At an average Rs 13,001 per room, Bangalore continues to remain the most expensive city for hotel rooms among the main business and leisure destinations. In October, the Average Room Rate (ARR) in the garden city were up 32 per cent year-on-year.
In 2004-05, ARRs had climbed 54 per cent with the IT and ITES segments accounting for 45 per cent of room demand. While 90 per cent of the hotel clientele in the city comprises foreign businesspeople, in the current year too, it appears to be the same technology sector which is fuelling the demand.
Anecdotal evidence suggests that hotel rooms have become even more expensive in November with rates in Bangalore touching Rs 14,000.
In New Delhi, the average ARR in October was Rs 8,111, an increase of 39 per cent year-on-year. Analysts say New Delhi is likely to see a serious shortage of hotel rooms since the only addition to rooms in the premium segment is from the Shangrila chain. As a consequence, ARRs could shoot up further.
According to CRIS INFAC, Pune boasted the highest occupancy rate of 85.9 per cent in October. Occupancies across ten cities moved to 75 .55 per cent in October 2005, from 74 per cent in October 2004.
Between April-October 2005, occupancies have been 75 per cent compared with 69 per cent for FY05. a further growth of 10 per cent in tourist arrivals could push occupancies to 82 per cent, say analysts.
Industry watchers believe that tourist inflows into India will grow at a CAGR of 10 per cent between now and 2010. Between April and October this year, tourist arrivals into the country have been 11.26 million, an increase of 11.26 per cent y-o-y.
While the hotel industry has announced expansions, the shortgae of rooms, they believe, could continue till 2009 owing to the long gestation period.
As a result, the increase in ARRs could be as much as 20 per cent in the next two years, for an occupancy rate of around 86 per cent. ARRs across 10 cities rose by 32 per cent in October. If the tourist traffic is more skewed in favour of business travellers, the rise in the ARRs could be even sharper.
While the shortage could be severe in cities such as Mumbai and Delhi, Hyderabad is expected to see a glut in another year and a half.
In another interesting trend, foreign travellers are increasingly spending more on premium segment hotels. That is leading to an increase in foreign exchange earnings, at a rate that is faster than that of tourist inflows.
The lower seasonality seen for room demand in cities such as Mumbai and Bangalore, where business traffic is high, suggests that there is an increasing proportion of business travellers.