Global hospitality majors check into Bangalore

BANGALORE: With the city emerging as a hub for international business travel, global hospitality brands are checking into Bangalore rather rapidly. Starwood Hotels and Resorts opened Sheraton Hotel at Brigade Gateway in Malleswaram last week. Switzerland-based Movenpick Hotels & Resorts is opening its first 5-star property in the country in Bangalore on June 1.

Many more are in line, and over the next two years, the city will witness an addition of 2,500 rooms across categories (3-star budget to 5-star luxury). Bangalore currently has about 5,550 rooms in these categories.

Several of the new launches will be in the five-star deluxe category. Prestige Estates Projects has partnered with JW Marriott to build a 300-room luxury resort hotel —Prestige Golfshire — on Nandi Hills Road. Shangri-La on Palace Road and Ritz Carlton on Residency Road are expected to be ready within the next two years.

"A fair amount of supply has come into Bangalore which has allowed for some rate rationalization. However,there are many micro markets in Bangalore that continue to do well," said Manav Thadani, chairman of hospitality consultancy firm HVS.

Micro markets of Whitefield, Electronics City and Outer Ring Road are seeing new supplies with many IT/ITeS companies expanding on the periphery. MDB Zephyr, part of New Delhi-based MBD Group, is setting up a 200-room luxury hotel in Whitefield. Hospitality brand Alila is doing a 120-room luxury hotel in Whitefield.

Business travellers account for 80% of the demand for rooms in Bangalore. The meetings and conferences segment and the leisure segment account for 5% and 3% , according to real estate consultancy Cushman & Wakefield. "A large chunk of business is driven by corporates. Except for Aero India, there aren't big events coming to Bangalore," said Akshay Kulkarni, executive director for hospitality services South Asia, in Cushman & Wakefield. The average room rate peaked at Rs 8,500 in 2007 as per Cushman & Wakefield hospitality report 2010 . It dropped to Rs 6,600 in 2009, and has since hardened by 10-15% because of rising demand.

The incremental room supply will result in softening of room rates in the short to medium term. "Occupancy rates in Bangalore are improving with average rates more or less flat compared to last year. With the new supply, the growth in business will be absorbed leaving occupancy and average daily rates flat," said Chris Moloney, COO, South West Asia, Intercontinental Hotels Group (IHG), which will soon launch Holiday Inn Hotels and Resorts in Bangalore.

Dilip Puri, MD-India, Starwood Asia Pacific Hotels & Resorts, said the luxury room rates have corrected after the steep rise in 2007. "The average room rate for luxury hotels shot up to $400 some three years back. The recession brought about a reality check. Rentals are exactly where they should be today. Anything between $200-$250 per room night are realistic."