance at the policy level.