Getting hotel rooms will soon be easier

If you thought getting a hotel booking easily is just a dream, think again. In a year from now, at least three cities "� Hyderabad, Chennai and Bangalore "� will see room availability crossing the demand.

According to a Crisil research report, this will dampen the high occupancy rates in these cities, a projection supported by another study by American Express which was released in Sydney recently.

The most dramatic increase will be in Chennai where the supply will go up by 30 per cent in a year against the current demand of 15 per cent.

In Bangalore, while the demand will be 20 per cent, supply will be 27 per cent. The increase in supply in Hyderabad will be 29 per cent against a demand of 15 per cent.

This could be music to the ears of leisure and business travellers as a surplus situation will lead to stiff competition and generally a decline in the average room rates (ARRs).

Boom time
The reason for the room inventory going up in these cities is that big names in the hospitality industry are setting up properties in these cities in view of the economic boom and the emergence of these cities as big business convention destinations.

Take a look at the infrastructure projects in the pipeline and at different stages of completion in these cities. With 39 hotels under various stages of development, Bangalore will get 3,000 rooms by 2008-09, as compared to the present 2,300, an increase of 30 per cent.

Hyderabad will get around 2,200 rooms by 2008-09 as compared to the existing 1,600, an increase of 38 per cent. The room inventory in three-, four- and five-star categories will double from the existing 3,500 to 7,000 by 2011-12.

Top end hotel chains like the Hilton, ITC, Taj and Park Hyatt will all add at least 15 properties by 2012. Chennai, which has 19 hotels under construction, will get around 2,400 rooms as compared to 1,650 rooms now, an increase of 45 per cent.

Lower rates
Occupancy levels will also see a dip in these cities. For example, in Hyderabad occupancy levels could fall from the current 72 per cent to 64 per cent next year and Bangalore could witness a fall from the current 75 per cent to 70 per cent in the same period.

According to experts, the ARRs (average room rates) in these three cities is likely to fall 6-10 per cent. However, not everyone agrees that the surplus would lead to lower ARRs.

"The ARRs might come down, but then strong players can still decide they will maintain the rates. For example, Shangri-La did not bring the rates down in Singapore even though availability went up sharply," said an executive of a five star property in Hyderabad.

Rajiv Kaul, senior vice president, The Leela, said, "I don't think minor changes in the demand and supply scene will have a major impact. The ARRs might get affected in the short run but we are positive that the long term would be good."