India Digest 2008
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INDIA D gest 2008
CONTENTS India
1
Bangalore
11
Chennai
18
Delhi
25
Hyderabad
34
Mumbai
41
Pune
51
Jones Lang LaSalle Hotels Jones Lang LaSalle Hotels Jones LaSalle Hotels, the first leading global investment services Jones LangLang LaSalle Hotels, the first and and leading global hotelhotel investment services firm,firm,in 2007 in 2007 in addition to bespoke research. Jones LaSalle Hotels services in addition to bespoke clientclient research. Jones LangLang LaSalle Hotels services spanspan is uniquely positioned to provide the depth breadth of advice required by hotelthe hospitality is uniquely positioned to provide bothboth the depth and and breadth of advice required by hotel the hospitality spectrum; luxury single assets portfolios to select service spectrum; fromfrom luxury single assets and and largelarge portfolios to select service investors companies, through a robust integrated network. In 2007,and and investors and and hotelhotel companies, through a robust and and integrated locallocal network. In 2007, budget hotels, resorts pubs. services include investment sales, mergers budget hotels, resorts and and pubs. TheirTheir services include investment sales, mergers Jones LaSalle Hotels provided purchase advice on 259 transactionsand and Jones LangLang LaSalle Hotels provided salesale and and purchase advice on 259 hotelhotel transactions acquisitions, capital raising, valuation appraisal, management, strategic acquisitions, capital raising, valuation and and appraisal, assetasset management, strategic globally; representing a combined of US$13.9 billion, a total of 54,763 roomsplanning, globally; representing a combined valuevalue of USD13.9 billion, a total of 54,763 hotelhotel rooms planning, operator selection, management contract negotiation, consulting, industry operator selection, management contract negotiation, consulting, industry 84 cities. In addition advisory valuation services provided on 660 assignmentsresearch in 84incities. In addition advisory and and valuation services werewere provided on 660 assignments research project development services. Jones LaSalle Hotels clients and and project development services. Jones LangLang LaSalle Hotels clients havehave globally for 182,048 rooms across cities. global comprises access globally for 182,048 rooms across moremore thanthan 300 300 cities. The The global teamteam comprises access to resources the resources its parent company, Jones LaSalle (NYSE: to the of itsofparent company, Jones LangLang LaSalle (NYSE: JLL).JLL). specialists, operating 27 offices 16 countries. advice 236 236 hotelhotel specialists, operating fromfrom 27 offices in 16incountries. The The firmsfirms advice is is www.joneslanglasallehotels.com www.joneslanglasallehotels.com supported a dedicated global research team, which produced 45 publications supported by aby dedicated global research team, which produced overover 45 publications
Digest 2008: India
INDIA
MARKET OUTLOOK
India has become a favoured destination for global investors and multinational corporations ever since it
The outlook for Indias tourism and hotel industry is
opened its economy in the early nineties. Although
upbeat. Key factors driving the tourism boom include
sectors such as business processing, information
Indias sustained economic growth, strong foreign direct
technology, telecommunications, and manufacturing,
investment inflows, increased air networks, the
have prospered in recent years, India's economy
availability of cheaper air travel, a strong domestic
remains largely driven by the agricultural sector.
market and aggressive marketing campaigns.
Despite this, India's economy has performed well with
Challenges relating to inadequate tourism infrastructure
the contribution from the services and manufacturing
still remain, but are not enough to dampen the bullish
sectors growing by 9.4% in the fiscal year ending March
outlook for the Indian hotel market.
2007. Preliminary estimates by the government according to the Union Budget 2008-2009 show a
Encouraged by this optimistic tourism outlook, many
growth rate of 8.5% for the fiscal year ending March
developers, investors and international hotel management
2008. For the next financial year (FY), analysts expect
companies are jumping onto the India hotel bandwagon.
real GDP to grow by 7.9%.
A number of the Indian real estate players view hotels as a natural extension and synergy to their growing real
While the Indian economy will be affected from
estate portfolios. The major cities that are the hub of
moderation in global economic growth, any negative
economic and real estate development in India are:
impact is expected to be minimal. Analysts also
Bangalore, Chennai, National Capital Region/Delhi
anticipate some slowing in growth rates which reflect
(comprising the capital city Delhi and suburbs of Noida,
an overheated economy such as that of China (PRC).
Gurgaon, Faridabad, Ghaziabad and Greater Noida), Hyderabad, Kolkata, Mumbai and Pune.
Economic Snapshot - India Indicator*
2005
2006
2007
2008F
2009F
Real GDP Growth (%)
9.2
9.4
8.5
7.9
7.4
Inward FDI (USD billion)
6.7
17.5
19.0
18.0
20.0
Inflation/CPI (%)
4.2
6.2
5.8
5.2
5.0
Prime Lending Rates (%)
10.8
11.2
13.0
11.3
10.7
Exchange Rates (INR Per USD)
44.1
45.3
41.3
40.0
39.0
8.1
7.6
7.2
6.8
6.4
Unemployment Rate (%)
* For fiscal year beginning April and ending March F: Forecasts Source: Actual - Central Statistical Organization, Forecasts - Economist Intelligence Unit (EIU), January 2008 1
Jones Lang LaSalle Hotels
Digest 2008: India
TOURISM MARKET OVERVIEW
round destination, with a focus on both generic and niche areas. "Chasing the Monsoon" is the new theme for the west Asian market.
Key Trends and Demand Drivers l
India, which ranks after China (PRC) as the world's
l
The government has also introduced initiatives
second most populous country, has experienced
to spur growth in the hospitality sector. Tax holidays
a tourism boom in recent years. Bolstered by a
for two-, three- and four-star hotels established in
multi-faceted tourism product that ranges from 27
specified districts that have UNESCO World Heritage
world heritage sites to religious relics, spa/mountain
Sites and convention centres with large seating
resorts and wildlife parks, India has much to offer
capacities in the National Capital Territory of Delhi
leisure travellers.
and in the adjacent urban areas of Faridabad, Gurgaon, Ghaziabad or Gautam Budh Nagar, have
l
l
The growing Indian economy will spur business
been announced to foster development prior to the
travel. The strong performance of the corporate
Commonwealth Games in 2010. In addition, there
sector and the growth in the economy has led to
are proposals to improve the tourism infrastructure
an unprecedented surge in business travel. GDP
that will lead to increased travel. These proposals
grew at a robust 9.4% in 2006-07 and is expected
include constructing 33,000 kilometres of the National
to grow by another 8.5% in 2007-08. Furthermore,
Highway in the Golden Quadrilateral, North-South
the industrial and services sectors have recorded
and East-West Corridor areas, improving identified
double-digit growth rates. These undoubtedly
ports to facilitate cruise tourism and evaluating
will continue to raise the level of business travel
public-private partnerships to connect identified
in the country.
circuits and destinations by rail.
The liberalisation of the airline industry will promote
l
Medical tourism will also result in additional
increased travel by both international and domestic
demand for hotel rooms. This sector has gained
travellers, further fuelling growth in the hotel sector.
momentum in the past few years, given the cost
Open skies policies and direct international flights
advantage and emergence of high quality
to the US and Europe have increased the country's
healthcare services in India where a choice of
accessibility, raising international traveller flows.
airlines, hotels, transportation, food and sightseeing
In addition, increased frequency of existing
is offered along with medical treatment in the form
routes and the introduction of additional routes
of packages. The country's medical tourism
by low cost carriers (LCC) such as Indigo, Spice
industry is thriving, encouraged by the introduction
Air, Jet Lite and Go Air will enhance domestic
of a medical visa. In addition, the Indian
travel flows.
government has announced plans to promote medical tourism with an investment of INR260
l
Recognising the importance of the tourism
billion for funding relevant infrastructure including
industry, the government has made large strides
affordable hospitals and budget hotels for patients
in marketing India internationally. Building on
and their relatives. Due to the lack of a "single
the success of the Incredible India campaign in
window" clearance system, foreign investors have
previous years, the Ministry of Tourism has
faced problems investing in this sector, and the
launched an integrated international media
Indian government is looking at ways to improve
campaign to promote India as "must-see" year-
the system.
2
Jones Lang LaSalle Hotels
Digest 2008: India
International Visitor Arrivals
l
In tandem with the increase in foreign arrivals, foreign exchange earnings soared by 34% over 2006 values to INR480 billion in 2007.
India has set a tourism target of 10 million international
l
tourist arrivals by 2010, the year of the Commonwealth Games in Delhi.
l
Leisure travel (96.6%) remains the primary reason for travel to India, followed by business
l
Preliminary statistics from the Ministry of Tourism
(2.8%), according to statistics sourced to the
indicate that inbound tourist arrivals had already
Ministry of Tourism. While we expect the overall
reached a 10-year high of approximately five
trend to remain unchanged over the next few
million in 2007. This represents a 13% growth over
years, the proportion of business travellers
the previous year and the fourth consecutive year
could increase with the rise in foreign
of positive growth in inbound foreign travellers.
investments to India.
Compared with the 2.4 million international arrivals in 2002, the number of foreign visitors to India has increased by an impressive 86%.
International Visitor Arrivals to India 6
30 25 20
4
15 10
3
5
2
0 -5
1 0
Annual Growth (%)
Number of Visitors (million)
5
-10 1997
1998
1999
Number of Visitors (million)
2000
2001
2002
2003
2004
2005
2006
2007E
-15
Annual Growth (%)
E: Estimates Source: Ministry of Tourism, PATA (Pacific Asia Travel Association), Jones Lang LaSalle Hotels
Total Number of International Visitor Arrivals
Year 2007
Growth Over 2006
Historical CAGR* (1997-2007)
5.0m
13.0%
8.6%
* Compound Annual Growth Rate Source: Ministry of Tourism, PATA, Jones Lang LaSalle Hotels
3
Jones Lang LaSalle Hotels
Digest 2008: India
International Visitor Arrivals to India in 2005 - By Main Purpose of Visit*
Conference 0.2% Education & Employment 0.4% Business 2.8% Tourism & Others 96.6%
* Updated official figures not available Source: Ministry of TourismSource: Ministry of Tourism
Major International Source Markets
l
In January 2007 India-based Jet Airways launched direct daily flights from Delhi and Kolkata to
l
All major source markets recorded positive growth
Bangkok. The same year also saw the airline
in 2006, with the UK and the US maintaining their
serving the New Delhi-Toronto and Mumbai-Newark
positions as India's two largest foreign source
route via their European hub, Brussels.
markets, according to latest available statistics from the Ministry of Tourism.
l
Reflecting strong travel demand for India, Singapore Airlines now operates six flights a week to Bangalore
l
Nepal, Sri Lanka, Japan and Malaysia were the
while Japan Airlines started daily flights between
major source markets. Notably, the number of arrivals
Tokyo and New Delhi in October 2007 to meet
from Nepal showed the highest year-on-year increase
the business demand on that route. Other cities
among top Asian markets in 2006.
such as Kolkata, Hyderabad and Chennai are also served by direct international flights from major
l
source markets.
While the UK and the US are expected to remain India's two largest foreign source markets, arrivals from Asia are expected to rise with the availability of more flights to India.
4
Jones Lang LaSalle Hotels
Digest 2008: India
Domestic Tourism
strong economic indicators, expanded air networks and the liberalisation of services.
l
India's domestic tourism market is significant and growing. According to the Ministry of Tourism, the
l
Pending the release of official data, this growth
number of domestic travellers has increased steadily
is expected to have continued into 2006 with
from 140 million in 1996 to 391 million in 2005 (latest
indicative statistics from the Ministry of Tourism
available statistics), a year-on-year increase of 7%.
suggesting that it might have crossed the
The growth in domestic tourism is attributable to
460-million mark.
the increasingly affluent and growing population,
Domestic Tourism in India* 500
20 15
400 350
10
300
5
250
0
200 150
-5
100
-10
50 0
Annual Growth (%)
Number of Visitors (million)
450
1996
1997
1998
1999
Number of Visitors (million)
2000
2001
2002
2003
2004
2005
2006F
-15
Annual Growth (%)
* Updated official figures not available F: Forecasts Source: Ministry of Tourism, Jones Lang LaSalle Hotels
Total Number of Domestic Visitors**
Year 2005
Growth Over 2004
Historical CAGR* (1996-2005)
390.5m
6.6%
12.1%
* Compound Annual Growth Rate ** Updated official figures not available Source: Ministry of Tourism, Jones Lang LaSalle Hotels
6
Jones Lang LaSalle Hotels
Digest 2008: India
growth in room rates and prompted the entry of new
HOTEL MARKET OVERVIEW
players. To address the huge demand-supply imbalance, we understand efforts will be directed
Existing Supply
towards building 150,000 hotel rooms in the next l
Based on the facilities and services provided, the
four years, in addition to the launch of a new "Bed
Ministry of Tourism approves and classifies hotels
and Breakfast" scheme to meet the requirements.
in India into eight categories, namely five-star deluxe, five-star, four-star, three-star, two-star, one-star,
l
The proposed known additions to supply are expected to be rapidly absorbed as they come
heritage and classification-awaited hotels.
on line over the next two to three years. After that l
As at the end of 2006, India had an estimated 1,169
we expect room rates to adjust to more realistic
approved hotels accounting for 75,787 rooms. The
levels. Markets such as Bangalore - which is
majority of this supply was located in Delhi, Mumbai,
generating one of the highest ADRs in India - are
Bangalore, Chennai and Hyderabad.
expected to experience a substantial rate correction by the end of the decade.
l
Historically, the high land prices in many of the
Additions to Supply
key cities have resulted in hotels being developed in the upper tier categories, causing a scarcity of supply in the lower categories. In its recent budget,
l
According to our research, the six major markets
the government has provided tax incentives to
have approximately 28,000 new rooms planned
develop one-, two- and three-star hotels in and
by 2011: Bangalore, Hyderabad and Pune will
around Delhi.
be most significantly impacted as room supply is forecast to increase almost 250% by 2011; in
Market Demand
Delhi/NCR, the majority of supply is being developed in Gurgaon and nearby Noida with
l
Aggressive growth in revenue per available room
almost 100% rooms is expected to be completed
(RevPAR) has been recorded in the three key
by 2011; while Mumbai and Chennai are expected
Indian cities of Delhi/NCR, Mumbai and Bangalore
to record growth rates of 35% and 55% respectively.
over the past five financial years. In FY2006-07, the five-star deluxe and five-star hotel segment in
l
Chennai has established itself as a preferred
Delhi/NCR and Mumbai reported growth in average
destination for the IT/ITeS (Information
room rates (ADR) of about 40% over the previous
Technology/Information Technology enabled
year, while Bangalore reported almost 20% ADR
services) industry. The major brands expected to
growth over the same period. In comparison, the
enter in the market in 2009 such as Hilton, Hyatt
occupancy growth has been less aggressive and in
and JW Marriot will raise the standard of
certain markets such as Bangalore, occupancies
accommodation. Hyderabad has very few rooms
have stagnated and even declined.
compared with Delhi and Mumbai. Most hotels are now concentrated in the central business district
l
Demand for rooms in India particularly in the key
(CBD) and upcoming markets of IT/ITeS. The Taj
cities (e.g. Delhi/NCR, Mumbai and Bangalore) is
Groups hotels are expected to commence
exceeding supply. This has fuelled the aggressive
operations in 2008.
7
Jones Lang LaSalle Hotels
Digest 2008: India
l
It is difficult to get accurate information on future
l
Credit Suisse, one of the world's top investment
developments in India, including hotels. There is
banks, launched its domestic brokerage operations
an unusually long approval process which delays
in India earlier this year and recently obtained its
projects and presents significant barriers to entry,
Indian merchant banking licence. Credit Suisse's
particularly for foreigners. Land is very expensive
real estate fund will acquire 10-15% in a hotel chain
everywhere and quality sites for hotels are even
in a structured deal. This is Credit Suisse's second
harder to locate. In some cases, part of this delay
investment in the real estate sector, the first being
is caused by the amalgamation of land which is
its acquisition of 75% of a INR3-billion InfoTech park
time-consuming as it requires purchasing land from
and five-star hotel project from Pune-based
different owners.
developer, Vascon Engineers. l
THE INVESTMENT MARKET
The Orchid Group of Hotels is planning to invest over INR10 billion to set up seven five-star properties in key centres across the country as it
l
In November 2007 DLF Ltd. announced its equal
mulls an international foray with properties in China
partnership with Amanresorts to enter into definitive
(PRC) and South Africa. It is also planning to add
agreements to acquire a controlling interest in the
nearly 2,000 rooms at seven locations across the
group. The entire transaction, when completed,
country. The company has entered into management
is estimated to be valued at INR16 billion, with
contracts for 10 hotels set to open acoss the country
an assumed debt of approximately INR6 billion.
over the next two years.
In addition to expanding its resort locations, Amanresorts is developing projects in key gateway
l
Milan-based Domina Hotel Group announced in
cities around the world, the first of which is scheduled
November 2007 that it would develop 25 hotels
to open in New Delhi in 2008.
through a joint venture and invest INR24 billion. In India, its first hotel is already under construction
l
US hospitality major Carlson is taking a 26% stake
and will be marketed under the new brand Vedic
in a new venture with the Unitech group to introduce
Domina Hotels & Resorts. Another four are
the Regent hospitality brand to India. The joint
expected to be built within five years.
venture will develop a luxury hotel property located at Greater Noida with an estimated
l
It was announced in December 2007 that Kamat Hotels had bought a 60% stake in Concept
investment of INR4.5 billion.
Hospitality for INR127 per share. The key hotels l
Domestic mid- to economy-segment group Lemon
Concept will manage include Seasons in Pune,
Tree Hotels has announced that Kotak Mahindra
Wall Street in Jaipur and Manor Floatel in Delhi.
Realty Fund has invested INR320 million in the
All of these now fall under the management of
company. In a related development, Kotak
Kamat Hotels. A total of 650 rooms will be under
Mahindra Realty Fund is investing about INR20
the listed Kamat Hotels entity which currently
million in Red Fox Hotels which proposes to
operates about 600 rooms.
open limited-service economy hotels in the price range of INR800-2,000 per night.
8
Jones Lang LaSalle Hotels
Digest 2008: India
l
Kotak India Real Estate Fund has just acquired an
l
Oberoi Hotels is fast expanding in India, Abu Dhabi,
approximate 11.11% stake in the Mumbai-based
the Maldives, Cambodia and Dubai, partly through
The Pride Group of Hotels at a cost of INR450
management contracts and also through investing
million. The group, which currently operates four
about INR5 billion of its own funds. The Group has
five-star hotels, has announced a INR3.5-billion
hired Kotak Mahindra to help raise INR4 billion via
expansion and renovation plan which includes setting
debt and new equity.
up five-star hotels in Mumbai, Goa, Bangalore and Hyderabad in addition to a resort hotel and spa at
l
India's Parsvnath Developers Limited (Parsvnath)
Alibaug. The management envisages an overall
has signed an agreement with conglomerate ITC's
inventory of 1,150 rooms in key cities by end 2009.
