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Knight Frank puts Indian hotel room market at Rs. 119 bn by 2013

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  • Translating to 17% average annual growth rate for 10 cities
  • Total of 35,977 additional operational rooms expected across 10 cities by 2013
  • Mumbai and Goa to be most attractive hospitality markets in next 3 years; the size of Mumbai Market will be greater at Rs 42 bn than NCR market size of Rs 28 bn
  • Growth in supply is estimated to surpass growth in demand during 2010-13

Leading independent global property consultancy – Knight Frank India Pvt Ltd today announced the release of their in-depth research study on India’s Hotel Market. The report provides an extensive scenario of the hotel market projecting the demand and supply dynamics of 10 major cities by the end of 2013. The study assesses to measure the performance of the existing hotels in terms of ARRs, occupancy rates and other operational characteristics as well as analyses the present market condition regarding hotel development. The study encompasses ten key cities in the hospitality industry namely NCR, Mumbai, Bengaluru, Goa, Pune, Jaipur, Hyderabad, Chennai, Kolkata and Ahmedabad

Commenting on the launch, Mr. Shreenath Shastry, National Director – Hospitality Agency, Knight Frank India said, “Our study identifies a city’s growth corridors with maximum upcoming hotel developments and to determine the impact of the demand – supply implications on the same. Our research findings clearly indicate that the hospitality market in India in terms of number of rooms demanded per day is estimated to grow at a CAGR of 10.3% during the period 2010 to 2013. However, the growth in supply will surpass the growth in demand since supply is expected to grow at a CAGR of 15% during the same period.”

In order to gauge the dynamics of hospitality industry, Knight Frank research segmented the hotels in three broad categories namely Upscale, Midscale and Economy and a sample of 250 hotels across ten cities was surveyed represented in these categories. This helped them track the historical trends of ARR and occupancy rates from 2005 to Q2 2010. Knight Frank research also formulated city specific econometric models to forecast the demand supply dynamics. The econometric model for each city has been developed after studying the various factors that have significant bearing on the hospitality market of the city.

Commenting on the research report Dr. Samantak Das, National Head – Research, Knight Frank India said, “Our research indicate that a total of 24,211, 8,709 and 3,057 additional rooms are expected to become operational in India by 2013 across upscale, midscale and economy category hotels respectively. The huge influx of incremental rooms in India will exert downward pressure on the occupancy level and Average Room Revenues of hotels for most of the cities. We estimate that the occupancy level across all the cities except Mumbai and Goa to witness a falling trend from 2010 to 2013.”

Among the 10 cities, NCR comprise the largest share of demand and supply followed by Mumbai, Bengaluru and Hyderabad. Strong growth in demand, higher occupancy level, increasing ARRs and low incremental supply are some of the factors for Mumbai and Goa to outperform other cities.

 

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