Expansion of hotels near Delhi airport will put pressure on rates

New Delhi, May 23:

The next battle between leading hospitality players will be fought out at the Aerocity project adjoining Delhi airport. A massive addition to the number of rooms is also likely to put severe pressure on hotel room rates in the NCR region.

The area will see nearly 4,800 rooms opening up in phases in the next 30 months. Nearly 13 hotels in various categories are expected to come up, with the first few starting operations by this year end.

While French hotel Company Accor's economy brand Ibis is expected to be the first one to open in the area this year, JW Marriott is targeting a November opening. Lemon Tree Hotels is set to open two hotels under the brand Lemon Tree and Red Fox by the end of this year. This will mean that nearly 1,452 rooms will be added to the region's hotel room inventory by end of this year or beginning of next year.

“In the next 30 months over 4,000 rooms are expected to open in Delhi Aerocity. With the demand in the NCR region and Faridabad growing at 18 per cent and the addition of supply at 30 per cent, it would create a situation of oversupply for the next 2-3 years in the region,” said Mr Rahul Pandit, CEO, Lemon Tree Hotels.

This is expected to put pressure on average room rates that the city hotels will be able to command this winter season, say analysts. The NCR region is estimated to currently have a room inventory of about 12,000 hotel rooms.

“The non-branded hotels near the airport do not charge less than Rs 3,000-4,000 a night. It is the hotels within New Delhi that are most likely to be impacted in the short term, rather than hotels in Gurgaon,” said Mr Siddharth Thaker, Managing Partner at Prognosis Global Consulting. But he added that the region will also be creating new demand for hotels due to the commercial spaces being constructed there.

Out of the 4,800 room inventory, nearly 1,000 rooms will be contributed by Accor's three hotels under brands Ibis, Novotel and Pullman. “Gurgaon, New Delhi and Noida have emerged as three different micro-markets. Hotels at the Delhi Aerocity project are not likely to impact the Gurgaon hotels,” said Mr Scott Davies, General Manager Delegate Delhi & NCR and Hotel Operations Accor said.

Hyatt Hotels will also introduce its boutique hotel brand Andaz being constructed by Juniper Hotels Pvt Ltd. American brand MGM is also going to debut in India under its brand MGM Grand. Nearly 3,000 rooms are expected to come up at the site in 2014 with some hotels opening next year.

http://www.thehindubusinessline.com/todays-paper/tp-marketing/article3450057.ece