Fortune Park Hotels to manage 50 hotels comprising 4,100 rooms for Parsvnath Hotels Limited, a
l
l
Dubai Ventures, the private equity arm of Dubai
subsidiary of Parsvnath. Parsvnath Hotels is
Investment Group, has bought a 5% stake in Delhi-
expected to invest approximately INR25.4 billion to
based Bharat Hotels for INR1.6 billion - the deal
develop and own 50 hotels in India which will
values the company at INR32 billion. The hospitality
comprise 20 five-star hotels, 20 four-star hotels and
chain plans to raise up to INR10 billion for the
10 three-star and budget hotels between 2011 and
expansion of six properties under construction and
2013. The hotels will come under the brands of
has recently announced an international foray
Fortune Select, which are likely to have at least
through a joint venture with the Dubai-based
100 rooms each; Fortune Park, which are expected
Nakheel Group - Grand Fort Dubai is set to open
to have 75 or more rooms; and other brands such
in 2009. Other hotels are under construction
as Fortune Inn and Fortune Faith, which are likely
and scheduled to open over the next two years
to have at least 50 rooms. Parsvnath plans to
including The Grand Jaipur, The Grand Resort
eventually develop 75 to 100 hotels across India,
Bekal, The Grand Ahmedabad, The Grand
especially in the second- and third-tier cities, as
Chandigarh and The Grand Noida.
well as other major centres.
DB Realty, a domestic real estate fund, is investing
l
Choice Hotels India (CHI) has announced a INR7.6
about INR3.2 billion in a 320-room five-star
billion franchise and management plan to partner
property in Goa. Hyatt International will manage
with various investors to develop 20 new hotels with
and market the property. The project is likely to be
approximately 2,000 guestrooms in India's major,
completed by the second quarter of 2009.
tier-one and tier-two cities by 2010. CHI is also planning to introduce India's first all-suite hotel,
l
Financial services giant Morgan Stanley is close to
Clarion Ludhiana, in Ludhiana, Punjab by the end
picking up a 15-20% stake in the Institute of
of 2008. The 120-suite Clarion Ludhiana Hotel aims
Human Health Research Hospitality, owners of the
to target non-resident Indians (NRI). In addition,
Ananda and Ista brands of spas and hotels, for
CHI has also linked up with Royal Indian Raj
INR1.4 to 1.6 billion. Morgan Stanley will have a
International Corporation which is expected to invest
seat on the board of the hospitality company which
approximately INR160 billion from 2008 to 2012 to
is in the process of expanding its footprint in Delhi,
develop 15,000 budget guestrooms across India
Hyderabad, Pune and Ahmedabad. It plans to have
under CHI's hotel brands such as Clarion, Comfort
nine properties operating under the Ista brand over
Inn, Quality Inn and Sleep Inn.
the next three years.
9
Jones Lang LaSalle Hotels
Digest 2008: India
l
India's real estate fund, Yatra Capital, has entered
l
ITC has announced that through its subsidiary,
into a joint venture with Atlas Hospitality Company
Fortune Park Hotels Limited, that plans are
Private Limited (AHPL), a subsidiary of Ruia Group,
underway to add 100 hotels in rural India to
to develop a luxury hotel and serviced apartments
leverage the growing corporate demand as well
in Pune. Yatra is expected to hold a 20% stake in
as reach out to approximately 792 million (72%
the INR286.4-billion venture, which also marks its
of the 1.1 billion population) people living in the
entry into India's hospitality industry. Scheduled to
rural areas. Fortune Park Hotels is expected to
be completed in late 2009, the 26,900 square metre
expand hotels and inns with as few as 20 rooms
project is likely to comprise 319 hotel rooms and 96
each in the smaller towns of India by 2012, adding
serviced apartments. The project is expected to
3,000 rooms under its brand.
cater to business travellers in the area. l l
Indian real estate developer DLF will open a Four
Rakeen India Operations Company (Rakindo) has
Seasons Hotel in Gurgaon at a cost of INR5.9
announced the signing of a Memorandum of
billion. Part of DLF's ambition to become India's
Understanding (MoU) with Lotus Hotel Investment
largest hotel group, the 250-room hotel will be
Fund (Lotus) to develop business hotels in Asia,
developed on a 10-acre site at DLF Golf Link and
particularly in India. According to the MoU, a joint
is expected to open before the Commonwealth
venture company will be formed to invest in three-
Games in 2010. The developer has also secured
star and four-star hotels in Asia, with six major cities
links with Hilton Hotels to construct over 25,000
in South India being the initial focus.
hotel rooms on 40 parcels of land in 71 cities in the country by 2010. The cities include Delhi, Mumbai,
l
Real estate developer, Royal Palms India (RPI),
Chennai, Kolkata, Bangalore, Hyderabad, Pune,
has announced its plans to invest INR15.3 billion
Chhattisgarh, Amritsar and Ludhiana.
in the next three years to develop a 8-million square feet development in suburban Goregaon. The development is expected to comprise three-star to five-star hotels, IT offices, residences, villas and a retail mall.
10
Jones Lang LaSalle Hotels
Digest 2008: Bangalore
BANGALORE
MARKET OUTLOOK
l
More than 6,400 rooms are expected to come on stream in the next couple of years, with
Prospects for Bangalore's tourism and hotel industry
international branded hotel offerings from the likes
remain positive over the next few years in view of the
of The Ritz-Carlton, Shangri-La and JW Marriott.
following main factors: l l
We expect business travel to be the prime contributor
Bangalore is a key market for hospitality in India
for room demand in the coming years on account
and will continue as such in the coming years. It is
of increased IT/ITeS activity.
still the preferred destination for the IT/ITeS industry and with the new international airport and other
l
In view of the substantial planned room additions,
infrastructure improvements, its appeal is expected
we expect occupancies to dip as evident from
to increase further.
the trend in 2007. We forecast occupancies to stabilise at around 65-70% in the next five years with ADR averaging at INR16,000.
City Snapshot (as at 2007) Bangalore
Total Land Area (square kilometres) 741 Resident Population (million)
5.6 (2001 census)
Major Industries
IT/ITeS, Telecom, Aerospace & Defence
Source: Census of India 2001, City Municipal Website, Jones Lang LaSalle Hotels
11
Jones Lang LaSalle Hotels
Digest 2008: Bangalore
includes the building of new elevated highways,
TOURISM MARKET OVERVIEW
widening of existing roads and setting up of a mass transit system in the city.
Bangalore, the capital city of the southern state of Karnataka, and one of the top five largest cities in India in terms of population, is widely recognised as the
l
Given its strategic location as a key gateway,
country's IT and outsourcing hub. The city therefore
particularly for domestic tourists, to the World
receives a higher number of business travellers than
Heritage sites of Hampi and Pattadakal and historical
leisure tourists, both from the international as well as
attractions such as Tipu Sultan's 18th century fort
domestic markets.
and palace, Bangalore is in a good position to further expand its leisure tourism segment.
The city's tourism industry is poised for further growth, supported by progressive improvements made to the
l
Bangalore is also able to offer visitors some of
tourism infrastructure as well as the continued growth
India's best-rated golf courses at the Bangalore
in inbound arrivals. Major initiatives such as the
Golf Club and Karnataka Golf Association (KGA)
opening of the new Bengaluru International Airport in
Golf Course as well as dedicated resorts such as
Devanahalli in May 2008, the construction of a metro
Eagleton on the Bangalore-Mysore highway.
rail and the Bangalore-Mysore Infrastructure Corridor will improve accessibility and also help to relieve the
l
existing strain on the city's transport system.
Improvements to the air transport infrastructure with the new international airport and expansion of the city's international air network will improve accessibility and facilitate the growth in
Key Trends and Demand Drivers
international arrivals. l
Bangalore is positioned as India's IT/outsourcing hub. The Whitefield suburb of Bangalore, located
l
Bangalore is aiming to become a healthcare hub
16 kilometres east of the city, is the IT and
by 2011, with heavy investments by the Manipal
software centre of Bangalore and home to many
Group, Wockhardt and Columbia Asia to increase
multinational companies.
the number of hospital beds in the city. State-ofthe-art facilities and specialty treatments offered
l
The state government has launched various
by these private hospitals are targeted at both
initiatives to develop Bangalore into India's Silicon
discerning domestic patients as well as international
Valley by inviting foreign investors to become
medical tourists. Bangalore is also home to renowned
involved in various private-public partnership
medical clinics such as Jindal's health farm for
infrastructure projects. The development plan
visitors looking for less intrusive alternatives.
Key Tourism Data International Tourism Total International Tourist Arrivals (million)
FY2006-07
Change over FY2005-06 (%)
1.3
+46.2
6.9
+43.2
Domestic Tourism Total Domestic Tourist Arrivals (million) Source: Ministry of Tourism, Airport Authority of India (AAI)
12
Jones Lang LaSalle Hotels
Digest 2008: Bangalore
l
International Visitor Arrivals
The MICE segment has the potential to grow provided plans for the proposed International Convention Centre adjacent to the new international
l
According to statistics from the Airport Authority of
airport materialise. The development is expected
India (AAI), international passenger traffic at
to fill the demand for full-scale exhibition and
Bangalore International Airport (BIA) increased
conference facilities that are currently lacking in the
steadily from 0.2 million in FY2001-02 to 1.3 million
city and compete directly with Hyderabad.
in FY2006-07. Compared with FY2005-06, arrivals had surged by over 46%. This uptrend is expected
l
The booming commercial and IT sectors,
to continue into FY2007-08 as indicated by the 31%
improved direct air connectivity as well as heightened
year-on-year increase in international arrivals to
investor interest contributed to the buoyant
one million during the April to November 2007 period.
state of the international visitor arrivals. While the leisure segment has potential to grow, the business segment continues to dominate.
1.4
80
1.2
70 60
1.0
50
0.8
40
0.6
30
0.4
20
0.2 0.0
Annual Growth (%)
Number of Passengers (million)
International Passenger Traffic via Bangalore International Airport
10 2001-02
2002-03
2003-04
2004-05
2005-06
Financial Year* Number of Passengers (million)
2006-07
2006-07 (Apr-Nov)
2007-08 (Apr-Nov)
0
Annual Growth (%)
* Beginning 1 April to 31 March Source: AAI, Jones Lang LaSalle Hotels
13
Jones Lang LaSalle Hotels
Digest 2008: Bangalore
Domestic Tourism
year-on-year increase in domestic passengers at the airport during the first eight months of the financial
l
year to 5.6 million.
AAI statistics show that domestic passenger traffic has more than tripled from 2.1 million in FY200102 to 6.9 million in FY2006-07. On an annual
l
The outlook for domestic tourism is positive with
comparison basis, domestic arrivals recorded an
arrivals expected to increase due to demand from
impressive growth of 43.2%.
corporate travellers. The incoming traffic has been further fuelled by the increased frequency of existing
l
Similar to the trend for international arrivals, the
routes or introduction of additional routes by LCCs
domestic market is expected to register strong
such as Indigo, Spice Air and Go Air.
growth in FY2007-08, as indicated by the 33.5%
8
50
7
40
6
30
5
20
4
10
3
0
2
-10
1 0
Annual Growth (%)
Number of Passengers (million)
Domestic Passenger Traffic via Bangalore International Airport
2001-02
2002-03
2003-04
2004-05
2005-06
Financial Year* Number of Passengers (million)
2006-07
2006-07 (Apr-Nov)
2007-08 (Apr-Nov)
-20
Annual Growth (%)
* Beginning 1 April to 31 March Source: AAI, Jones Lang LaSalle Hotels
14
Jones Lang LaSalle Hotels
Digest 2008: Bangalore
HOTEL MARKET OVERVIEW
Future Supply
According to our research, Bangalore has 20-25
l
Based on our research, Bangalore will witness
government-approved hotels with a total count of
the entry of more than 6,400 rooms between
2,600-2,900 rooms. Geographically, there is no
2008 and 2010.
distinct hotel district in Bangalore and the greater part of the major hotel accommodation is located
l
The new projects in the pipeline, which comprise
in the CBD along Race Course Road, MG Road
a mixture of domestic and international brand
and Sankey Road.
names, will diversify the city's accommodation offerings ranging from the internationally branded
With the new international airport, hotels such as
hotel segment such as The Ritz-Carlton,
the Windsor Manor, Le Meridien, Grand Ashok and
Sheraton, Shangri-La and JW Marriott, to budget
Taj West End, which are located along Sankey and
and economy establishments such as Ibis.
Race Course Road, will benefit from a direct road link from the airport to their properties. Currently,
l
A number of additions to supply are to be located
these properties have a perceived disadvantaged
near the new airport although construction has
location relative to the existing airport as
yet to commence. We understand from our
accessibility is often via the congested CBD area.
research that a substantial amount of land on both sides of the roads leading to the airport has
For 2007 we are only aware of the addition of The
been land-banked by developers and local hotel
Leela Palace Kempinski's 105-room extension
companies such as Taj and Oberoi were awaiting
which entered the market in January. The additional
the development of the airport.
rooms have placed some downward pressure on market-wide occupancies during the year.
Major Future Supply in Bangalore (as at March 2008) 3.5
Number of Rooms (000)
3.0 2.5 2.0 1.5 1.0 0.5 0
2007
2008
2009
2010 onwards
Estimated Year of Completion Completed Supply
Forecast Supply
Source: Jones Lang LaSalle Hotels, Industry Sources
15
Jones Lang LaSalle Hotels
Digest 2008: Bangalore
The following table details the major supply in the pipeline from 2008 through to 2010.
Major Future Hotel Supply In Bangalore (as at March 2008) Project Name
Location
Rooms Due/Open Likely Star Positioning
Taj ITPL Bangalore
International Tech Park
199 2008
Five-star Deluxe
JW Marriott
UB City, City Centre
250 2008
Five-star Deluxe
Trident
Bengaluru International Airport
321 2008
Five-star
Shangri-La
CBD
350 2008
Five-star Deluxe
Shangri-La Resort & Spa
IT Corridor
474 2008
Five-star Deluxe
Traders Hotel
Whitefield
280 2008
N/A
Bell Tower Hotel
Whitefield
100 2008
N/A
Keys Hotel Hosur Road
Hosur Road
180 2008
Three-star
Keys Hotel
Whitefield
150 2008
Three-star
Hilton Bangalore
Ulsoor District
300 2008
Five-star Deluxe
Unnamed Hotel (by Chancery Group) Devanhalli
250 2009
N/A
Renaissance
Race Course Road
328 2009
Five-star
Sheraton Bangalore Hotel at Brigade Gateway
Malleshwaram West
300 2009
Five-star
Taj Residency (by Naveen Hotels)
Yeshwantpur
350 2009
Five-star
The Westin Bangalore
Outer Ring Road, Hebbel
300 2009
Five-star Deluxe
Lemon Tree Hotel
St. John Road
173 2009
Three-star
ITC Gardenia
Residency Road
230 2009
Five-star Deluxe
Ibis Bangalore
TBC
380 2009
Three-star
Novotel Bangalore
TBC
200 2009
Three-star
Park Plaza Bangalore
Outer Ring Road
167 2009
Four-star
Mövenpick Bangalore
TBC
220 2009
Three-star
The Ritz-Carlton
Off Residency Road
275 2009
Five-star Deluxe
Hampshire Hotel
TBC
TBC 2010
Four-star
Holiday Inn Bangalore International Aiport
Near Bengaluru International Airport
250 2010
Four-star
Oberoi Hotel
Overlooking Hebbel Lake
225 TBC
Five-star Deluxe
Ista Golf View
Koramangala
Unnamed Hotel (by Surraaj Hotels & Resorts)
TBC
100 TBC
N/A
Fortune Hotel Bangalore
TBC
TBC TBC
Four-star
70 TBC
Total New/Proposed Supply
Four-star
6,422
TBC: to be confirmed N/A: not avaliable Source: Jones Lang LaSalle Hotels, Media Sources
16
Jones Lang LaSalle Hotels
Digest 2008: Bangalore
Five-Star Deluxe and Five-Star Hotel Market
l
In view of the relatively large new supply anticipated in 2008 and with room demand expected to remain
l
Bangalore's five-star deluxe and five-star hotels
strong, we expect RevPAR growth to be driven by
enjoyed another robust year as demand continues
ADR growth in 2008-09. The anticipated addition
to exceed supply.
of almost 3,700 new rooms in 2008 and 2009 is expected to alleviate the current shortage in supply
l
l
ADR saw a 16% increment in 2006-07 to INR16,000.
however the resultant increase in competitive
Due to the addition of rooms in 2007, occupancy
pressures within the market could lead to some
dropped two percentage points to 74%.
rationalisation in ADR growth rates.
Led by growth in room rates, RevPAR strengthened by 13% year-on-year to a seven-year high of INR12,000.
Five-Star Deluxe and Five-Star Hotel Performance in Bangalore 18
78 76
14
74
12 10
72
8
70
6
68
4
66
2 0
Occupancy (%)
ADR/RevPAR (INR) (000)
16
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
64
Financial Year* ADR
RevPAR
Occupancy (%)
* Beginning 1 April to 31 March Source: Jones Lang LaSalle Hotels, Industry Sources
17
Jones Lang LaSalle Hotels
Digest 2008: Chennai
CHENNAI
MARKET OUTLOOK
l
Our research shows that Chennai will see the entry of almost 3,700 rooms between 2008 and
Chennai's tourism and hotel industry prospects are
2011. The majority of this supply (2,075 rooms) is
positive in view of the following key contributors:
expected to enter the market by the end of 2009. Major brands include Hilton, Hyatt and JW Marriott,
l
Chennai, like Delhi to the north, will continue to be
which will broaden the range and lift the city's
the prime gateway to south India for both leisure
standard of accommodation.
and business tourists. l l
Regardless of the relatively large supply in the
Chennai has established itself as a preferred
pipeline, we expect robust demand drivers to
destination for the IT/ITeS industry as well as the
continue the trend of increased ADR and
auto and electronic equipment manufacturing
stabilised occupancy.
industry. With confirmed plans of the auto and electronic industry to expand and establish new
l
l
Occupancy in Chennai is forecast to remain
bases, we expect Chennai to be a favourable
stable at 73% in the next five years with ADR
market for the hospitality industry.
averaging INR10,000.
We forecast leisure and business travellers to maintain their share whereby increasing numbers will drive the growth of the city's hospitality industry.
City Snapshot (as at 2007) Chennai
Total Land Area (square kilometres) 181 Resident Population (million)
4.3 (2001 census)
Major Industries
Manufacturing (automotive & electronic), IT/ITeS, Banking & Financial Services
Source: Census of India 2001, City Municipal Website, Jones Lang LaSalle Hotels
18
Jones Lang LaSalle Hotels
Digest 2008: Chennai
TOURISM MARKET OVERVIEW
Nadu contributes almost 15%, second only to Karnataka. Chennai has popular government and
Located on the Coromandel Coast of the Bay of Bengal,
private universities that are known in India for
Chennai is the capital of the Indian state of Tamil Nadu.
engineering courses.
It is the fourth largest metropolitan city in India and one of the largest metropolitan areas in the world.
l
It is of religious importance to a large number of south Indians. Many temples of religious significance
Chennai's economy has a broad industrial base in the
are present in the state of Tamil Nadu and Chennai
automobile, technology, hardware manufacturing and
serves as a gateway to the state.
healthcare industries. The city is home to much of India's automobile industry and is one of the major hubs for the
l
IT/ITeS industry after Bangalore.
