Opportune time to invest in hotels: HVS ANAROCK

HVS ANAROCK Room for Growth report analyses the hotel room supply in the three main cities in India – Delhi NCR (composition of Delhi and Gurugram only), Mumbai and Bengaluru – with other key Asian cities, comparing hotel density based on population, air traffic and Grade A office stock – the three main factors driving hotel room demand in any country. The analysis shows that there is still room to build hotels in India, but careful planning is needed to develop the right type of property in the right market as hotel development capital costs and gestation periods are high compared to other real estate assets.

The three key cities in India – Delhi NCR, Mumbai & Bengaluru – have the lowest proportion of branded hotel rooms compared to other major Asian hotel markets; Our largest market, Delhi NCR, which is a composition of two sub-markets, will have to more than double up in supply to become larger than Jakarta, our closest competitor; Delhi NCR & Mumbai offer less than 1,400 rooms per million people compared to 10,000 rooms per million people in Hong Kong, Shanghai, Singapore, and Beijing; Hotel room supply in Beijing is 10 times that of Mumbai though the population of both the cities is similar; Bengaluru has 9 times the Grade A office stock in Bangkok but only 27% of its hotel supply.

The Indian hotels sector was poised to grow to greater heights driven by increasing demand in the pre-COVID era and the current crisis is just a speed-breaker in its path. As a famous adage goes, ‘in every crisis lies an opportunity’, and this calamity can also be turned into an opportunity for the sector as this is perhaps an opportune time to invest in hotels.