Room With A View

Another chain, ITC Hotels, which operates 15 hotels (nine owned/licensed and six under management contract), has just drawn up a Rs 2,000 crore expansion plan for the next five years. It will put up some 20 hotels in this period including a 340-room hotel in Mumbai.

ITCs strategy is to not only extend coverage in the five-star segment through its tie-ups with ITT and Sheraton but to penetrate the budget hotel segment as well (see Mass appeal on this page). It will also set up heritage hotels in a joint-venture with Marudhar Hotels, a company floated by the owners of Umaid Bhavan Palace, Jaipur.

Hotel chains across the country have lined up investment plans amounting to over Rs 5,000 crore over the next five years. This in spite of the fact that the industry has been hit by falling occupancies in recent times. Occupancies, which had touched over 90 per cent in the early nineties following a surge in business travellers from overseas, have fallen by nearly 10 per cent in the metros this year. For instance, the average occupancy in Mumbai fell to 63.5 per cent in the first half of 1997-98 from 67 per cent in the same period in 1996-97. Both political instability and the economic slowdown have contributed to lower occupancy levels.

The industry, however, is upbeat about the long-term prospects. The figures, after all, justify this optimism. There is a severe shortage of hotel rooms in practically every segment. It is estimated that by 2000, the country will need 1,25,000 hotel rooms. But only 63,115 hotel rooms are available today. The shortage is acute in the three-star category with over 25,000 rooms required by 2000. In the five-star category, the estimated shortage is over 22,000 rooms.

Says C P Krishnan Nair, chairman, Hotel Leelaventure,