Chennai is the origin of the majority of the expatriate and NRI population. Many Indians from this part of the country migrate to the US and Gulf countries,
The city is served by an international airport and
mostly as software workers and as construction
two major ports; it is connected to the rest of the
professionals. They visit the country once every two
country by five national highways and two railway
years on average and stay about 30 days. During
terminals. Being an economic centre in south India,
this period they undertake religious and tourist
Chennai receives both domestic and international
excursions within the state.
business travellers. l
Emerging fast as a preferred destination for medical tourism, Chennai offers world-class treatments with
Key Trends and Demand Drivers
modern medicine as well as traditional Indian l
Chennai has a broad industrial base with a strong
medicine being available. Popular hospital chains
focus on the automobile and electronic industries.
such as Apollo, Max and Fortis have established
The city hosts world majors such as GM, Hyundai,
speciality hospitals that cater to patients from the
Nokia and Motorola. These companies have plans
Gulf and Southeast Asia.
to expand their facilities further and develop Chennai as a regional hub for Asia Pacific.
l
Chennai's large industrial base, booming IT/ITeS services, widespread religious importance and
l
It is one of the largest exporters of IT/ITeS
mushrooming healthcare sector renders a preferred
services in India after Bangalore. Out of India's
destination for business and leisure.
total IT/ITeS workforce, the parent state of Tamil
19
Jones Lang LaSalle Hotels
Digest 2008: Chennai
Key Tourism Data International Tourism Total International Tourist Arrivals (million)
FY2006-07
Change over FY2005-06 (%)
2.9
+11.5
6.1
+45.1
Domestic Tourism Total Domestic Tourist Arrivals (million) Source: Ministry of Tourism, AAI
International Visitor Arrivals
l
Latest available statistics from AAI indicate that this growth trend will continue into FY2007-08.
l
Statistics from AAI show international passenger
For the period from April to November 2007, total
traffic at Chennai International Airport reached 2.9
international passenger arrivals increased by
million in FY2006-07, up by 61% from 1.8 million
19% year-on-year to 2.2 million.
in FY2000-01.
International Passenger Traffic via Chennai International Airport 25 20 3
15 10
2
5 0
1
Annual Growth (%)
Number of Passengers (million)
4
-5 0
2001-02
2002-03
2003-04
2004-05
2005-06
Financial Year* Number of Passengers (million)
2006-07
2006-07 (Apr-Nov)
2007-08 (Apr-Nov)
-10
Annual Growth (%)
* Beginning 1 April to 31 March Source: AAI, Jones Lang LaSalle Hotels
20
Jones Lang LaSalle Hotels
Digest 2008: Chennai
Domestic Tourism
l
Similar to the trend for international passenger arrivals, the number of domestic passengers rose
l
Statistics from AAI show domestic passenger traffic
27% year-on-year to 4.9 million over the April to
at Chennai International Airport reached 6.1 million
November 2007 period.
in FY2006-07, up from 2.2 million in 1999.
7
50
6
40
5
30
4
20
3
10
2
0
1
-10
0
2001-02
2002-03
2003-04
2004-05
2005-06
Financial Year* Number of Passengers (million)
2006-07
2006-07 (Apr-Nov)
2007-08 (Apr-Nov)
Annual Growth (%)
Number of Passengers (million)
Domestic Passenger Traffic via Chennai International Airport
-20
Annual Growth (%)
* Beginning 1 April to 31 March Source: AAI, Jones Lang LaSalle Hotels
21
Jones Lang LaSalle Hotels
Digest 2008: Chennai
HOTEL MARKET OVERVIEW
Future Supply
According to our research and latest available
l
Our research shows that Chennai will witness
statistics, Chennai has 55 government-approved
the entry of almost 3,700 rooms between 2008
hotels with a total of 5,500 rooms. Most of the hotels
and 2011.
in Chennai are concentrated near to the CBD or along Anna Salai road that connects the international
l
The Hilton is expected to start operations in 2008
airport to the city. However, many new hotels are
while both Hyatt and JW Marriott hotels are
expected to come up along the Old Mahabalipuram
scheduled to be operational by 2009.
Road (OMR) which is fast emerging as a micro market for IT/ITeS activity. We are aware of only two
l
There is a major concentration of hotels along
openings for 2007, the Asiana at OMR Road with
the OMR and the rest are scattered around
114 rooms and The Pride at Poonamallee High
the CBD.
Road with 115 rooms. Both properties are in the five-star category.
Major Future Supply in Chennai (as at March 2008)
Number of Rooms (000)
2.5 2.0 1.5 1.0 0.5 0
2007
2008
2009
Estimated Year of Completion Completed Supply
Forecast Supply
Source: Jones Lang LaSalle Hotels, Industry Sources
22
Jones Lang LaSalle Hotels
Digest 2008: Chennai
The following table details the major supply in the pipeline from 2008 to 2011.
Major Future Hotel Supply In Chennai (as at March 2008) Project Name
Location
Rooms Due/Open
Taj GVK Chennai
Mount Road
221 2008
Five-star
Lemon Tree Hotel
Opposite Raj Bhavan
110 2008
Three-star
Hilton Chennai
Guindy
253 2008
Five-star Deluxe
Unnamed Hotel
Old Mahabalipuram Road
300 2008
TBC
100 2008
TBC
66 2008
TBC
Unnamed Hotel (by Femena Hotels) TBC
Likely Star Positioning
Deccan Park Ltd
Old Mahabalipuram Road
Hyatt Regency Chennai
TBC
225 2009
Five-star
The ITC Grand Chola
Mount Road
550 2009
Five-star Deluxe
Hyatt
Close to the Chennai Airport
250 2009
Five-star
JW Marriott
Estuary near the Adyar river
300 2009
Five-star Deluxe
The Leela Palace Kempinski
Adyar Beach
380 2010
Five-star Deluxe
Hampshire Hotels
TBC
TBC 2011
Four-star
Unnamed Hotel (by Bharat Hotels)
TBC
320 TBC
Five-star Deluxe
Raintree-branded Hotel (by Ceebros)
Anna Salai
200 TBC
TBC
Unnamed Hotel
Off College Road
150 TBC
TBC
Fortune
Old Mahabalipuram Road
Empee Group
Inner Ring Road
Total New/Proposed Supply
Three-star 253
TBC
3,678
TBC: to be confirmed N/A: not avaliable Source: Jones Lang LaSalle Hotels, Media Sources
23
Jones Lang LaSalle Hotels
Digest 2008: Chennai
Five-Star Deluxe and Five-Star Hotel Market
increased from INR4,000 to INR8,500. Increased business travel and the lack of hotel rooms are
l
the prime reasons for this trend.
Chennai has approximately 1,500 rooms in the five-star deluxe and five-star hotel market segment. No new addition to the stock has taken place in the
l
past couple of years.
Taking into account the future supply in this segment, we anticipate downward pressure on the RevPAR.
l
Occupancies in this segment increased from 51% in 2002 to 76% in 2007. For the same period, ADR
9
90
8
80
7
70
6
60
5
50
4
40
3
30
2
20
1
10
0
2001-02 ADR
2002-03 RevPAR
2003-04 2004-05 Financial Year*
2005-06
2006-07
Occupancy (%)
ADR/RevPAR (INR) (000)
Five-Star Deluxe and Five-Star Hotel Performance in Chennai
0
Occupancy (%)
* Beginning 1 April to 31 March Source: Jones Lang LaSalle Hotels, Industry Sources
24
Jones Lang LaSalle Hotels
Digest 2008: Delhi
DELHI
MARKET OUTLOOK
l
The Commonwealth Games in 2010 is expected to attract 50,000 foreign visitors to Delhi. Our research
Delhi is both the nation's capital and its prime economic
indicates that approximately 30,000 rooms will be
hub. It is home to the administration, Supreme Court
required to accommodate these visitors.
and political base which governs and exercises supervisory powers over the whole country. With
l
Gurgaon, the satellite city of Delhi, is witnessing
decentralisation policies for urban development of the
a phenomenal increase in development activity
National Capital Region (NCR), Delhi comprises the
with a major increase in MNCs (multinational
National Capital Territory of Delhi itself and the
corporations) and domestic BPOs (business
neighbouring satellite urban areas including Gurgaon
process outsourcings) setting up their offices
and Faridabad in Haryana and Noida, Greater Noida
there. There are about 4,087 rooms in the pipeline
and Ghaziabad in Uttar Pradesh.
in Gurgaon which will make it an alternative to Delhi city's existing commercial districts.
Further growth and development in Delhi's tourism and hospitality sectors is expected to be supported by the
l
following key factors:
With the influx of specialty hospitals such as Apollo, Fortis, Artemis Health Institute and Wockhardt Hospitals, it is expected that medical tourism will
l
Delhi will continue to be the prime gateway to India
increase and this will further strengthen the demand
for both leisure and business travellers. With
for hotel rooms.
emerging suburbs as centres of corporate activity, coupled with Delhi's positioning as the seat of the
l
Notwithstanding the large volumes of new rooms
central government, and the expanding international
expected in the future, we forecast robust demand
airport, the city's tourism industry is expected to
drivers to continue the trend of increased ADRs and
grow further in the coming years. We expect
stabilised occupancies. Occupancy in Delhi is
increasing leisure and business travellers to be a
expected to remain at 75% in the next five years
prime demand driver for the hospitality industry in
with ADR averaging at INR17,000.
the city.
25
Jones Lang LaSalle Hotels
Digest 2008: Delhi
City Snapshot (as at 2007) Delhi
Total Land Area (square kilometres) 1483 Resident Population (million)
13.8 (2001 census)
Major Industries
IT/ITeS, Manufacturing, Banking & Financial Services
Source: Census of India 2001, City Municipal Website, Jones Lang LaSalle Hotels
TOURISM MARKET OVERVIEW
international convention centre at Dwarka, located five kilometres from the international airport. This
As the capital city and one of the key international
centre is designed to have a seating capacity of
gateways to India, Delhi benefits from India's continued
12,000 with a convention hall, auditoriums,
economic expansion, rising foreign investment inflows
conference rooms, banquet halls and exhibition
and increasing attractiveness as a tourist destination.
areas, along with two hotels with up to 850 rooms. It is expected to attract large conventions to Delhi
Delhi's tourism industry stands to benefit from India's
and boost the city's MICE (meetings, incentives,
continued economic boom and the resulting influx of
conventions and exhibitions) capabilities.
foreign investment and visitors to the capital city. Playing host to the upcoming Commonwealth Games will not
l
A hospitality district is being developed by Delhi
only help the city to raise its profile as a business and
International Airport Limited (DIAL) with over
leisure destination in the international arena but will also
40 acres of land allocated for luxury and business
spur improvements to the existing tourism and transport
hotels, serviced apartments and a convention
infrastructure, thereby benefiting the tourism and
centre. The district, which is alongside the
hospitality sector.
Delhi-Gurgaon road, is expected to help ease the shortage of hotel rooms in the capital and transform the complex into a hub for hospitality,
Key Trends and Demand Drivers
commercial and retail space. l
Delhi is the second largest metropolis in India and, along with Mumbai, attracts the majority of tourist
l
Delhi is expected to see an increase in connectivity
arrivals to the country. As India's long-term capital,
in both domestic as well as international air routes.
Delhi's culture is strongly embedded in its history,
Apart from national carriers, private carriers are
and reflected in the 175 monuments that have been
also securing direct or single leg international
marked as national heritage sites. This results in a
connections from Delhi to major cities worldwide.
steady stream of visitors to the metropolis keen to
The entrance of many LCCs has boosted traffic to
witness the remnants of its Mughal past in the many
and from the capital, stretching the current aviation
bazaars and historical sites around the city.
infrastructure even further. DIAL currently handles 23 million passengers a year against its official
l
capacity of 14 million.
The Delhi Development Authority (DDA) has put forward a proposal to set up India's largest
26
Jones Lang LaSalle Hotels
Digest 2008: Delhi
l
In an effort to increase mobility within the city,
and the city centre. The scheme is expected to
plans are being put in place to expand the metro
greatly reduce journey time to the city centre.
system in time for the Commonwealth Games. The
This is to be further enhanced by the introduction
second phase of the metro system includes an
of high capacity bus systems which are already
extension into the city's southern neighbourhoods
being developed.
as well as a high-speed rail link between the airport
Key Tourism Data International Tourism Total International Tourist Arrivals (million)
FY2006-07
Change over FY2005-06 (%)
6.7
+15.4
13.6
+31.7
Domestic Tourism Total Domestic Tourist Arrivals (million) Source: Ministry of Tourism, AAI
27
Jones Lang LaSalle Hotels
Digest 2008: Delhi
International Visitor Arrivals
l
Of all the foreign tourists coming to India, 35-40% make Delhi their first port of call, with 62% of these
l
being business travellers.
Statistics from AAI show international passenger traffic at Indira Ghandi International Airport reached 6.7 million in FY2006-07, up 15.4% from the
l
Industry estimates suggest that all business
previous financial year. This growth in inbound
travellers and 12% of foreign leisure travellers
foreign travellers is expected to continue into
coming to Delhi prefer to stay in star-rated hotels.
FY2007-08 as indicated by the 11% year-on-year growth in international passenger arrivals to 4.5
l
According to our estimates, Delhi is expected to host 50,000 additional foreign tourists during
million for the April to November 2007 period.
Commonwealth Games in 2010.
7
20
6
15
5
10
4
5
3 0
2
-5
1 0
Annual Growth (%)
Number of Passengers (million)
International Passenger Traffic via Indira Ghandi International Airport
2001-02
2002-03
2003-04
2004-05
2005-06
Financial Year* Number of Passengers (million)
2006-07
2006-07 (Apr-Nov)
2007-08 (Apr-Nov)
-10
Annual Growth (%)
* Beginning 1 April to 31 March Source: AAI, Jones Lang LaSalle Hotels
28
Jones Lang LaSalle Hotels
Digest 2008: Delhi
Domestic Tourism
l
Domestic tourists to Delhi comprise 60-65% of total arrivals with 50% preferring to stay in
l
star-rated hotels.
Based on data from AAI, domestic passenger traffic at Indira Ghandi International Airport has surged by 31.7% from 10.5 million in FY2005-06 to 13.6
l
Anecdotal evidence suggests domestic guests typically stayed for two to three days.
million in FY2006-07. A similar growth trend is expected for FY2007-08 as the first eight months of 2008 witnessed an increment of 26% year-on-
l
The outlook for domestic tourism is positive, with domestic visitor traffic expected to surge during the
year to 8.6 million domestic passengers.
Commonwealth Games.
16
40
14
35 30
12
25
10
20
8
15
6
10 5
4
0
2 0
Annual Growth (%)
Number of Passengers (million)
Domestic Passenger Traffic via Indira Ghandi International Airport
-5 2001-02
2002-03
2003-04
2004-05
2005-06
Financial Year* Number of Passengers (million)
2006-07
2006-07 (Apr-Nov)
2007-08 (Apr-Nov)
-10
Annual Growth (%)
* Beginning 1 April to 31 March Source: AAI, Jones Lang LaSalle Hotels
29
Jones Lang LaSalle Hotels
Digest 2008: Delhi
HOTEL MARKET OVERVIEW
Future Supply
Existing Supply
l
Our research shows that Delhi/NCR will see the entry of almost 7,400 rooms between 2008 and
According to our research and the latest available
2010. The majority of supply (3,037 rooms) is
statistics, Delhi has 48 government-approved hotels
expected to enter the market in 2009.
with a total of 7,165 rooms. If we include Noida and Gurgaon (the suburbs of Delhi in neighbouring states),
l
Aside from the Crowne Plaza Gurgaon (234 rooms)
there are 62 hotels with 7,781 rooms. The majority of
which recently opened and The Westin Resort &
Delhi's upmarket hotels are located in its traditional
Spa (97 rooms), other prominent additions will
business districts of Connaught Place, Nehru Place and
include the 322-room Leela Kempinski Gurgaon
Bhikaji Cama Place however the emergence of Gurgaon
which is scheduled to open end 2008.
and Noida as major commercial and residential centres on the outskirts of Delhi has also led to increased hotel
l
Approximately 55% of the total room inventory in the pipeline will open in Gurgaon. The concentration
development activity in these areas.
of hotels parallels the commercial, residential and Our statistics indicate that of the 30,000 approximately
retail activities taking place. Some of the proposed
rooms required in the NCR region for the Commonwealth
hotel additions in the area include the Courtyard by
Games, there are presently approximately only 10,500
Marriott, Novotel and The Westin, Gurgaon.
rooms. With the expected forecast for the number of hotels coming up, it is still expected that an additional
l
While the increase in supply will help to address
15,000 to 18,000 rooms will be required during the
the current shortfall of hotel rooms in the city, new
Games. This potential demand-supply gap presents
challenges such as manpower shortages will need
huge untapped opportunity for potential investors in
to be addressed following the surge in supply.
the industry.
Major Future Supply in Delhi/NCR (as at March 2008) 3.5
Number of Rooms (000)
3.0 2.5 2.0 1.5 1.0 0.5 0
2007
2008
2009
2010 onwards
Estimated Year of Completion Completed Supply
Forecast Supply
Source: Jones Lang LaSalle Hotels, Industry Sources
30
Jones Lang LaSalle Hotels
Digest 2008: Delhi
l
New projects in the pipeline, which comprise a
ranging from the upper tier hotel segment such as
mixture of domestic and international brand names,
the Leela Kempinski to lower tier establishments
will diversify the city's accommodation offerings
such as Ibis and Lemon Tree.
The following table details the major supply in the pipeline from 2008 to 2010.
Major Future Hotel Supply In Delhi (as at March 2008) Project Name
Location
The Leela Kempinski Gurgaon
Gurgaon
322 2008
Five-star Deluxe
The Leela Residences
Gurgaon
90 2008
Five-star Deluxe
The Aman, Lodhi Road
Delhi
69 2008
Five-star Deluxe
The Claridges Atrium Suraj Kund
Faridabad
275 2008
Five-star
Park Plaza Extension & Convention Centre
Gurgaon
32 2008
Five-star
DLF Hilton Garden Inn, Saket
Delhi
118 2008
Five-star
Park Plaza Noida
Noida
88 2008
Five-star
Courtyard by Marriott
Gurgaon
199 2008
Five-star
Picadilly, Janakpuri
Delhi
240 2008
Five-star
Courtyard by Marriott
Noida
250 2008
Five-star
Ibis
Gurgaon
217 2008
Three-star
Red Fox Manesar
Gurgaon
110 2008
Three-star
Red Fox Jasola
Delhi
77 2008
Three-star
The Westin Gurgaon
Gurgaon
300 2009
Five-star Deluxe
The Westin Service Residences
Gurgaon
150 2009
Five-star Deluxe
Regent Gurgaon
Gurgaon
300 2009
Five-star Deluxe
Today Hotel
Delhi
250 2009
Five-star
Radisson Manesar
Gurgaon
225 2009
Five-star
Crowne Plaza Today
Delhi
200 2009
Five-star
Clarion Hotel
Gurgaon
80 2009
Five-star
Unnamed hotel by Narsi group
Gurgaon
250 2009
Five-star
Savoy Suites - Apartments
Gurgaon
110 2009
Four-star
Dawnay Day
Gurgaon
100 2009
Four-star
Oakwood Apartments
Gurgaon
64 2009
Four-star
Mariott Executive Apartments
Gurgaon
173 2009
Four-star
JMD Hotel on Sonha Road
Gurgaon
175 2009
Four-star
Shipra Hotel Ghaziabad
Ghaziabad
250 2009
Three-star
Novotel
Gurgaon
320 2009
Three-star
Formula 1, Gurgaon
Gurgaon
90 2009
Three-star
31
Rooms Due/Open
Likely Star Positioning
Jones Lang LaSalle Hotels
Digest 2008: Delhi
Major Future Hotel Supply In Delhi (as at March 2008) Project Name
Location
The Leela Palace New Delhi
Delhi
210 2010
Five-star Deluxe
The Oberoi
Gurgaon
150 2010
Five-star Deluxe
Four Seasons Hotel Gurgaon
Gurgaon
230 2010
Five-star Deluxe
Hilton Dwarka New Delhi
Delhi
300 2010
Five-star
Eros Boulevard Hotel
Delhi
350 2010
Five-star
JP Greens
Greater Noida
200 2010
Five-star
Taj Business Hotel
Gurgaon
200 2010
Five-star
DLF Rajiv Chawk - Connaught Place Hotel
Gurgaon
200 2010
Five-star
Hilton Garden Inn New Delhi
Delhi
400 2010
Four-star
Six Senses
Greater Noida
TBC 2010
Five-star Deluxe
Total Proposed Supply
Rooms Due/Open
Likely Star Positioning
7,364
TBC: to be confirmed Source: Jones Lang LaSalle Hotels, Media Sources
32
Jones Lang LaSalle Hotels
Digest 2008: Delhi
Five-Star Deluxe and Five-Star Hotel Market
l
In comparison, occupancy rates remained stable at 75% but are expected to decline in the coming
l
The performance of five-star deluxe and
years on account of upcoming supply in Noida
five-star hotels in Delhi/NCR reached record
and Gurgaon.
levels in 2007 on the back of robust demand and limited supply.
l
With room demand anticipated to stay strong, we expect RevPAR growth to remain driven by ADR
l
ADR rose to historic highs at INR12,500 though
growth in 2008. However, the growth in ADR may
the additional supply coming online could affect
moderate slightly following the anticipated entry
its growth.
of over 3,400 new rooms in 2008 and 2009.
