Hyderabad emerges high in ARR growth

After taking over the IT hub mantle from Bangalore, Hyderabad has pushed the garden city to second place in terms of recording the fastest average room rate (ARR) growth.

This year, hotels in Hyderabad have recorded a 44 per cent growth in ARRs at Rs 8580 in April-December 2006 compared with Rs 5955 in the year-ago period owing to the demand-supply gap in premium segment hotels.

On the other hand, Bangalore has recorded a growth of only 18 per cent at Rs 13366 for the nine-month period against Rs 11280 in the corresponding period last year. 
 

CITY BUZZ
Cities	ARR 06(Rs) (April-Dec)	ARR 05(Rs) (April-Dec)	%change
Hyderabad	8580	5955	44
Delhi	9483	6671	42
North Mumbai	7961	5697	39
South Mumbai	9163	6812	34
Bangalore	13366	11280	18

Following Hyderabad closely is Delhi with a growth of 42 per cent in ARRs at Rs 9483 against Rs 6671 in the same period last year. North and South Mumbai have recorded a ARR growth at 39 per cent and 34 per cent respectively.

In the next 18 months, the room rates will go further up by 15-20 per cent unless there is more supply, analysts said with Bangalore's ARR remaining more or less stable.

Binaifer Jehani, analyst, Crisil Research said, "Bangalore would see little or no increase in ARRs in the next 18 months. It is already a mature market and rates are quite high. Hyderabad ARRs are half that of Bangalore and it would see a healthy growth."

Analysts forecast that with huge economic activity in Delhi, room rates there will see a significant increase. It might surpass that of Bangalore too. "Outlook for Delhi hotels in the next three years remains positive," another analyst said.

In terms of growth in revenue per available room (RevPar), North Mumbai hotels have recorded a 40 per increase for nine months at Rs 6247 from Rs 4455 in the last corresponding period.

Closely following North Mumbai is Delhi with a revenue per room (RevPar) growth of 39 per cent at Rs 7200 in 2006 against Rs 5149 in 2005.

While performance of South Mumbai hotels have gone up by 37 per cent at Rs 6029 against Rs 4400 last year, hotels in Hyderabad and Bangalore show a growth in RevPar of 29 per cent and 15 per cent respectively.

RevPar is usually calculated by multiplying a hotel's average daily room rate (ADR) by its occupancy rate.

Pune, however, has emerged leader in terms of occupancy rate recording a high of 79 per cent. North Mumbai has also recorded a growth of 78.5 per cent in occupancy rate with Delhi showing a growth of 75.9 per cent.

According to analysts, Pune and North Mumbai hotels will witness a healthy growth in ARRs, in the next 18 months.

Goa would see a healthy increase in ARRs among the leisure destinations. This year ARRs in Goa have grown 30 per cent at Rs 5685 against Rs 4344 in the last corresponding period.