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| It has see the coming up of budget hotels or business class hotels like Residency Towers, Quality Inn Sabari, Vestin Park, Benz Park, Ramada Inn in the last 20 months or so.
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| Investment in budget hotels is pegged around Rs 100 crore in the last two years. K C Tharyan, executive director, The Residency Group of Hotels, said, "The demand has been predominantly from the business segment and the room occupancy rate has gone up to 75 per cent this year compared to 60 per cent last year."
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| While there has been a decline in the number of tourists after the September 9 / 11 , events like the Iraq war and the outbreak of Severe Acute Respiratory Syndrome (Sars)have also contributed to the negative inflow of tourists to India, hospitality industry sources point out.
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| "Five years ago, there were very few budget hotels in the city and the landscape was dominated by upmarket hotels. Now there is a feeling among the new entrants that the budget hotel segment is a lucrative business," he added.
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| For a good quality 100 room budget with Rs 25 crore investment to break even, it would take a minimum of six to seven years. Property costs claim 15 per cent of the total investment for setting-up a budget hotel. The room rent for four-star budget hotels are between Rs.2,500 and Rs.2,800.
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| GS Chenny, vice president and general manager, Choice Hotels International Ltd, said the demand from business segment has been the reason for the increasing number of budget hotels in the city. "One of the reasons why businessmen prefer budget hotels is the affordable price. The average room rent is between Rs.1,400 to Rs.1,600."
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| The occupancy rate of these hotels depends on the marketing muscle as they have in major cities like Delhi, Bangalore, Hyderabad and Pune from where the majority of businessmen come to city," he said said.
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| Chenny said, "A three-star budget hotel having around 50 rooms would require an investment of Rs.15 lakh a room, excluding the land value.The location also adds to the cost of setting-up of three-star hotels. The investment in the case of four-star budget hotel would require Rs.25 lakh a room."
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| Industry veterans point out that that it is difficult to say when a budget hotel would break-even as it depends on prudential management and the investment incurred in setting-up the hotel. With the tourists not coming in large droves, businessmen seem to be saving grace for budget hotels in Chennai. |
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