14
80
12
70
10
60 50
8
40
6
30
4
20
2 0
ADR
Occupancy (%)
ADR/RevPAR (INR) (000)
Five-Star Deluxe and Five-Star Hotel Performance in Delhi/NCR
10 2001-02
2002-03 RevPAR
2003-04 2004-05 Financial Year*
2005-06
2006-07
0
Occupancy (%)
* Beginning 1 April to 31 March Source: Jones Lang LaSalle Hotels, Industry Sources
33
Jones Lang LaSalle Hotels
Digest 2008: Hyderabad
HYDERABAD
MARKET OUTLOOK
l
Our research shows that Hyderabad will see the entry of around 5,600 rooms between 2008 and
Hyderabad's tourism and hotel industry has the
2011. About 1,700 rooms are expected to come
potential to develop and grow further in light of the
on stream in 2008 including major brands such as
following key factors:
Marriott and Westin.
l
Hyderabad is a key market for hospitality in India
l
We expect business travel to continue to be the
and will remain so in the coming years. It has
prime demand driver in the coming years on account
established itself as a preferred destination for the
of increased IT/ITeS activity.
IT/ITeS industry after Bangalore and with the new international airport and other infrastructure
l
With the expected room additions, we forecast
improvements, its attractiveness is expected to
occupancies to dip in the coming years. We estimate
increase further.
that occupancies will stabilise at around 65-70% in the next five years with ADR averaging INR15,000.
City Snapshot (as at 2007) Hyderabad
Total Land Area (square kilometres) 625 Resident Population (million)
3.8 (2001 census)
Major Industries
IT/ITeS, Biotechnology
Source: Census of India 2001, City Municipal Website, Jones Lang LaSalle Hotels
34
Jones Lang LaSalle Hotels
Digest 2008: Hyderabad
TOURISM MARKET OVERVIEW
metre facility with a 287-room capacity business hotel, Novotel Hyderabad, the convention centre
Hyderabad is the capital city of the Indian state of
has a seating capacity of 4,000 and can be
Andhra Pradesh. It has an estimated metropolitan
configured to accommodate a seating capacity
population of 6.1 million, making it a mini-metro
of about 6,500 guests.
city and India's sixth largest metropolitan area. The city is renowned for its rich history, culture and
l
The city is an emerging base for semiconductor
architecture representing its unique character as a
fabrication activity. With the opening up of India's
meeting point for north and south India as well as its
semiconductor policy, large manufacturing
multilingual culture.
companies such as Intel and Cypress have shortlisted the city to set up their first fabrication
Also known as The City of Nizams, Hyderabad is today
plants in India.
one of the most developed cities in the country and a modern hub for IT/ITeS and biotechnology.
l
The presence of multiple speciality hospitals has established Hyderabad as a preferred destination
Hyderabad is predominantly a business destination
for medical tourism. Hospital operators including
and derives 98% of tourism revenues from business
Apollo, Max and Fortis have established hospitals
travel. Domestic business travel constitutes 70% of
which cater to domestic as well as international
total revenues.
patients, particularly from the Middle East and Asia Pacific.
Key Trends and Demand Drivers l l
l
Hyderabad is a strong base for local and
With its strong IT/ITeS industry and emerging
international business in precious stones, gems
biotechnology hub, Hyderabad is home to large
and jewellery. The city is a major hub for the
campuses of major international and domestic
processing and export of gems and jewellery and
IT/ITeS companies including Microsoft, Infosys,
draws a large number of international business
Wipro, Deloitte and UBS.
visitors for this purpose.
Hyderabad is a preferred MICE destination.
l
Hyderabad is the origin of a large expatriate and
The Hyderabad International Convention Centre
NRI population based mainly in the US and the Gulf
has established itself as a popular MICE venue
who travel to India for long periods every two years.
and has played host to numerous large and small events including Infocom in 2007 and is set to
l
Its strong IT/ITeS industry, emerging biotechnology
host the PATA Travel Mart in September 2008.
and established MICE segment has helped
The centre was developed by Dubai-based
the city create a niche for itself on the travel
Emaar Properties. An integrated 27,000 square
and tourism map.
35
Jones Lang LaSalle Hotels
Digest 2008: Hyderabad
Key Tourism Data International Tourism
FY2006-07
Change over FY2005-06 (%)
1.2
+21.0
4.5
+51.8
Total International Tourist Arrivals (million) Domestic Tourism Total Domestic Tourist Arrivals (million) Source: Ministry of Tourism, AAI
International Visitor Arrivals
l
Latest available statistics from the AAI show that a total of 0.9 million international passengers were
l
Statistics from AAI show international passenger
received at the airport for April to November 2007,
traffic at Hyderabad International Airport reached
representing an increase of 23% from the
1.2 million in FY2006-07, an increase of more than
corresponding period in 2006.
400% from FY2000-01.
0.9
50
0.8
45
0.7
40 35
0.6
30
0.5
25
0.4
20
0.3
15
0.2
10
0.1
5
0
2001-02
2002-03
2003-04
2004-05
2005-06
Financial Year* Number of Passengers (million)
2006-07
2006-07 (Apr-Nov)
2007-08 (Apr-Nov)
Annual Growth (%)
Number of Passengers (million)
International Passenger Traffic via Hyderabad International Airport
0
Annual Growth (%)
* Beginning 1 April to 31 March Source: AAI, Jones Lang LaSalle Hotels
36
Jones Lang LaSalle Hotels
Digest 2008: Hyderabad
Domestic Tourism
l
According to the latest available statistics from the AAI, a total of 3.6 million domestic passengers were
l
AAI statistics show domestic passenger traffic at
received from April to November 2007, up 29%
Hyderabad International Airport reached 4.5 million
year-on-year.
in FY2006-07, an increase of more than 200% from FY2000-01.
Domestic Passenger Traffic via Hyderabad International Airport 60
5.0
50
4.0 3.5
40
3.0
30
2.5
20
2.0 1.5
10
1.0
0
0.5 0
Annual Growth (%)
Number of Passengers (million)
4.5
2001-02
2002-03
2003-04
2004-05
2005-06
Financial Year* Number of Passengers (million)
2006-07
2006-07 (Apr-Nov)
2007-08 (Apr-Nov)
-10
Annual Growth (%)
* Beginning 1 April to 31 March Source: AAI, Jones Lang LaSalle Hotels
37
Jones Lang LaSalle Hotels
Digest 2008: Hyderabad
HOTEL MARKET OVERVIEW
l
Most of the rooms in 2008 will be in new hotels being developed by the Taj group, while Westin
According to our research and latest available statistics,
is expected to start operations with this year.
Hyderabad has 40 government-approved hotels with a total of 2,000 rooms. Given the importance of the
l
The existing Hyderabad International Convention
city in the economic landscape of India, Hyderabad has
Centre and the new Rajiv Ghandi International
a very low number of rooms compared with cities such
Airport will keep room occupancy rates high for five-
as Mumbai and Delhi. Most of the existing hotels in
star hotels in the near future.
Hyderabad are located in the CBD and upcoming micro markets for the IT/ITeS industry namely Madhapur
l
and Gacchibowli.
Despite the interest generated by mid-market and budget hotel development, more than half of the new properties are concentrated in the luxury and upper tier segment.
Future Supply l
Our research shows that Hyderabad will see the entry of about 5,600 rooms between 2008 and 2011. Most of these hotels will be located in the areas of Banjara Hills, Madhapur, Gacchibowli and Begumpet.
Major Future Supply in Hyderabad (as at March 2008) 3.5
Number of Rooms (000)
3.0 2.5 2.0 1.5 1.0 0.5 0
2008
2009
2010 onwards
Estimated Year of Completion Forecast Supply Source: Jones Lang LaSalle Hotels, Industry Sources
38
Jones Lang LaSalle Hotels
Digest 2008: Hyderabad
The following table details the major supply in the pipeline from 2008 to 2011.
Major Future Hotel Supply In Hyderabad (as at March 2008) Project Name
Location
Rooms Due/Open
Lemon Tree Hotel
Cyberabad (HITEC City)
260 2008
Three-star
Park Hotels
Raj Bhavan Road, Somajiguda
225 2008
Four-star
Taj Falaknuma Palace
Old City
Taj-Begumpet
Begumpet
189 2008
Five-star
Penna Cements
Banjara Hills
180 2008
Three-star
Taj Residency
Banjara Hills
180 2008
Five-star
Quality Inn
Ameerpet
225 2008
Three-star
Westin
Madhapur
428 2008
Five-star
Courtyard by Marriott (former Viceroy Hotel)
Near Rajiv Gandhi International Airport
TBC 2009
TBC
The Leela Palace, Kempinski Hyderabad
Banjara Hills
225
Five-star
Lemon Tree Hotel
Jubilee Hills
200 2009
Three-star
Taj Krishna
Banjara Hills
200 2009
Five-star Deluxe
Raheja Mindspace
HITEC City
200 2009
Five-star Deluxe
Prajay Engineers Syndicated Group Adis
140 2009
Three-star
Unknown hotel
HITEC City
400 2010
Five-star Deluxe
Ibis
Shamshabad
200 2010
Three-star
Hampshire Hotel
TBC
TBC 2010
TBC
Trident
HITEC City
150 2011
Five-star
Hilton Hyderabad
Saifabad/Adarsh Nagar
299 2011
TBC
Hyatt
Banjara Hills
200 N/A
Five-star Deluxe
Green Park
Ameerpet
120 N/A
Four-star
Mantri group
HITEC City
N/A N/A
Five-star
GoAP
HITEC City
150 N/A
Three-star
ITC
HITEC City
N/A N/A
Five-star
Emaar Golf Resorts
Gacchibowli
70 N/A
Five-star Deluxe
Grand Hyatt
Manikonda
400 N/A
Five-star Deluxe
Holiday Inn
Manikonda
350 N/A
Five-star
GMR Group
Shamshabad
300 N/A
Five-star
Regal Broadway
Shamshabad
N/A N/A
Five-star
Emaar
Shamshabad
70 N/A
Hometel
HITEC City
60 2008
2009
200 N/A
Total New/Proposed Supply
Likely Star Positioning
Five-star Deluxe
Seven-star Four-star
5,621
TBC: to be confirmed N/A: not avaliable Source: Jones Lang LaSalle Hotels
39
Jones Lang LaSalle Hotels
Digest 2008: Hyderabad
Five-Star Deluxe and Five-Star Hotel Market
ADR improved from INR2,700 to INR9,500. Increased business travel and the lack of hotel
l
rooms are the prime reasons for this trend.
The five-star deluxe and five-star market segment in Hyderabad has approximately 1,300 rooms. This is expected to increase to almost 2,800 rooms by
l
Taking into account the future supply in this segment, we expect downward pressures on the
the end of 2009.
RevPAR. l
The occupancies in this segment increased from 65% in 2002 to 73% in 2007. For the same period,
10
78
9
76
8
74
7
72
6
70
5
68
4
66
3
64
2
62
1
60
0
2001-02 ADR
2002-03 RevPAR
2003-04 2004-05 Financial Year*
2005-06
2006-07
Occupancy (%)
ADR/RevPAR (INR) (000)
Five-Star Deluxe and Five-Star Hotel Performance in Hyderabad
58
Occupancy (%)
* Beginning 1 April to 31 March Source: Jones Lang LaSalle Hotels, Industry Sources
40
Jones Lang LaSalle Hotels
Digest 2008: Mumbai
MUMBAI
MARKET OUTLOOK
l
Mumbai has also gained new international connections with direct flights from both private and
Mumbai is the financial capital of India and the base for
national carriers.
most national and international banks, funds and other financial institutions operating in the country. It serves
l
Asia's largest slum, Dharavi, is being redeveloped
as a gateway to western India and has the busiest
by private entrepreneurs in partnership with the
domestic and international airport after Delhi. Apart from
government. This is expected to release prime real
business, it is also popular among leisure tourists, both
estate of about 535 acres that will cater to the
domestic and international, as it serves as a starting
development of new commercial and residential
point for visiting popular tourist destinations in western
real estate in Mumbai.
India such as Goa and Pune. l
In addition to Dharavi's redevelopment, the Mukesh
Further growth and development in Mumbai's tourism
Ambani-promoted Reliance Industries is developing
and hospitality sectors is expected to be supported by
a Special Economic Zone in Navi Mumbai which is
the following key factors:
proposed to comprise 35,000 acres. This will further foster commercial activity in city and generate
l
demand for rooms.
With emerging suburbs as centres of corporate activity and the expansion of Mumbai towards the north and an expanding international airport,
l
Notwithstanding the large volumes of new rooms
Mumbai is expected to see growth in tourist activity
planned, we expect robust demand drivers to
in the coming years. We expect leisure and business
continue the trend of increased ADR and stabilised
travel to be a prime demand driver for the citys
occupancies. Occupancy in Mumbai is expected to
hospitality industry.
remain stable at 75% in the next five years with ADR averaging at INR17,000.
l
Mumbai is also emerging as a popular medical tourism destination with popular hospitals such as Lilavati, Hiranandani, Hinduja and Jaslok offering speciality treatments.
41
Jones Lang LaSalle Hotels
Digest 2008: Mumbai
City Snapshot (as at 2007) Mumbai
Total Land Area (square kilometres) 4,355 Resident Population (million)
17.8 (2001 census)
Major Industries
IT/ITeS, Manufacturing, Banking & Financial Services
Source: Census of India 2001, City Municipal Website, Jones Lang LaSalle Hotels
TOURISM MARKET OVERVIEW
in the suburbs as well as Hinduja and Jaslok downtown offer state-of-the-art facilities,
Mumbai's tourism prospects are promising in the
renowned doctors and outpatient services to
immediate term. Any unfavourable impact on foreign
international patients.
arrivals arising from the country's political risk, security concerns and airport congestion is expected to be limited.
l
Improvements to the existing airport infrastructure
However, while Mumbai's medium- to longer-term tourism
will boost the airport's passenger handling
prospects remain positive, the development of the
capacity and strengthen Mumbai's positioning
supporting tourism infrastructure needs to keep pace
as a key international gateway. The Chhattrapati
with the inflow of visitors in order to ensure the sector's
Shivaji International Airport (CSIA) is currently
future sustainability and to validate Mumbai's position
the busiest airport in India, handling 22.2 million
as the commercial hub of India.
domestic and international passengers during FY2006-07 against its capacity of 14 million. Upgrading of the airport, including a new passenger
Key Trends and Demand Drivers
terminal is underway, and when completed l
Mumbai offers visitors a number of historical,
will alleviate some of the congestion. The city's
architectural, religious and cultural attractions
airport infrastructure will receive a further boost
unique to the city such as the Gateway of India,
following government approval for the construction
Haji Ali Mosque, Hanging Gardens and the
of Mumbais second international airport at
promenade of Marine Drive also known as the
Navi Mumbai.
"Queen's Necklace". Home to Bollywood, Mumbai also attracts a large number of visitors trying to
l
The addition of new air routes will expand
catch a glimpse of the stars. Additionally, Mumbai
Mumbai's international air network and improve
has two World Heritage sites: the Elephanta Caves
accessibility. For example, the recent liberalisation
and Chhattrapati Shivaji Station (Victoria Terminus).
of the aviation sector has led to the rise of the London-Mumbai route as one of the fastest growing
l
The city's medical tourism segment is expected
sectors with five carriers currently offering services.
to benefit from the government's recently announced
Finnair launched its Mumbai-Helsinki route in June
plans to launch a medical tourism campaign to
this year while Continental Airlines will operate
raise awareness about India's private medical
between New York and Mumbai daily from October.
services as a part of the Incredible India campaign.
EgyptAir also started tri-weekly services on the
Private hospitals such as Lilavati and Hiranandani
Mumbai-Kuala Lumpur route from June 2007.
42
Jones Lang LaSalle Hotels
Digest 2008: Mumbai
l
The Finance Ministry is committed to transforming
construction, competition is expected to intensify.
Mumbai into an international financial hub over
Certain areas, identified as micro-markets for
the next 10 years, and is aligning current urban
international luxury brands, have seen the
infrastructure and lifestyle facilities with global
development of speciality malls. These developments
standards. The state government has launched
will broaden the city's offering and attract both
a number of projects to reduce pressure on
international and domestic visitors.
existing infrastructure. These include drainage system upgrades, road widening and privatisation
l
Realising the acute land shortage situation in
of airports and development of metro train services
south Mumbai, MMRDA started developing
in addition to the construction of 42 new flyovers
a series of new growth centres in Greater
across the city. This long term traffic scheme by
Mumbai to help ease the pressure on offices
the Mumbai Metropolitan Region Development
and commercial activities in south Mumbai. The
Authority (MMRDA) includes expressways as well
Bandra Kurla Complex (BKC) is being developed
as arterial routes in presently traffic-congested areas
as an alternative location where future growth
such as Andheri-Ghatkopar Link Road, S V Road
of offices and commercial activity can be
and L B S Marg.
absorbed and where some of the existing activities from south Mumbai can be relocated. The British
l
Several hotel projects are now being considered in
Deputy High Commission's recent purchase
locations along the Mumbai metro lines. The first
of office space and the construction of the
phase of the 11-kilometre Versova-Andheri-
American Consulate in the BKC are examples
Ghatkopar route of the Mumbai metro became
of the south-to-north Mumbai migration
operational in June this year. When completed in
by corporations.
2011, the metro is expected to dramatically lessen bottlenecks on these roads and reduce travelling
l
Lured by its modern infrastructure, centralised
time by half. To be built over several phases, the
location and its viability as a new commercial hub,
metro will have nine lines of which 32.5 kilometres
more commercial and diplomatic offices are
will be underground and 114 kilometres on elevated
finding the BKC appealing. With limited existing
rails. The first phase will be fully functional by 2011,
supply in the vicinity and two other known
the second phase by 2016 and the third phase
developments underway, the potential demand for
by 2021.
hotel rooms that is created by the shift in activity could exceed supply.
l
The development of the eight-lane Bandra-Worli Sealink will improve intra-city connectivity as it
l
Recent years have seen a trend towards the
will ease the congestion at Mahim Causeway
development of mixed-use projects with a hotel
which is currently the only link along the North-
component. For instance, a High Court order in
South corridor. Once this happens, the travel
late 2005 saw the opening up of 600 acres of
time from one end of the city to the other will be
mill land, of which 200 acres has been allocated
greatly reduced, thus increasing competition
to commercial space. Various bids for these
among hotels that have so far only competed
land parcels are underway for the purpose of
in their micro-markets.
mixed-use developments with a retail and hotel component. Many local landowners are in talks
l
Mumbai has the potential to develop into a key
with international hospitality brands to launch
shopping destination with a number of new malls
new properties and we expect to see more joint
opening in the city. While many are still under
ventures in the future.
