Hotel room rates in India rise 40% but market to be handled with care, say experts

Jan 07, 08 | 8:55 am

Demand for upscale hotel rooms in India is on the rise, and so are prices, according to Jonathan Worsley, co-organiser of the Arabian Hotel Investment Conference (AHIC), now in its fourth year.

Recent figures bear out this optimism with room rates in the major metropolitan centres rising nearly 40 per cent this year over 2006, while global names such as Shangri-La, Four Seasons, Marriott and Hilton have all announced major expansion plans for India.

"India is gearing up to accommodate international interest, both in business and leisure sectors, in a country poised for rapid growth," said Worsley.

Capitalising on confirmed attendance, and requests, by decision makers from all sectors of the hotel industry, the Arabian Hotel Investment Conference in Dubai will devote the key opening session (on May 3) to the potential opportunities and pitfalls of the burgeoning hotel investment market in India.

According to Worsley, the two regions - India and the Gulf States - share many characteristics in the development of their hospitality sector.

He said that the inclusion of detailed presentations and analysis on India would be of interest to both regional and international developers, investors, architects, operators and consultants focused on the industry.

"There is scarcely a week that goes past without another announcement of a new project in Arabia, and recently India has joined this explosive development as well. Given the large population, the economic boom and the pent-up demand for hotel accommodation the potential for India is vast," he said.

The key sessions on the first day of AHIC 2008 are devoted to India's hotel development and will feature topics such as market trends, industry overviews, investment and growth opportunities and business development challenges.

"Already, we are seeing many regional names entering the Indian market - Emaar, Nakheel, ETA Star, KM Properties and Dubai Properties have all announced plans for India. There is perceived potential in every sector from luxury palace resorts to branded budget chains and executive residences," he continued.

"This buoyant scenario aside, there are difficulties associated with investing in this market and the India Summit at AHIC 2008 will address these issues," said Worsley.

His view is borne out by one of the key Middle East players, Kingdom Hotel Investments. Development Director, Tim Hansing, has been keeping a watching brief on opportunities for several years.

"Difficulties of obtaining suitable land, bureaucracy associated with construction and constraints of infrastructure mean India is an expensive opportunity," he cautioned.

"Indian assets do not come cheap, and while there is clearly an under capacity in the hotel sector, international investors are having to compete with local money (investors) and places a different risk perception on future yields," said Hansing.

The India Summit at AHIC will take place on the opening afternoon (May 3; the conference will run until May 5, prior to the Arabian Travel Market). More than 1,000 delegates are expected to attend, with almost half of these from outside the Middle East region.

Surjit S Bhalla, Managing Director, Oxus Research and Investments; Abhijit "Beej" Das, Managing Director (India), Molinaro Koger; Raymond Bickson, Managing Director & CEO, Taj Hotels & Resorts & Palaces; KB Kachru, Executive Vice President, South Asia, Carlson and Gaurav Bhushan, Senior Vice President, Development Asia Pacific, Accor Hotels are some of the India panel experts. 

Platinum sponsors of the 2008 event include: Jones Lang LaSalle Hotels, Rezidor Hotel Group, Bawadi and IFA Hotels & Resorts. 

Gold sponsors include Accor Middle East; Aldar Hotels & Hospitality; Christie + Co; Davis Langdon; DLF Hotels; Dubai Heritage Vision LLC; Emaar Hospitality Group; Emirates; Fairmont Raffles Hotels International; Godwin Austen Johnson; Golden Tulip Hotels, Inns & Resorts; Group RCI; GuestInvest; Hamilton Hotel Partners; Hilton Hotels; Horwath Hotel Tourism & Leisure; HVS International; Ibahn; IHG; Interval International; Jumeirah; Kempinski Hotels SA; Langham Hotels International;

Marriott International; Morgan Stanley; Mövenpick Hotels & Resorts; Nakheel Hotels; NorthCourse; OBM International Limited; Rakeen; Rotana; Shaza Hotels; Sidley Austin; Starwood Hotels & Resorts Worldwide Inc; Strategic Solutions; TAJ Hotels, Resorts & Palaces; Tiara Hotels & Resorts; TRI Hospitality Consulting; WATG; WestLB; Wyndham Hotel Group International Inc.

Media sponsors include AME Info, CNBC Arabia, Hospitality News Magazine, HOTELS Investment Outlook, Luxury Hotelier, Sleeper and TTN.

The Arabian Hotel Investment Conference will run from May 3-5, 2008 at Dubai's Madinat Jumeirah Convention Centre and is jointly organised by The Bench and MEED. To register visit www.arabianconference.com