43
Jones Lang LaSalle Hotels
Digest 2008: Mumbai
l
With the availability of land from the mills area,
l
Cruising is a growing lifestyle choice among affluent
we are likely to witness an increase of commercial
Indians and Mumbai is poised to become a prime
activities at locations such as Worli, Parel and
destination. The economic growth in the city, along
Lower Parel which may also attract hotel
with a new cruise shipping policy, has led to 40
developments. With the new Bandra-Worli Sealink,
international cruise lines calling on the port. We
these locations will also be more accessible.
expect to see a boost in both domestic as well as international leisure travel in future.
Key Tourism Data International Tourism Total International Tourist Arrivals (million)
FY2006-07
Change over FY2005-06 (%)
7.3
+9.2
14.9
+27.6
Domestic Tourism Total Domestic Tourist Arrivals (million) Source: Ministry of Tourism, AAI
44
Jones Lang LaSalle Hotels
Digest 2008: Mumbai
International Visitor Arrivals
l
Indicating the continued growth in international arrivals, latest available statistics for up to the third
l
Our analysis of Mumbai's international tourism
quarter of FY2007-08 showed that the number of
market is based on the international passenger
international passengers at CSIA had increased by
traffic arriving at CSIA. The ease of accessibility to
11% year-on-year to 5.1 million.
other destinations from Mumbai also reinforces the city's reputation as an international gateway to the
l
Given Mumbai's positioning as a commercial hub and logistics centre, business travel remains the
rest of the country.
key motivator for visiting Mumbai. However, the l
leisure segment has further potential for growth.
International passenger movement at Mumbai's CSIA has increased steadily from 4.9 million in FY2001-02 to 7.3 million in FY2006-07. Year-on-
l
Anecdotal evidence suggests international visitors generally stayed for two to four days.
year, international passenger traffic was up 9.2%.
International Passenger Traffic via Chhattrapati Shivaji International Airport 20
8
15
6 10
5
5
4 3
0
Annual Growth (%)
Number of Passengers (million)
7
2 -5
1 0
2001-02
2002-03
2003-04
2004-05
2005-06
Financial Year* Number of Passengers (million)
2006-07
2006-07 (Apr-Nov)
2007-08 (Apr-Nov)
-10
Annual Growth (%)
* Beginning 1 April to 31 March Source: AAI, Jones Lang LaSalle Hotels
45
Jones Lang LaSalle Hotels
Digest 2008: Mumbai
Domestic Tourism
l
The domestic tourism market received a boost from the entrance of local airlines which made air travel
l
l
The burgeoning business sector is fuelling domestic
accessible and more affordable to the masses. For
travel growth. Reflecting the growth of Mumbai's
example, Kingfisher Airlines launched direct flights
domestic tourism market, domestic passenger traffic
in April 2007 from Mumbai to Nagpur, Indore and
at Mumbais Santa Cruz Domestic Airport more than
Guwahati. We expect other domestic airlines to
doubled from FY2001-02 to 14.9 million in FY2006-
follow with more connections between the
07. The annual growth in domestic passenger traffic
commercial capital and other emerging economic
was 27.6%, up from 22% last year.
centres in India.
This growth trend is expected to continue into
l
Anecdotal evidence suggests domestic visitors
FY2007-08, with latest available statistics for the
generally stayed for two to four days, similar to the
first eight months (April to November) of the financial
international segment.
year showing a 24.5% year-on-year increase in domestic air passengers to about 12 million.
16
30
14
25
12
20
10
15
8
10
6
5
4
0
2
-5
0
2001-02
2002-03
2003-04
2004-05
2005-06
Financial Year* Number of Passengers (million)
2006-07
2006-07 (Apr-Nov)
2007-08 (Apr-Nov)
Annual Growth (%)
Number of Passengers (million)
Domestic Passenger Traffic via Santa Cruz Domestic Airport
-10
Annual Growth (%)
* Beginning 1 April to 31 March Source: AAI, Jones Lang LaSalle Hotels
46
Jones Lang LaSalle Hotels
Digest 2008: Mumbai
in these sectors. Moreover, Navi Mumbai Special
HOTEL MARKET OVERVIEW
Economic Zone (NMSEZ) will promise enhanced l
Demand for rooms will remain strong with
development and also push the demand for hotel
expectations of a continued steady increase in
accommodation in north Mumbai. The construction
arrivals, generating healthy yields across the market.
of Navi Mumbai International Airport at Kopra-Panvel
Due to the geographic layout of Mumbai, the south
is expected to increase capacity and connectivity,
offers limited opportunities for real estate
boosting the demand for hotels in Navi Mumbai.
developments. With the saturation of prime land in south Mumbai, most of the development is
Existing Supply
taking place near the commercial centres of central Mumbai and the airport vicinity of north Mumbai.
l
As at end 2007 (latest available statistics), Mumbai had 74 government-approved hotels with a total
l
Traditionally, the Mumbai hotel market has been
count of 9,503 rooms.
skewed towards the upper tier hotels, most likely the result of the high land prices in the city. Most of
l
The concentration of hotels is now in three
the upcoming projects are expected to fall within
broad localities: in south Mumbai, in the Colaba-
the five-star deluxe and five-star hotel category
Marine drive area, in north Mumbai next to the
while the mid- to lower tiers are expected to be
airports and Bandra-Kurla. Central Mumbai has
developed in the outer suburbs.
seen some development with more projects expected in the future.
l
The redevelopment of mill land area in central Mumbai into commercial will add to the supply
l
As the journey from the airport to south Mumbai
and enhance the demand in the hospitality sector.
can take as long as 90 minutes, visitors on a
Two prominent developments are the Four Seasons
short stopover typically stay at hotels near the airport
at Worli and Shangri-La, High Street Phoenix at
such as the ITC Grand Maratha Sheraton, Hyatt
Lower Parel.
Regency, Le Meridien, The Leela Kempinski and InterContinental The Grand Mumbai.
l
Proposed infrastructure projects such as the BandraWorli Sea Link, Mass Rapid Transit System (MRTS)
l
According to our research the 226-room Sahara
and Mumbai Trans Harbour Link (MTHL) between
Star in Vile Parle near the domestic airport was the
Nhava and Sheva will augment growth in hospitality
only major hotel opening in 2007.
47
Jones Lang LaSalle Hotels
Digest 2008: Mumbai
Future Supply
with Sofitel at Bandra-Kurla. Additionally, Starwood is expected to launch its 100-plus
l
Our research reveals more than 3,000 new rooms
room property under the aloft brand in 2010,
in the pipeline from 2008 to 2011. The majority of
and there will be a new 200-room Park Hyatt in
this new supply (51%) is anticipated in 2008.
2011. Searock Sheraton, which was acquired by Claridges Hotels, is being refurbished and
l
The new projects are mainly local brands, many
upgraded to a five-star deluxe hotel and is strongly
of which are brand extensions of existing properties
rumoured to be rebranded as Mandarin Oriental.
expanding to other parts of the city. For example,
The entrance of international brands will raise the
a new Taj Santacruz is coming up near the airport
city's accommodation standards.
while Hyatt International recently announced the development of a Park Hyatt on Marine Lines in
l
There is also an established but small serviced
south Mumbai, making it their third operation in
apartment market in Mumbai. Main developments
the city.
by hotel operators include the Lakeside Chalet Marriott Executive Apartments at Powai Mumbai
l
Mumbai will also see several major international
(177 units) and Grand Hyatt serviced apartments
players enter the market with flagship properties
at Santa Cruz (147 units).
such as the Four Seasons in Worli and Accor
Major Future Supply in Mumbai (as at March 2008) 1.8
Number of Rooms (000)
1.6 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0
2007
2008
2009
2010 onwards
Estimated Year of Completion Completed Supply
Forecast Supply
Source: Jones Lang LaSalle Hotels, Industry Sources
48
Jones Lang LaSalle Hotels
Digest 2008: Mumbai
The following table details the major supply in the pipeline from 2008 to 2011.
Major Future Hotel Supply In Mumbai (as at March 2008) Project Name
Location
Rooms
Due/Open
Likely Star Positioning
New/Proposed Hotel Projects Four Seasons Hotel Mumbai
Worli, Central Mumbai
230
2008
Five-star Deluxe
Fortune Select Exotica
Navi Mumbai
TBC
2008
Four-star
Renaissance Mumbai Hotel & Convention Centre (expansion)
Powai, Central Mumbai
291
2008
Five-star
Ibis Mumbai
Mumbai Airport
145
2008
Three-star
Taj Santacruz Mumbai
Near Santa Cruz Airport
175
2008
Five-star Deluxe
Radisson Hotel Mumbai
Powai, Central Mumbai
275
2008
Five-star
Trident
Bandra Kurla Complex
437
2008
Five-star
Sofitel Mumbai
Bandra Kurla Complex
311
2009
Five-star
Mandarin Oriental (former Searock Sheraton)
Lands End
TBC
2009
Five-star Deluxe
Crowne Plaza Juhu, Mumbai
Juhu
225
2009
Five-star Deluxe
Shangri-La Mumbai
Lower Parel, Central Mumbai
350
2009
Five-star Deluxe
Westin
Goregoan
TBC
2009
Five-star Deluxe
aloft
TBC
130
2010
Three-star
Lemon Tree Hotel
Andheri
250
2010
Three-star
Park Hyatt Mumbai
Marine Lines
200
2011
Five-star
Royal Orchid
TBC
TBC
TBC
Four-star
Total New/Proposed Supply
3,019
TBC: to be confirmed Source: Jones Lang LaSalle Hotels
49
Jones Lang LaSalle Hotels
Digest 2008: Mumbai
Five-Star Deluxe and Five-Star Hotel Market
l
Occupancy rates, however, recorded a marginal 0.8 percentage point increase to about 78.0%
l
over the same period.
Strong demand in the wake of limited supply pushed occupancy and ADR for five-star deluxe and fivestar hotels in Mumbai to a seven-year high in
l
l
With room demand anticipated to remain strong,
FY2006-07 as trading performance improved for
we expect RevPAR growth to be driven by ADR
the fourth consecutive year.
growth in 2008.
Compared with FY2005-06, ADR rose by 40.4% to about INR9,000 in FY2006-07. We anticipate downward pressure due to the additional supply in the pipeline.
10
90
9
80
8
70
7
60
6
50
5
40
4 3
30
2
20
1
10
0
ADR
2000-01
2001-02 RevPAR
2002-03
2003-04 2004-05 Financial Year*
2005-06
2006-07
Occupancy (%)
ADR/RevPAR (INR) (000)
Five-Star Deluxe and Five-Star Hotel Performance in Mumbai
0
Occupancy (%)
* Beginning 1 April to 31 March Source: Jones Lang LaSalle Hotels, Industry Sources
50
Jones Lang LaSalle Hotels
Digest 2008: Pune
PUNE
MARKET OUTLOOK
l
Hotels from major international chains such as JW Marriott, Westin and Hyatt are set to start operations by 2010.
Pune's tourism and hotel industry has the potential to grow and develop further due to the following key factors:
l
We forecast business travel to continue as the prime demand driver in the coming years on account of
l
increased IT/ITeS activity
Pune has established itself as a preferred destination for the IT/ITeS industry and is the second most popular city in Maharashtra after Mumbai for
l
With the expected room additions we forecast
business and education. With a new international
occupancies to dip in the coming years. In our
airport and other infrastructure improvements, its
opinion, occupancies will stabilise at around
attractiveness is expected to increase further.
75-80% in the next five years with ADR averaging INR11,000.
l
Our research shows that Pune will record the entry of around 3,365 rooms between 2008 and 2010. Around 1,129 rooms of total supply are expected to come on stream in 2009.
City Snapshot (as at 2007) Pune
Total Land Area (square kilometres) 700 Resident Population (million)
2.5 (2001 census)
Major Industries
IT/ITeS, Manufacturing, Education
Source: Census of India 2001, City Municipal Website, Jones Lang LaSalle Hotels
51
Jones Lang LaSalle Hotels
Digest 2008: Pune
been present in the city and are expanding their
TOURISM MARKET OVERVIEW
existing operations. Pune is in the western Indian state of Maharashtra. Capital of Pune District and the eighth largest urban
l
An established IT/ITeS destination for major domestic and international firms, Pune has large
centre in India with a population of five million, it is
campuses and offices of both domestic and
the second largest city in the state. It is located
international IT/ITeS firms including TCS, Infosys,
approximately 150 kilometres east of Mumbai and is
Wipro, Cognizant and Kanbay.
at the eastern edge of the Western ghats on the Deccan plateau. l
The city is home to several reputed government
Pune is widely considered the cultural capital of
and private universities attended by students
Maharashtra. The city has several reputed colleges
from other parts of India and throughout Asia Pacific.
and other educational institutions and is called the
Pune University has more than 100,000 students
"Oxford of the East" (or "Oxford of India"). It has a
across a diverse range of studies from engineering
very strong presence in the automobile sector and
to medicine to management.
is on its way to consolidating its position as the "Detroit of India". It is now home to numerous software and
l
Pune will host the third Youth Commonwealth Games in October 2008. It is expected that 71
IT companies.
countries will take part in these games and the city will host more than 2,000 athletes and professionals.
Pune is predominantly a business and education destination and derives most of its tourist revenues from business travel. Compared with other prominent
l
With its proximity to Mumbai and ease of access
cities in India, air connectivity to Pune is still undeveloped
on an expressway or a 30-minute flight, Pune is
and is proving to be an inhibitor towards the growth of
easily accessible from international destinations
the city. The Defence Ministry has recently provided in-
via Mumbai. The travel time between Pune and
principle clearence for a proposed international airport
Mumbai has been greatly reduced following the
project in Pune.
opening of the Mumbai-Pune expressway and also with the advent of multiple flight options via LCCs
Key Trends and Demand Drivers l
and private airlines.
Pune is a strong automobile manufacturing base
l
As a hub for colleges and universities, and a
for major domestic and international car
strong automobile manufacturing base, Pune has
manufacturers. Auto majors such as GM, Mercedes
a lot to offer.
Benz, Tata Motors and Bajaj Auto have traditionally
52
Jones Lang LaSalle Hotels
Digest 2008: Pune
Key Tourism Data International Tourism
FY2006-07
Change over FY2005-06 (%)
6.7
+15.4
13.6
+31.7
Total International Tourist Arrivals (million) Domestic Tourism Total Domestic Tourist Arrivals (million) Source: Ministry of Tourism, AAI
International Visitor Arrivals
Domestic Tourism
There are no available statistics for international
l
Domestic passenger traffic at Pune Airport reached 1.5 million in FY2006-07, up by more than 250%
connections to and fro Pune Airport.
from FY2000-01. l
Statistics from AAI show domestic passenger traffic for the period April to November 2007 increased by 19% to reach 1.1 million compared with the same period in 2006.
Domestic Passenger Traffic via Pune International Airport 80
1.6
70 60
1.2
50
1.0
40
0.8
30 20
0.6
10
0.4
Annual Growth (%)
Number of Passengers (million)
1.4
0
0.2
-10
0
-20
2001-02
2002-03
2003-04
2004-05
2005-06
Financial Year* Number of Passengers (million)
2006-07
2006-07 (Apr-Nov)
2007-08 (Apr-Nov)
Annual Growth (%)
* Beginning 1 April to 31 March Source: AAI, Jones Lang LaSalle Hotels
53
Jones Lang LaSalle Hotels
Digest 2008: Pune
HOTEL MARKET OVERVIEW
Future Supply
According to our research and the latest available
l
Our research shows that Pune will see the entry
statistics, Pune has 36 government-approved hotels
of around 3,365 rooms between 2008 and 2010.
with a total of 1,000 rooms. Given the importance of
Most of these hotels will be located in the areas of
the city in the economic landscape of India, Pune,
Hinjiwadi and Senapati Bapat Marg.
like Hyderabad, has a very low number of rooms compared with cities such as Mumbai and Delhi.
l
Hotels from major international chains such as JW
Most of the existing hotels in Pune are located near
Marriott, Westin and Hyatt are expected to start
to the CBD.
operations by 2010.
Major Future Supply in Pune (as at March 2008) 1.6
Number of Rooms (000)
1.4 1.2 1.0 0.8 0.6 0.4 0.2 0
2008
2009
2010 onwards
Estimated Year of Completion Forecast Supply Source: Jones Lang LaSalle Hotels, Industry Sources
54
Jones Lang LaSalle Hotels
Digest 2008: Pune
The following table details the major supply in the pipeline from 2008 to 2010.
Major Known Hotel Supply In Pune (as at March 2008) Project Name
Location
Rooms
Due/Open
Lemon Tree Hotel
City Centre
230
2008
Three-star
Ibis Pune
TBC
180
2008
Four-star
Marriott Courtyard West Pune
Hinjawadi
153
2008
Five-star
Marriott Courtyard
Sassan Road
210
2009
Five-star
The Leela Palace, Kempinski Pune
Yerwada
200
2009
Five-star Deluxe
ISTA Hotels and Spa
NA
150
2009
Four-star
JW Marriott
Airport Road
250
2009
Five-star Deluxe
The Yatra
Nagar Road
319
2009
Three-star
Pune Marriott
Senapati Bapat Road
430
2010
Five-star Deluxe
Royal Orchid
TBC
140
2010
Four-star
Hyatt Regency
Airport Road
250
TBC
Five-star
Radisson
Kharadi
156
N/A
Five-star
Peppermint
NA
90
N/A
Three-star
Westin
Koregaon Park
277
N/A
Five-star Deluxe
Novotel
Magarpatta City
330
N/A
Four-star
Total New/Proposed Supply
Likely Star Positioning
3,365
TBC: to be confirmed N/A: not avaliable Source: Jones Lang LaSalle Hotels
55
Jones Lang LaSalle Hotels
Digest 2008: Pune
Five-Star Deluxe and Five-Star Hotel Market
ADR has increased from INR3,000 to INR7,500. The growth trend can be attributed to increased
l
business travel as well as the lack of hotel rooms.
The five-star deluxe and five-star hotel market segment in Pune has approximately 530 rooms. This is expected to increase to more than 1,300
l
Taking into account the future supply in this segment, we expect the occupancies to stabilise in the near
rooms by the end of 2009.
future and settle at 75% in the next four to five years. l
Occupancies in this segment have increased from
ADR is expected to be about INR12,000, backed
70% in 2002 to 82% in 2007. For the same period
primarily by corporate demand.
8
84
7
82 80
6
78
5
76
4
74
3
72
Occupancy (%)
ADR/RevPAR (INR) (000)
Five-Star Deluxe and Five-Star Hotel Performance in Pune
70
2
68
1
66
0
2001-02 ADR
2002-03 RevPAR
2003-04 2004-05 Financial Year*
2005-06
2006-07
64
Occupancy (%)
* Beginning 1 April to 31 March Source: Jones Lang LaSalle Hotels, Industry Sources
56
Jones Lang LaSalle Hotels
Copyright © Jones Lang LaSalle Hotels 2008
Disclaimer This report is confidential to the recipient of the report. No reference to the report or any part of it may be published in any document, statement or circular or in any communication with third parties without the prior written consent of Jones Lang LaSalle Hotels, including specifically in relation to the form and context in which it will appear. We stress that forecasting is a problematical exercise which at best should be regarded as an indicative assessment of possibilities rather than absolute certainties. The process of making forward projections involves assumptions in respect of a considerable number of variables which are acutely sensitive to changing conditions, variations in any one of which may significantly affect the outcome and we draw your attention to this factor. Jones Lang LaSalle Hotels makes no representation, warranty, assurance or guarantee with respect to any material with which this report may be issued and this report should not be taken as an endorsement of or recommendation on any participation by any intending investor or any other party in any transaction whatsoever.
This report has been produced solely as a general guide and does not constitute advice. Users should not rely on this report and must make their own enquiries to verify and satisfy themselves of all aspects of information set out in the report. We have used and relied upon information from sources generally regarded as authoritative and reputable, but the information obtained from these sources may not have been independently verified by Jones Lang LaSalle Hotels. Whilst the material contained in the report has been prepared in good faith and with due care, no representation or warranty is made in relation to the accuracy, currency, completeness, suitability or otherwise of the whole or any part of the report. Jones Lang LaSalle Hotels, its officers, employees, subcontractors and agents shall not be liable (to the extent permitted by law) to any person for any loss, liability, damage or expense ("liability") arising directly or indirectly from or connected in any way with any use of or reliance on this report. If any liability is established, notwithstanding this exclusion, it shall not exceed $1,000.
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CONTENTS India
1
Bangalore
11
Chennai
18
Delhi
25
Hyderabad
34
Mumbai
41
Pune
51
Jones Lang LaSalle Hotels Jones Lang LaSalle Hotels Jones LaSalle Hotels, the first leading global investment services Jones LangLang LaSalle Hotels, the first and and leading global hotelhotel investment services firm,firm,in 2007 in 2007 in addition to bespoke research. Jones LaSalle Hotels services in addition to bespoke clientclient research. Jones LangLang LaSalle Hotels services spanspan is uniquely positioned to provide the depth breadth of advice required by hotelthe hospitality is uniquely positioned to provide bothboth the depth and and breadth of advice required by hotel the hospitality spectrum; luxury single assets portfolios to select service spectrum; fromfrom luxury single assets and and largelarge portfolios to select service investors companies, through a robust integrated network. In 2007,and and investors and and hotelhotel companies, through a robust and and integrated locallocal network. In 2007, budget hotels, resorts pubs. services include investment sales, mergers budget hotels, resorts and and pubs. TheirTheir services include investment sales, mergers Jones LaSalle Hotels provided purchase advice on 259 transactionsand and Jones LangLang LaSalle Hotels provided salesale and and purchase advice on 259 hotelhotel transactions acquisitions, capital raising, valuation appraisal, management, strategic acquisitions, capital raising, valuation and and appraisal, assetasset management, strategic globally; representing a combined of US$13.9 billion, a total of 54,763 roomsplanning, globally; representing a combined valuevalue of USD13.9 billion, a total of 54,763 hotelhotel rooms planning, operator selection, management contract negotiation, consulting, industry operator selection, management contract negotiation, consulting, industry 84 cities. In addition advisory valuation services provided on 660 assignmentsresearch in 84incities. In addition advisory and and valuation services werewere provided on 660 assignments research project development services. Jones LaSalle Hotels clients and and project development services. Jones LangLang LaSalle Hotels clients havehave globally for 182,048 rooms across cities. global comprises access globally for 182,048 rooms across moremore thanthan 300 300 cities. The The global teamteam comprises access to resources the resources its parent company, Jones LaSalle (NYSE: to the of itsofparent company, Jones LangLang LaSalle (NYSE: JLL).JLL). specialists, operating 27 offices 16 countries. advice 236 236 hotelhotel specialists, operating fromfrom 27 offices in 16incountries. The The firmsfirms advice is is www.joneslanglasallehotels.com www.joneslanglasallehotels.com supported a dedicated global research team, which produced 45 publications supported by aby dedicated global research team, which produced overover 45 publications
Digest 2008: India
INDIA
MARKET OUTLOOK
India has become a favoured destination for global investors and multinational corporations ever since it
The outlook for Indias tourism and hotel industry is
opened its economy in the early nineties. Although
upbeat. Key factors driving the tourism boom include
sectors such as business processing, information
Indias sustained economic growth, strong foreign direct
technology, telecommunications, and manufacturing,
investment inflows, increased air networks, the
have prospered in recent years, India's economy
availability of cheaper air travel, a strong domestic
remains largely driven by the agricultural sector.
market and aggressive marketing campaigns.
Despite this, India's economy has performed well with
Challenges relating to inadequate tourism infrastructure
the contribution from the services and manufacturing
still remain, but are not enough to dampen the bullish
sectors growing by 9.4% in the fiscal year ending March
outlook for the Indian hotel market.
2007. Preliminary estimates by the government according to the Union Budget 2008-2009 show a
Encouraged by this optimistic tourism outlook, many
growth rate of 8.5% for the fiscal year ending March
developers, investors and international hotel management
2008. For the next financial year (FY), analysts expect
companies are jumping onto the India hotel bandwagon.
real GDP to grow by 7.9%.
A number of the Indian real estate players view hotels as a natural extension and synergy to their growing real
While the Indian economy will be affected from
estate portfolios. The major cities that are the hub of
moderation in global economic growth, any negative
economic and real estate development in India are:
impact is expected to be minimal. Analysts also
Bangalore, Chennai, National Capital Region/Delhi
anticipate some slowing in growth rates which reflect
(comprising the capital city Delhi and suburbs of Noida,
an overheated economy such as that of China (PRC).
Gurgaon, Faridabad, Ghaziabad and Greater Noida), Hyderabad, Kolkata, Mumbai and Pune.
Economic Snapshot - India Indicator*
2005
2006
2007
2008F
2009F
Real GDP Growth (%)
9.2
9.4
8.5
7.9
7.4
Inward FDI (USD billion)
6.7
17.5
19.0
18.0
20.0
Inflation/CPI (%)
4.2
6.2
5.8
5.2
5.0
Prime Lending Rates (%)
10.8
11.2
13.0
11.3
10.7
Exchange Rates (INR Per USD)
44.1
45.3
41.3
40.0
39.0
8.1
7.6
7.2
6.8
6.4
Unemployment Rate (%)
* For fiscal year beginning April and ending March F: Forecasts Source: Actual - Central Statistical Organization, Forecasts - Economist Intelligence Unit (EIU), January 2008 1
Jones Lang LaSalle Hotels
Digest 2008: India
TOURISM MARKET OVERVIEW
round destination, with a focus on both generic and niche areas. "Chasing the Monsoon" is the new theme for the west Asian market.
Key Trends and Demand Drivers l
India, which ranks after China (PRC) as the world's
l
The government has also introduced initiatives
second most populous country, has experienced
to spur growth in the hospitality sector. Tax holidays
a tourism boom in recent years. Bolstered by a
for two-, three- and four-star hotels established in
multi-faceted tourism product that ranges from 27
specified districts that have UNESCO World Heritage
world heritage sites to religious relics, spa/mountain
Sites and convention centres with large seating
resorts and wildlife parks, India has much to offer
capacities in the National Capital Territory of Delhi
leisure travellers.
and in the adjacent urban areas of Faridabad, Gurgaon, Ghaziabad or Gautam Budh Nagar, have
l
l
The growing Indian economy will spur business
been announced to foster development prior to the
travel. The strong performance of the corporate
Commonwealth Games in 2010. In addition, there
sector and the growth in the economy has led to
are proposals to improve the tourism infrastructure
an unprecedented surge in business travel. GDP
that will lead to increased travel. These proposals
grew at a robust 9.4% in 2006-07 and is expected
include constructing 33,000 kilometres of the National
to grow by another 8.5% in 2007-08. Furthermore,
Highway in the Golden Quadrilateral, North-South
the industrial and services sectors have recorded
and East-West Corridor areas, improving identified
double-digit growth rates. These undoubtedly
ports to facilitate cruise tourism and evaluating
will continue to raise the level of business travel
public-private partnerships to connect identified
in the country.
circuits and destinations by rail.
The liberalisation of the airline industry will promote
l
Medical tourism will also result in additional
increased travel by both international and domestic
demand for hotel rooms. This sector has gained
travellers, further fuelling growth in the hotel sector.
momentum in the past few years, given the cost
Open skies policies and direct international flights
advantage and emergence of high quality
to the US and Europe have increased the country's
healthcare services in India where a choice of
accessibility, raising international traveller flows.
airlines, hotels, transportation, food and sightseeing
In addition, increased frequency of existing
is offered along with medical treatment in the form
routes and the introduction of additional routes
of packages. The country's medical tourism
by low cost carriers (LCC) such as Indigo, Spice
industry is thriving, encouraged by the introduction
Air, Jet Lite and Go Air will enhance domestic
of a medical visa. In addition, the Indian
travel flows.
government has announced plans to promote medical tourism with an investment of INR260
l
Recognising the importance of the tourism
billion for funding relevant infrastructure including
industry, the government has made large strides
affordable hospitals and budget hotels for patients
in marketing India internationally. Building on
and their relatives. Due to the lack of a "single
the success of the Incredible India campaign in
window" clearance system, foreign investors have
previous years, the Ministry of Tourism has
faced problems investing in this sector, and the
launched an integrated international media
Indian government is looking at ways to improve
campaign to promote India as "must-see" year-
the system.
2
Jones Lang LaSalle Hotels
Digest 2008: India
International Visitor Arrivals
l
In tandem with the increase in foreign arrivals, foreign exchange earnings soared by 34% over 2006 values to INR480 billion in 2007.
India has set a tourism target of 10 million international
l
tourist arrivals by 2010, the year of the Commonwealth Games in Delhi.
l
Leisure travel (96.6%) remains the primary reason for travel to India, followed by business
l
Preliminary statistics from the Ministry of Tourism
(2.8%), according to statistics sourced to the
indicate that inbound tourist arrivals had already
Ministry of Tourism. While we expect the overall
reached a 10-year high of approximately five
trend to remain unchanged over the next few
million in 2007. This represents a 13% growth over
years, the proportion of business travellers
the previous year and the fourth consecutive year
could increase with the rise in foreign
of positive growth in inbound foreign travellers.
investments to India.
Compared with the 2.4 million international arrivals in 2002, the number of foreign visitors to India has increased by an impressive 86%.
International Visitor Arrivals to India 6
30 25 20
4
15 10
3
5
2
0 -5
1 0
Annual Growth (%)
Number of Visitors (million)
5
-10 1997
1998
1999
Number of Visitors (million)
2000
2001
2002
2003
2004
2005
2006
2007E
-15
Annual Growth (%)
E: Estimates Source: Ministry of Tourism, PATA (Pacific Asia Travel Association), Jones Lang LaSalle Hotels
Total Number of International Visitor Arrivals
Year 2007
Growth Over 2006
Historical CAGR* (1997-2007)
5.0m
13.0%
8.6%
* Compound Annual Growth Rate Source: Ministry of Tourism, PATA, Jones Lang LaSalle Hotels
3
Jones Lang LaSalle Hotels
Digest 2008: India
International Visitor Arrivals to India in 2005 - By Main Purpose of Visit*
Conference 0.2% Education & Employment 0.4% Business 2.8% Tourism & Others 96.6%
* Updated official figures not available Source: Ministry of TourismSource: Ministry of Tourism
Major International Source Markets
l
In January 2007 India-based Jet Airways launched direct daily flights from Delhi and Kolkata to
l
All major source markets recorded positive growth
Bangkok. The same year also saw the airline
in 2006, with the UK and the US maintaining their
serving the New Delhi-Toronto and Mumbai-Newark
positions as India's two largest foreign source
route via their European hub, Brussels.
markets, according to latest available statistics from the Ministry of Tourism.
l
Reflecting strong travel demand for India, Singapore Airlines now operates six flights a week to Bangalore
l
Nepal, Sri Lanka, Japan and Malaysia were the
while Japan Airlines started daily flights between
major source markets. Notably, the number of arrivals
Tokyo and New Delhi in October 2007 to meet
from Nepal showed the highest year-on-year increase
the business demand on that route. Other cities
among top Asian markets in 2006.
such as Kolkata, Hyderabad and Chennai are also served by direct international flights from major
l
source markets.
While the UK and the US are expected to remain India's two largest foreign source markets, arrivals from Asia are expected to rise with the availability of more flights to India.
4
Jones Lang LaSalle Hotels
Digest 2008: India
Domestic Tourism
strong economic indicators, expanded air networks and the liberalisation of services.
l
India's domestic tourism market is significant and growing. According to the Ministry of Tourism, the
l
Pending the release of official data, this growth
number of domestic travellers has increased steadily
is expected to have continued into 2006 with
from 140 million in 1996 to 391 million in 2005 (latest
indicative statistics from the Ministry of Tourism
available statistics), a year-on-year increase of 7%.
suggesting that it might have crossed the
The growth in domestic tourism is attributable to
460-million mark.
the increasingly affluent and growing population,
Domestic Tourism in India* 500
20 15
400 350
10
300
5
250
0
200 150
-5
100
-10
50 0
Annual Growth (%)
Number of Visitors (million)
450
1996
1997
1998
1999
Number of Visitors (million)
2000
2001
2002
2003
2004
2005
2006F
-15
Annual Growth (%)
* Updated official figures not available F: Forecasts Source: Ministry of Tourism, Jones Lang LaSalle Hotels
Total Number of Domestic Visitors**
Year 2005
Growth Over 2004
Historical CAGR* (1996-2005)
390.5m
6.6%
12.1%
* Compound Annual Growth Rate ** Updated official figures not available Source: Ministry of Tourism, Jones Lang LaSalle Hotels
6
Jones Lang LaSalle Hotels
Digest 2008: India
growth in room rates and prompted the entry of new
HOTEL MARKET OVERVIEW
players. To address the huge demand-supply imbalance, we understand efforts will be directed
Existing Supply
towards building 150,000 hotel rooms in the next l
Based on the facilities and services provided, the
four years, in addition to the launch of a new "Bed
Ministry of Tourism approves and classifies hotels
and Breakfast" scheme to meet the requirements.
in India into eight categories, namely five-star deluxe, five-star, four-star, three-star, two-star, one-star,
l
The proposed known additions to supply are expected to be rapidly absorbed as they come
heritage and classification-awaited hotels.
on line over the next two to three years. After that l
As at the end of 2006, India had an estimated 1,169
we expect room rates to adjust to more realistic
approved hotels accounting for 75,787 rooms. The
levels. Markets such as Bangalore - which is
majority of this supply was located in Delhi, Mumbai,
generating one of the highest ADRs in India - are
Bangalore, Chennai and Hyderabad.
expected to experience a substantial rate correction by the end of the decade.
l
Historically, the high land prices in many of the
Additions to Supply
key cities have resulted in hotels being developed in the upper tier categories, causing a scarcity of supply in the lower categories. In its recent budget,
l
According to our research, the six major markets
the government has provided tax incentives to
have approximately 28,000 new rooms planned
develop one-, two- and three-star hotels in and
by 2011: Bangalore, Hyderabad and Pune will
around Delhi.
be most significantly impacted as room supply is forecast to increase almost 250% by 2011; in
Market Demand
Delhi/NCR, the majority of supply is being developed in Gurgaon and nearby Noida with
l
Aggressive growth in revenue per available room
almost 100% rooms is expected to be completed
(RevPAR) has been recorded in the three key
by 2011; while Mumbai and Chennai are expected
Indian cities of Delhi/NCR, Mumbai and Bangalore
to record growth rates of 35% and 55% respectively.
over the past five financial years. In FY2006-07, the five-star deluxe and five-star hotel segment in
l
Chennai has established itself as a preferred
Delhi/NCR and Mumbai reported growth in average
destination for the IT/ITeS (Information
room rates (ADR) of about 40% over the previous
Technology/Information Technology enabled
year, while Bangalore reported almost 20% ADR
services) industry. The major brands expected to
growth over the same period. In comparison, the
enter in the market in 2009 such as Hilton, Hyatt
occupancy growth has been less aggressive and in
and JW Marriot will raise the standard of
certain markets such as Bangalore, occupancies
accommodation. Hyderabad has very few rooms
have stagnated and even declined.
compared with Delhi and Mumbai. Most hotels are now concentrated in the central business district
l
Demand for rooms in India particularly in the key
(CBD) and upcoming markets of IT/ITeS. The Taj
cities (e.g. Delhi/NCR, Mumbai and Bangalore) is
Groups hotels are expected to commence
exceeding supply. This has fuelled the aggressive
operations in 2008.
7
Jones Lang LaSalle Hotels
Digest 2008: India
l
It is difficult to get accurate information on future
l
Credit Suisse, one of the world's top investment
developments in India, including hotels. There is
banks, launched its domestic brokerage operations
an unusually long approval process which delays
in India earlier this year and recently obtained its
projects and presents significant barriers to entry,
Indian merchant banking licence. Credit Suisse's
particularly for foreigners. Land is very expensive
real estate fund will acquire 10-15% in a hotel chain
everywhere and quality sites for hotels are even
in a structured deal. This is Credit Suisse's second
harder to locate. In some cases, part of this delay
investment in the real estate sector, the first being
is caused by the amalgamation of land which is
its acquisition of 75% of a INR3-billion InfoTech park
time-consuming as it requires purchasing land from
and five-star hotel project from Pune-based
different owners.
developer, Vascon Engineers. l
THE INVESTMENT MARKET
The Orchid Group of Hotels is planning to invest over INR10 billion to set up seven five-star properties in key centres across the country as it
l
In November 2007 DLF Ltd. announced its equal
mulls an international foray with properties in China
partnership with Amanresorts to enter into definitive
(PRC) and South Africa. It is also planning to add
agreements to acquire a controlling interest in the
nearly 2,000 rooms at seven locations across the
group. The entire transaction, when completed,
country. The company has entered into management
is estimated to be valued at INR16 billion, with
contracts for 10 hotels set to open acoss the country
an assumed debt of approximately INR6 billion.
over the next two years.
In addition to expanding its resort locations, Amanresorts is developing projects in key gateway
l
Milan-based Domina Hotel Group announced in
cities around the world, the first of which is scheduled
November 2007 that it would develop 25 hotels
to open in New Delhi in 2008.
through a joint venture and invest INR24 billion. In India, its first hotel is already under construction
l
US hospitality major Carlson is taking a 26% stake
and will be marketed under the new brand Vedic
in a new venture with the Unitech group to introduce
Domina Hotels & Resorts. Another four are
the Regent hospitality brand to India. The joint
expected to be built within five years.
venture will develop a luxury hotel property located at Greater Noida with an estimated
l
It was announced in December 2007 that Kamat Hotels had bought a 60% stake in Concept
investment of INR4.5 billion.
Hospitality for INR127 per share. The key hotels l
Domestic mid- to economy-segment group Lemon
Concept will manage include Seasons in Pune,
Tree Hotels has announced that Kotak Mahindra
Wall Street in Jaipur and Manor Floatel in Delhi.
Realty Fund has invested INR320 million in the
All of these now fall under the management of
company. In a related development, Kotak
Kamat Hotels. A total of 650 rooms will be under
Mahindra Realty Fund is investing about INR20
the listed Kamat Hotels entity which currently
million in Red Fox Hotels which proposes to
operates about 600 rooms.
open limited-service economy hotels in the price range of INR800-2,000 per night.
8
Jones Lang LaSalle Hotels
Digest 2008: India
l
Kotak India Real Estate Fund has just acquired an
l
Oberoi Hotels is fast expanding in India, Abu Dhabi,
approximate 11.11% stake in the Mumbai-based
the Maldives, Cambodia and Dubai, partly through
The Pride Group of Hotels at a cost of INR450
management contracts and also through investing
million. The group, which currently operates four
about INR5 billion of its own funds. The Group has
five-star hotels, has announced a INR3.5-billion
hired Kotak Mahindra to help raise INR4 billion via
expansion and renovation plan which includes setting
debt and new equity.
up five-star hotels in Mumbai, Goa, Bangalore and Hyderabad in addition to a resort hotel and spa at
l
India's Parsvnath Developers Limited (Parsvnath)
Alibaug. The management envisages an overall
has signed an agreement with conglomerate ITC's
inventory of 1,150 rooms in key cities by end 2009.
Fortune Park Hotels to manage 50 hotels comprising 4,100 rooms for Parsvnath Hotels Limited, a
l
l
Dubai Ventures, the private equity arm of Dubai
subsidiary of Parsvnath. Parsvnath Hotels is
Investment Group, has bought a 5% stake in Delhi-
expected to invest approximately INR25.4 billion to
based Bharat Hotels for INR1.6 billion - the deal
develop and own 50 hotels in India which will
values the company at INR32 billion. The hospitality
comprise 20 five-star hotels, 20 four-star hotels and
chain plans to raise up to INR10 billion for the
10 three-star and budget hotels between 2011 and
expansion of six properties under construction and
2013. The hotels will come under the brands of
has recently announced an international foray
Fortune Select, which are likely to have at least
through a joint venture with the Dubai-based
100 rooms each; Fortune Park, which are expected
Nakheel Group - Grand Fort Dubai is set to open
to have 75 or more rooms; and other brands such
in 2009. Other hotels are under construction
as Fortune Inn and Fortune Faith, which are likely
and scheduled to open over the next two years
to have at least 50 rooms. Parsvnath plans to
including The Grand Jaipur, The Grand Resort
eventually develop 75 to 100 hotels across India,
Bekal, The Grand Ahmedabad, The Grand
especially in the second- and third-tier cities, as
Chandigarh and The Grand Noida.
well as other major centres.
DB Realty, a domestic real estate fund, is investing
l
Choice Hotels India (CHI) has announced a INR7.6
about INR3.2 billion in a 320-room five-star
billion franchise and management plan to partner
property in Goa. Hyatt International will manage
with various investors to develop 20 new hotels with
and market the property. The project is likely to be
approximately 2,000 guestrooms in India's major,
completed by the second quarter of 2009.
tier-one and tier-two cities by 2010. CHI is also planning to introduce India's first all-suite hotel,
l
Financial services giant Morgan Stanley is close to
Clarion Ludhiana, in Ludhiana, Punjab by the end
picking up a 15-20% stake in the Institute of
of 2008. The 120-suite Clarion Ludhiana Hotel aims
Human Health Research Hospitality, owners of the
to target non-resident Indians (NRI). In addition,
Ananda and Ista brands of spas and hotels, for
CHI has also linked up with Royal Indian Raj
INR1.4 to 1.6 billion. Morgan Stanley will have a
International Corporation which is expected to invest
seat on the board of the hospitality company which
approximately INR160 billion from 2008 to 2012 to
is in the process of expanding its footprint in Delhi,
develop 15,000 budget guestrooms across India
Hyderabad, Pune and Ahmedabad. It plans to have
under CHI's hotel brands such as Clarion, Comfort
nine properties operating under the Ista brand over
Inn, Quality Inn and Sleep Inn.
the next three years.
9
Jones Lang LaSalle Hotels
Digest 2008: India
l
India's real estate fund, Yatra Capital, has entered
l
ITC has announced that through its subsidiary,
into a joint venture with Atlas Hospitality Company
Fortune Park Hotels Limited, that plans are
Private Limited (AHPL), a subsidiary of Ruia Group,
underway to add 100 hotels in rural India to
to develop a luxury hotel and serviced apartments
leverage the growing corporate demand as well
in Pune. Yatra is expected to hold a 20% stake in
as reach out to approximately 792 million (72%
the INR286.4-billion venture, which also marks its
of the 1.1 billion population) people living in the
entry into India's hospitality industry. Scheduled to
rural areas. Fortune Park Hotels is expected to
be completed in late 2009, the 26,900 square metre
expand hotels and inns with as few as 20 rooms
project is likely to comprise 319 hotel rooms and 96
each in the smaller towns of India by 2012, adding
serviced apartments. The project is expected to
3,000 rooms under its brand.
cater to business travellers in the area. l l
Indian real estate developer DLF will open a Four
Rakeen India Operations Company (Rakindo) has
Seasons Hotel in Gurgaon at a cost of INR5.9
announced the signing of a Memorandum of
billion. Part of DLF's ambition to become India's
Understanding (MoU) with Lotus Hotel Investment
largest hotel group, the 250-room hotel will be
Fund (Lotus) to develop business hotels in Asia,
developed on a 10-acre site at DLF Golf Link and
particularly in India. According to the MoU, a joint
is expected to open before the Commonwealth
venture company will be formed to invest in three-
Games in 2010. The developer has also secured
star and four-star hotels in Asia, with six major cities
links with Hilton Hotels to construct over 25,000
in South India being the initial focus.
hotel rooms on 40 parcels of land in 71 cities in the country by 2010. The cities include Delhi, Mumbai,
l
Real estate developer, Royal Palms India (RPI),
Chennai, Kolkata, Bangalore, Hyderabad, Pune,
has announced its plans to invest INR15.3 billion
Chhattisgarh, Amritsar and Ludhiana.
in the next three years to develop a 8-million square feet development in suburban Goregaon. The development is expected to comprise three-star to five-star hotels, IT offices, residences, villas and a retail mall.
10
Jones Lang LaSalle Hotels
Digest 2008: Bangalore
BANGALORE
MARKET OUTLOOK
l
More than 6,400 rooms are expected to come on stream in the next couple of years, with
Prospects for Bangalore's tourism and hotel industry
international branded hotel offerings from the likes
remain positive over the next few years in view of the
of The Ritz-Carlton, Shangri-La and JW Marriott.
following main factors: l l
We expect business travel to be the prime contributor
Bangalore is a key market for hospitality in India
for room demand in the coming years on account
and will continue as such in the coming years. It is
of increased IT/ITeS activity.
still the preferred destination for the IT/ITeS industry and with the new international airport and other
l
In view of the substantial planned room additions,
infrastructure improvements, its appeal is expected
we expect occupancies to dip as evident from
to increase further.
the trend in 2007. We forecast occupancies to stabilise at around 65-70% in the next five years with ADR averaging at INR16,000.
City Snapshot (as at 2007) Bangalore
Total Land Area (square kilometres) 741 Resident Population (million)
5.6 (2001 census)
Major Industries
IT/ITeS, Telecom, Aerospace & Defence
Source: Census of India 2001, City Municipal Website, Jones Lang LaSalle Hotels
11
Jones Lang LaSalle Hotels
Digest 2008: Bangalore
includes the building of new elevated highways,
TOURISM MARKET OVERVIEW
widening of existing roads and setting up of a mass transit system in the city.
Bangalore, the capital city of the southern state of Karnataka, and one of the top five largest cities in India in terms of population, is widely recognised as the
l
Given its strategic location as a key gateway,
country's IT and outsourcing hub. The city therefore
particularly for domestic tourists, to the World
receives a higher number of business travellers than
Heritage sites of Hampi and Pattadakal and historical
leisure tourists, both from the international as well as
attractions such as Tipu Sultan's 18th century fort
domestic markets.
and palace, Bangalore is in a good position to further expand its leisure tourism segment.
The city's tourism industry is poised for further growth, supported by progressive improvements made to the
l
Bangalore is also able to offer visitors some of
tourism infrastructure as well as the continued growth
India's best-rated golf courses at the Bangalore
in inbound arrivals. Major initiatives such as the
Golf Club and Karnataka Golf Association (KGA)
opening of the new Bengaluru International Airport in
Golf Course as well as dedicated resorts such as
Devanahalli in May 2008, the construction of a metro
Eagleton on the Bangalore-Mysore highway.
rail and the Bangalore-Mysore Infrastructure Corridor will improve accessibility and also help to relieve the
l
existing strain on the city's transport system.
Improvements to the air transport infrastructure with the new international airport and expansion of the city's international air network will improve accessibility and facilitate the growth in
Key Trends and Demand Drivers
international arrivals. l
Bangalore is positioned as India's IT/outsourcing hub. The Whitefield suburb of Bangalore, located
l
Bangalore is aiming to become a healthcare hub
16 kilometres east of the city, is the IT and
by 2011, with heavy investments by the Manipal
software centre of Bangalore and home to many
Group, Wockhardt and Columbia Asia to increase
multinational companies.
the number of hospital beds in the city. State-ofthe-art facilities and specialty treatments offered
l
The state government has launched various
by these private hospitals are targeted at both
initiatives to develop Bangalore into India's Silicon
discerning domestic patients as well as international
Valley by inviting foreign investors to become
medical tourists. Bangalore is also home to renowned
involved in various private-public partnership
medical clinics such as Jindal's health farm for
infrastructure projects. The development plan
visitors looking for less intrusive alternatives.
Key Tourism Data International Tourism Total International Tourist Arrivals (million)
FY2006-07
Change over FY2005-06 (%)
1.3
+46.2
6.9
+43.2
Domestic Tourism Total Domestic Tourist Arrivals (million) Source: Ministry of Tourism, Airport Authority of India (AAI)
12
Jones Lang LaSalle Hotels
Digest 2008: Bangalore
l
International Visitor Arrivals
The MICE segment has the potential to grow provided plans for the proposed International Convention Centre adjacent to the new international
l
According to statistics from the Airport Authority of
airport materialise. The development is expected
India (AAI), international passenger traffic at
to fill the demand for full-scale exhibition and
Bangalore International Airport (BIA) increased
conference facilities that are currently lacking in the
steadily from 0.2 million in FY2001-02 to 1.3 million
city and compete directly with Hyderabad.
in FY2006-07. Compared with FY2005-06, arrivals had surged by over 46%. This uptrend is expected
l
The booming commercial and IT sectors,
to continue into FY2007-08 as indicated by the 31%
improved direct air connectivity as well as heightened
year-on-year increase in international arrivals to
investor interest contributed to the buoyant
one million during the April to November 2007 period.
state of the international visitor arrivals. While the leisure segment has potential to grow, the business segment continues to dominate.
1.4
80
1.2
70 60
1.0
50
0.8
40
0.6
30
0.4
20
0.2 0.0
Annual Growth (%)
Number of Passengers (million)
International Passenger Traffic via Bangalore International Airport
10 2001-02
2002-03
2003-04
2004-05
2005-06
Financial Year* Number of Passengers (million)
2006-07
2006-07 (Apr-Nov)
2007-08 (Apr-Nov)
0
Annual Growth (%)
* Beginning 1 April to 31 March Source: AAI, Jones Lang LaSalle Hotels
13
Jones Lang LaSalle Hotels
Digest 2008: Bangalore
Domestic Tourism
year-on-year increase in domestic passengers at the airport during the first eight months of the financial
l
year to 5.6 million.
AAI statistics show that domestic passenger traffic has more than tripled from 2.1 million in FY200102 to 6.9 million in FY2006-07. On an annual
l
The outlook for domestic tourism is positive with
comparison basis, domestic arrivals recorded an
arrivals expected to increase due to demand from
impressive growth of 43.2%.
corporate travellers. The incoming traffic has been further fuelled by the increased frequency of existing
l
Similar to the trend for international arrivals, the
routes or introduction of additional routes by LCCs
domestic market is expected to register strong
such as Indigo, Spice Air and Go Air.
growth in FY2007-08, as indicated by the 33.5%
8
50
7
40
6
30
5
20
4
10
3
0
2
-10
1 0
Annual Growth (%)
Number of Passengers (million)
Domestic Passenger Traffic via Bangalore International Airport
2001-02
2002-03
2003-04
2004-05
2005-06
Financial Year* Number of Passengers (million)
2006-07
2006-07 (Apr-Nov)
2007-08 (Apr-Nov)
-20
Annual Growth (%)
* Beginning 1 April to 31 March Source: AAI, Jones Lang LaSalle Hotels
14
Jones Lang LaSalle Hotels
Digest 2008: Bangalore
HOTEL MARKET OVERVIEW
Future Supply
According to our research, Bangalore has 20-25
l
Based on our research, Bangalore will witness
government-approved hotels with a total count of
the entry of more than 6,400 rooms between
2,600-2,900 rooms. Geographically, there is no
2008 and 2010.
distinct hotel district in Bangalore and the greater part of the major hotel accommodation is located
l
The new projects in the pipeline, which comprise
in the CBD along Race Course Road, MG Road
a mixture of domestic and international brand
and Sankey Road.
names, will diversify the city's accommodation offerings ranging from the internationally branded
With the new international airport, hotels such as
hotel segment such as The Ritz-Carlton,
the Windsor Manor, Le Meridien, Grand Ashok and
Sheraton, Shangri-La and JW Marriott, to budget
Taj West End, which are located along Sankey and
and economy establishments such as Ibis.
Race Course Road, will benefit from a direct road link from the airport to their properties. Currently,
l
A number of additions to supply are to be located
these properties have a perceived disadvantaged
near the new airport although construction has
location relative to the existing airport as
yet to commence. We understand from our
accessibility is often via the congested CBD area.
research that a substantial amount of land on both sides of the roads leading to the airport has
For 2007 we are only aware of the addition of The
been land-banked by developers and local hotel
Leela Palace Kempinski's 105-room extension
companies such as Taj and Oberoi were awaiting
which entered the market in January. The additional
the development of the airport.
rooms have placed some downward pressure on market-wide occupancies during the year.
Major Future Supply in Bangalore (as at March 2008) 3.5
Number of Rooms (000)
3.0 2.5 2.0 1.5 1.0 0.5 0
2007
2008
2009
2010 onwards
Estimated Year of Completion Completed Supply
Forecast Supply
Source: Jones Lang LaSalle Hotels, Industry Sources
15
Jones Lang LaSalle Hotels
Digest 2008: Bangalore
The following table details the major supply in the pipeline from 2008 through to 2010.
Major Future Hotel Supply In Bangalore (as at March 2008) Project Name
Location
Rooms Due/Open Likely Star Positioning
Taj ITPL Bangalore
International Tech Park
199 2008
Five-star Deluxe
JW Marriott
UB City, City Centre
250 2008
Five-star Deluxe
Trident
Bengaluru International Airport
321 2008
Five-star
Shangri-La
CBD
350 2008
Five-star Deluxe
Shangri-La Resort & Spa
IT Corridor
474 2008
Five-star Deluxe
Traders Hotel
Whitefield
280 2008
N/A
Bell Tower Hotel
Whitefield
100 2008
N/A
Keys Hotel Hosur Road
Hosur Road
180 2008
Three-star
Keys Hotel
Whitefield
150 2008
Three-star
Hilton Bangalore
Ulsoor District
300 2008
Five-star Deluxe
Unnamed Hotel (by Chancery Group) Devanhalli
250 2009
N/A
Renaissance
Race Course Road
328 2009
Five-star
Sheraton Bangalore Hotel at Brigade Gateway
Malleshwaram West
300 2009
Five-star
Taj Residency (by Naveen Hotels)
Yeshwantpur
350 2009
Five-star
The Westin Bangalore
Outer Ring Road, Hebbel
300 2009
Five-star Deluxe
Lemon Tree Hotel
St. John Road
173 2009
Three-star
ITC Gardenia
Residency Road
230 2009
Five-star Deluxe
Ibis Bangalore
TBC
380 2009
Three-star
Novotel Bangalore
TBC
200 2009
Three-star
Park Plaza Bangalore
Outer Ring Road
167 2009
Four-star
Mövenpick Bangalore
TBC
220 2009
Three-star
The Ritz-Carlton
Off Residency Road
275 2009
Five-star Deluxe
Hampshire Hotel
TBC
TBC 2010
Four-star
Holiday Inn Bangalore International Aiport
Near Bengaluru International Airport
250 2010
Four-star
Oberoi Hotel
Overlooking Hebbel Lake
225 TBC
Five-star Deluxe
Ista Golf View
Koramangala
Unnamed Hotel (by Surraaj Hotels & Resorts)
TBC
100 TBC
N/A
Fortune Hotel Bangalore
TBC
TBC TBC
Four-star
70 TBC
Total New/Proposed Supply
Four-star
6,422
TBC: to be confirmed N/A: not avaliable Source: Jones Lang LaSalle Hotels, Media Sources
16
Jones Lang LaSalle Hotels
Digest 2008: Bangalore
Five-Star Deluxe and Five-Star Hotel Market
l
In view of the relatively large new supply anticipated in 2008 and with room demand expected to remain
l
Bangalore's five-star deluxe and five-star hotels
strong, we expect RevPAR growth to be driven by
enjoyed another robust year as demand continues
ADR growth in 2008-09. The anticipated addition
to exceed supply.
of almost 3,700 new rooms in 2008 and 2009 is expected to alleviate the current shortage in supply
l
l
ADR saw a 16% increment in 2006-07 to INR16,000.
however the resultant increase in competitive
Due to the addition of rooms in 2007, occupancy
pressures within the market could lead to some
dropped two percentage points to 74%.
rationalisation in ADR growth rates.
Led by growth in room rates, RevPAR strengthened by 13% year-on-year to a seven-year high of INR12,000.
Five-Star Deluxe and Five-Star Hotel Performance in Bangalore 18
78 76
14
74
12 10
72
8
70
6
68
4
66
2 0
Occupancy (%)
ADR/RevPAR (INR) (000)
16
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
64
Financial Year* ADR
RevPAR
Occupancy (%)
* Beginning 1 April to 31 March Source: Jones Lang LaSalle Hotels, Industry Sources
17
Jones Lang LaSalle Hotels
Digest 2008: Chennai
CHENNAI
MARKET OUTLOOK
l
Our research shows that Chennai will see the entry of almost 3,700 rooms between 2008 and
Chennai's tourism and hotel industry prospects are
2011. The majority of this supply (2,075 rooms) is
positive in view of the following key contributors:
expected to enter the market by the end of 2009. Major brands include Hilton, Hyatt and JW Marriott,
l
Chennai, like Delhi to the north, will continue to be
which will broaden the range and lift the city's
the prime gateway to south India for both leisure
standard of accommodation.
and business tourists. l l
Regardless of the relatively large supply in the
Chennai has established itself as a preferred
pipeline, we expect robust demand drivers to
destination for the IT/ITeS industry as well as the
continue the trend of increased ADR and
auto and electronic equipment manufacturing
stabilised occupancy.
industry. With confirmed plans of the auto and electronic industry to expand and establish new
l
l
Occupancy in Chennai is forecast to remain
bases, we expect Chennai to be a favourable
stable at 73% in the next five years with ADR
market for the hospitality industry.
averaging INR10,000.
We forecast leisure and business travellers to maintain their share whereby increasing numbers will drive the growth of the city's hospitality industry.
City Snapshot (as at 2007) Chennai
Total Land Area (square kilometres) 181 Resident Population (million)
4.3 (2001 census)
Major Industries
Manufacturing (automotive & electronic), IT/ITeS, Banking & Financial Services
Source: Census of India 2001, City Municipal Website, Jones Lang LaSalle Hotels
18
Jones Lang LaSalle Hotels
Digest 2008: Chennai
TOURISM MARKET OVERVIEW
Nadu contributes almost 15%, second only to Karnataka. Chennai has popular government and
Located on the Coromandel Coast of the Bay of Bengal,
private universities that are known in India for
Chennai is the capital of the Indian state of Tamil Nadu.
engineering courses.
It is the fourth largest metropolitan city in India and one of the largest metropolitan areas in the world.
l
It is of religious importance to a large number of south Indians. Many temples of religious significance
Chennai's economy has a broad industrial base in the
are present in the state of Tamil Nadu and Chennai
automobile, technology, hardware manufacturing and
serves as a gateway to the state.
healthcare industries. The city is home to much of India's automobile industry and is one of the major hubs for the
l
IT/ITeS industry after Bangalore.
Chennai is the origin of the majority of the expatriate and NRI population. Many Indians from this part of the country migrate to the US and Gulf countries,
The city is served by an international airport and
mostly as software workers and as construction
two major ports; it is connected to the rest of the
professionals. They visit the country once every two
country by five national highways and two railway
years on average and stay about 30 days. During
terminals. Being an economic centre in south India,
this period they undertake religious and tourist
Chennai receives both domestic and international
excursions within the state.
business travellers. l
Emerging fast as a preferred destination for medical tourism, Chennai offers world-class treatments with
Key Trends and Demand Drivers
modern medicine as well as traditional Indian l
Chennai has a broad industrial base with a strong
medicine being available. Popular hospital chains
focus on the automobile and electronic industries.
such as Apollo, Max and Fortis have established
The city hosts world majors such as GM, Hyundai,
speciality hospitals that cater to patients from the
Nokia and Motorola. These companies have plans
Gulf and Southeast Asia.
to expand their facilities further and develop Chennai as a regional hub for Asia Pacific.
l
Chennai's large industrial base, booming IT/ITeS services, widespread religious importance and
l
It is one of the largest exporters of IT/ITeS
mushrooming healthcare sector renders a preferred
services in India after Bangalore. Out of India's
destination for business and leisure.
total IT/ITeS workforce, the parent state of Tamil
19
Jones Lang LaSalle Hotels
Digest 2008: Chennai
Key Tourism Data International Tourism Total International Tourist Arrivals (million)
FY2006-07
Change over FY2005-06 (%)
2.9
+11.5
6.1
+45.1
Domestic Tourism Total Domestic Tourist Arrivals (million) Source: Ministry of Tourism, AAI
International Visitor Arrivals
l
Latest available statistics from AAI indicate that this growth trend will continue into FY2007-08.
l
Statistics from AAI show international passenger
For the period from April to November 2007, total
traffic at Chennai International Airport reached 2.9
international passenger arrivals increased by
million in FY2006-07, up by 61% from 1.8 million
19% year-on-year to 2.2 million.
in FY2000-01.
International Passenger Traffic via Chennai International Airport 25 20 3
15 10
2
5 0
1
Annual Growth (%)
Number of Passengers (million)
4
-5 0
2001-02
2002-03
2003-04
2004-05
2005-06
Financial Year* Number of Passengers (million)
2006-07
2006-07 (Apr-Nov)
2007-08 (Apr-Nov)
-10
Annual Growth (%)
* Beginning 1 April to 31 March Source: AAI, Jones Lang LaSalle Hotels
20
Jones Lang LaSalle Hotels
Digest 2008: Chennai
Domestic Tourism
l
Similar to the trend for international passenger arrivals, the number of domestic passengers rose
l
Statistics from AAI show domestic passenger traffic
27% year-on-year to 4.9 million over the April to
at Chennai International Airport reached 6.1 million
November 2007 period.
in FY2006-07, up from 2.2 million in 1999.
7
50
6
40
5
30
4
20
3
10
2
0
1
-10
0
2001-02
2002-03
2003-04
2004-05
2005-06
Financial Year* Number of Passengers (million)
2006-07
2006-07 (Apr-Nov)
2007-08 (Apr-Nov)
Annual Growth (%)
Number of Passengers (million)
Domestic Passenger Traffic via Chennai International Airport
-20
Annual Growth (%)
* Beginning 1 April to 31 March Source: AAI, Jones Lang LaSalle Hotels
21
Jones Lang LaSalle Hotels
Digest 2008: Chennai
HOTEL MARKET OVERVIEW
Future Supply
According to our research and latest available
l
Our research shows that Chennai will witness
statistics, Chennai has 55 government-approved
the entry of almost 3,700 rooms between 2008
hotels with a total of 5,500 rooms. Most of the hotels
and 2011.
in Chennai are concentrated near to the CBD or along Anna Salai road that connects the international
l
The Hilton is expected to start operations in 2008
airport to the city. However, many new hotels are
while both Hyatt and JW Marriott hotels are
expected to come up along the Old Mahabalipuram
scheduled to be operational by 2009.
Road (OMR) which is fast emerging as a micro market for IT/ITeS activity. We are aware of only two
l
There is a major concentration of hotels along
openings for 2007, the Asiana at OMR Road with
the OMR and the rest are scattered around
114 rooms and The Pride at Poonamallee High
the CBD.
Road with 115 rooms. Both properties are in the five-star category.
Major Future Supply in Chennai (as at March 2008)
Number of Rooms (000)
2.5 2.0 1.5 1.0 0.5 0
2007
2008
2009
Estimated Year of Completion Completed Supply
Forecast Supply
Source: Jones Lang LaSalle Hotels, Industry Sources
22
Jones Lang LaSalle Hotels
Digest 2008: Chennai
The following table details the major supply in the pipeline from 2008 to 2011.
Major Future Hotel Supply In Chennai (as at March 2008) Project Name
Location
Rooms Due/Open
Taj GVK Chennai
Mount Road
221 2008
Five-star
Lemon Tree Hotel
Opposite Raj Bhavan
110 2008
Three-star
Hilton Chennai
Guindy
253 2008
Five-star Deluxe
Unnamed Hotel
Old Mahabalipuram Road
300 2008
TBC
100 2008
TBC
66 2008
TBC
Unnamed Hotel (by Femena Hotels) TBC
Likely Star Positioning
Deccan Park Ltd
Old Mahabalipuram Road
Hyatt Regency Chennai
TBC
225 2009
Five-star
The ITC Grand Chola
Mount Road
550 2009
Five-star Deluxe
Hyatt
Close to the Chennai Airport
250 2009
Five-star
JW Marriott
Estuary near the Adyar river
300 2009
Five-star Deluxe
The Leela Palace Kempinski
Adyar Beach
380 2010
Five-star Deluxe
Hampshire Hotels
TBC
TBC 2011
Four-star
Unnamed Hotel (by Bharat Hotels)
TBC
320 TBC
Five-star Deluxe
Raintree-branded Hotel (by Ceebros)
Anna Salai
200 TBC
TBC
Unnamed Hotel
Off College Road
150 TBC
TBC
Fortune
Old Mahabalipuram Road
Empee Group
Inner Ring Road
Total New/Proposed Supply
Three-star 253
TBC
3,678
TBC: to be confirmed N/A: not avaliable Source: Jones Lang LaSalle Hotels, Media Sources
23
Jones Lang LaSalle Hotels
Digest 2008: Chennai
Five-Star Deluxe and Five-Star Hotel Market
increased from INR4,000 to INR8,500. Increased business travel and the lack of hotel rooms are
l
the prime reasons for this trend.
Chennai has approximately 1,500 rooms in the five-star deluxe and five-star hotel market segment. No new addition to the stock has taken place in the
l
past couple of years.
Taking into account the future supply in this segment, we anticipate downward pressure on the RevPAR.
l
Occupancies in this segment increased from 51% in 2002 to 76% in 2007. For the same period, ADR
9
90
8
80
7
70
6
60
5
50
4
40
3
30
2
20
1
10
0
2001-02 ADR
2002-03 RevPAR
2003-04 2004-05 Financial Year*
2005-06
2006-07
Occupancy (%)
ADR/RevPAR (INR) (000)
Five-Star Deluxe and Five-Star Hotel Performance in Chennai
0
Occupancy (%)
* Beginning 1 April to 31 March Source: Jones Lang LaSalle Hotels, Industry Sources
24
Jones Lang LaSalle Hotels
Digest 2008: Delhi
DELHI
MARKET OUTLOOK
l
The Commonwealth Games in 2010 is expected to attract 50,000 foreign visitors to Delhi. Our research
Delhi is both the nation's capital and its prime economic
indicates that approximately 30,000 rooms will be
hub. It is home to the administration, Supreme Court
required to accommodate these visitors.
and political base which governs and exercises supervisory powers over the whole country. With
l
Gurgaon, the satellite city of Delhi, is witnessing
decentralisation policies for urban development of the
a phenomenal increase in development activity
National Capital Region (NCR), Delhi comprises the
with a major increase in MNCs (multinational
National Capital Territory of Delhi itself and the
corporations) and domestic BPOs (business
neighbouring satellite urban areas including Gurgaon
process outsourcings) setting up their offices
and Faridabad in Haryana and Noida, Greater Noida
there. There are about 4,087 rooms in the pipeline
and Ghaziabad in Uttar Pradesh.
in Gurgaon which will make it an alternative to Delhi city's existing commercial districts.
Further growth and development in Delhi's tourism and hospitality sectors is expected to be supported by the
l
following key factors:
With the influx of specialty hospitals such as Apollo, Fortis, Artemis Health Institute and Wockhardt Hospitals, it is expected that medical tourism will
l
Delhi will continue to be the prime gateway to India
increase and this will further strengthen the demand
for both leisure and business travellers. With
for hotel rooms.
emerging suburbs as centres of corporate activity, coupled with Delhi's positioning as the seat of the
l
Notwithstanding the large volumes of new rooms
central government, and the expanding international
expected in the future, we forecast robust demand
airport, the city's tourism industry is expected to
drivers to continue the trend of increased ADRs and
grow further in the coming years. We expect
stabilised occupancies. Occupancy in Delhi is
increasing leisure and business travellers to be a
expected to remain at 75% in the next five years
prime demand driver for the hospitality industry in
with ADR averaging at INR17,000.
the city.
25
Jones Lang LaSalle Hotels
Digest 2008: Delhi
City Snapshot (as at 2007) Delhi
Total Land Area (square kilometres) 1483 Resident Population (million)
13.8 (2001 census)
Major Industries
IT/ITeS, Manufacturing, Banking & Financial Services
Source: Census of India 2001, City Municipal Website, Jones Lang LaSalle Hotels
TOURISM MARKET OVERVIEW
international convention centre at Dwarka, located five kilometres from the international airport. This
As the capital city and one of the key international
centre is designed to have a seating capacity of
gateways to India, Delhi benefits from India's continued
12,000 with a convention hall, auditoriums,
economic expansion, rising foreign investment inflows
conference rooms, banquet halls and exhibition
and increasing attractiveness as a tourist destination.
areas, along with two hotels with up to 850 rooms. It is expected to attract large conventions to Delhi
Delhi's tourism industry stands to benefit from India's
and boost the city's MICE (meetings, incentives,
continued economic boom and the resulting influx of
conventions and exhibitions) capabilities.
foreign investment and visitors to the capital city. Playing host to the upcoming Commonwealth Games will not
l
A hospitality district is being developed by Delhi
only help the city to raise its profile as a business and
International Airport Limited (DIAL) with over
leisure destination in the international arena but will also
40 acres of land allocated for luxury and business
spur improvements to the existing tourism and transport
hotels, serviced apartments and a convention
infrastructure, thereby benefiting the tourism and
centre. The district, which is alongside the
hospitality sector.
Delhi-Gurgaon road, is expected to help ease the shortage of hotel rooms in the capital and transform the complex into a hub for hospitality,
Key Trends and Demand Drivers
commercial and retail space. l
Delhi is the second largest metropolis in India and, along with Mumbai, attracts the majority of tourist
l
Delhi is expected to see an increase in connectivity
arrivals to the country. As India's long-term capital,
in both domestic as well as international air routes.
Delhi's culture is strongly embedded in its history,
Apart from national carriers, private carriers are
and reflected in the 175 monuments that have been
also securing direct or single leg international
marked as national heritage sites. This results in a
connections from Delhi to major cities worldwide.
steady stream of visitors to the metropolis keen to
The entrance of many LCCs has boosted traffic to
witness the remnants of its Mughal past in the many
and from the capital, stretching the current aviation
bazaars and historical sites around the city.
infrastructure even further. DIAL currently handles 23 million passengers a year against its official
l
capacity of 14 million.
The Delhi Development Authority (DDA) has put forward a proposal to set up India's largest
26
Jones Lang LaSalle Hotels
Digest 2008: Delhi
l
In an effort to increase mobility within the city,
and the city centre. The scheme is expected to
plans are being put in place to expand the metro
greatly reduce journey time to the city centre.
system in time for the Commonwealth Games. The
This is to be further enhanced by the introduction
second phase of the metro system includes an
of high capacity bus systems which are already
extension into the city's southern neighbourhoods
being developed.
as well as a high-speed rail link between the airport
Key Tourism Data International Tourism Total International Tourist Arrivals (million)
FY2006-07
Change over FY2005-06 (%)
6.7
+15.4
13.6
+31.7
Domestic Tourism Total Domestic Tourist Arrivals (million) Source: Ministry of Tourism, AAI
27
Jones Lang LaSalle Hotels
Digest 2008: Delhi
International Visitor Arrivals
l
Of all the foreign tourists coming to India, 35-40% make Delhi their first port of call, with 62% of these
l
being business travellers.
Statistics from AAI show international passenger traffic at Indira Ghandi International Airport reached 6.7 million in FY2006-07, up 15.4% from the
l
Industry estimates suggest that all business
previous financial year. This growth in inbound
travellers and 12% of foreign leisure travellers
foreign travellers is expected to continue into
coming to Delhi prefer to stay in star-rated hotels.
FY2007-08 as indicated by the 11% year-on-year growth in international passenger arrivals to 4.5
l
According to our estimates, Delhi is expected to host 50,000 additional foreign tourists during
million for the April to November 2007 period.
Commonwealth Games in 2010.
7
20
6
15
5
10
4
5
3 0
2
-5
1 0
Annual Growth (%)
Number of Passengers (million)
International Passenger Traffic via Indira Ghandi International Airport
2001-02
2002-03
2003-04
2004-05
2005-06
Financial Year* Number of Passengers (million)
2006-07
2006-07 (Apr-Nov)
2007-08 (Apr-Nov)
-10
Annual Growth (%)
* Beginning 1 April to 31 March Source: AAI, Jones Lang LaSalle Hotels
28
Jones Lang LaSalle Hotels
Digest 2008: Delhi
Domestic Tourism
l
Domestic tourists to Delhi comprise 60-65% of total arrivals with 50% preferring to stay in
l
star-rated hotels.
Based on data from AAI, domestic passenger traffic at Indira Ghandi International Airport has surged by 31.7% from 10.5 million in FY2005-06 to 13.6
l
Anecdotal evidence suggests domestic guests typically stayed for two to three days.
million in FY2006-07. A similar growth trend is expected for FY2007-08 as the first eight months of 2008 witnessed an increment of 26% year-on-
l
The outlook for domestic tourism is positive, with domestic visitor traffic expected to surge during the
year to 8.6 million domestic passengers.
Commonwealth Games.
16
40
14
35 30
12
25
10
20
8
15
6
10 5
4
0
2 0
Annual Growth (%)
Number of Passengers (million)
Domestic Passenger Traffic via Indira Ghandi International Airport
-5 2001-02
2002-03
2003-04
2004-05
2005-06
Financial Year* Number of Passengers (million)
2006-07
2006-07 (Apr-Nov)
2007-08 (Apr-Nov)
-10
Annual Growth (%)
* Beginning 1 April to 31 March Source: AAI, Jones Lang LaSalle Hotels
29
Jones Lang LaSalle Hotels
Digest 2008: Delhi
HOTEL MARKET OVERVIEW
Future Supply
Existing Supply
l
Our research shows that Delhi/NCR will see the entry of almost 7,400 rooms between 2008 and
According to our research and the latest available
2010. The majority of supply (3,037 rooms) is
statistics, Delhi has 48 government-approved hotels
expected to enter the market in 2009.
with a total of 7,165 rooms. If we include Noida and Gurgaon (the suburbs of Delhi in neighbouring states),
l
Aside from the Crowne Plaza Gurgaon (234 rooms)
there are 62 hotels with 7,781 rooms. The majority of
which recently opened and The Westin Resort &
Delhi's upmarket hotels are located in its traditional
Spa (97 rooms), other prominent additions will
business districts of Connaught Place, Nehru Place and
include the 322-room Leela Kempinski Gurgaon
Bhikaji Cama Place however the emergence of Gurgaon
which is scheduled to open end 2008.
and Noida as major commercial and residential centres on the outskirts of Delhi has also led to increased hotel
l
Approximately 55% of the total room inventory in the pipeline will open in Gurgaon. The concentration
development activity in these areas.
of hotels parallels the commercial, residential and Our statistics indicate that of the 30,000 approximately
retail activities taking place. Some of the proposed
rooms required in the NCR region for the Commonwealth
hotel additions in the area include the Courtyard by
Games, there are presently approximately only 10,500
Marriott, Novotel and The Westin, Gurgaon.
rooms. With the expected forecast for the number of hotels coming up, it is still expected that an additional
l
While the increase in supply will help to address
15,000 to 18,000 rooms will be required during the
the current shortfall of hotel rooms in the city, new
Games. This potential demand-supply gap presents
challenges such as manpower shortages will need
huge untapped opportunity for potential investors in
to be addressed following the surge in supply.
the industry.
Major Future Supply in Delhi/NCR (as at March 2008) 3.5
Number of Rooms (000)
3.0 2.5 2.0 1.5 1.0 0.5 0
2007
2008
2009
2010 onwards
Estimated Year of Completion Completed Supply
Forecast Supply
Source: Jones Lang LaSalle Hotels, Industry Sources
30
Jones Lang LaSalle Hotels
Digest 2008: Delhi
l
New projects in the pipeline, which comprise a
ranging from the upper tier hotel segment such as
mixture of domestic and international brand names,
the Leela Kempinski to lower tier establishments
will diversify the city's accommodation offerings
such as Ibis and Lemon Tree.
The following table details the major supply in the pipeline from 2008 to 2010.
Major Future Hotel Supply In Delhi (as at March 2008) Project Name
Location
The Leela Kempinski Gurgaon
Gurgaon
322 2008
Five-star Deluxe
The Leela Residences
Gurgaon
90 2008
Five-star Deluxe
The Aman, Lodhi Road
Delhi
69 2008
Five-star Deluxe
The Claridges Atrium Suraj Kund
Faridabad
275 2008
Five-star
Park Plaza Extension & Convention Centre
Gurgaon
32 2008
Five-star
DLF Hilton Garden Inn, Saket
Delhi
118 2008
Five-star
Park Plaza Noida
Noida
88 2008
Five-star
Courtyard by Marriott
Gurgaon
199 2008
Five-star
Picadilly, Janakpuri
Delhi
240 2008
Five-star
Courtyard by Marriott
Noida
250 2008
Five-star
Ibis
Gurgaon
217 2008
Three-star
Red Fox Manesar
Gurgaon
110 2008
Three-star
Red Fox Jasola
Delhi
77 2008
Three-star
The Westin Gurgaon
Gurgaon
300 2009
Five-star Deluxe
The Westin Service Residences
Gurgaon
150 2009
Five-star Deluxe
Regent Gurgaon
Gurgaon
300 2009
Five-star Deluxe
Today Hotel
Delhi
250 2009
Five-star
Radisson Manesar
Gurgaon
225 2009
Five-star
Crowne Plaza Today
Delhi
200 2009
Five-star
Clarion Hotel
Gurgaon
80 2009
Five-star
Unnamed hotel by Narsi group
Gurgaon
250 2009
Five-star
Savoy Suites - Apartments
Gurgaon
110 2009
Four-star
Dawnay Day
Gurgaon
100 2009
Four-star
Oakwood Apartments
Gurgaon
64 2009
Four-star
Mariott Executive Apartments
Gurgaon
173 2009
Four-star
JMD Hotel on Sonha Road
Gurgaon
175 2009
Four-star
Shipra Hotel Ghaziabad
Ghaziabad
250 2009
Three-star
Novotel
Gurgaon
320 2009
Three-star
Formula 1, Gurgaon
Gurgaon
90 2009
Three-star
31
Rooms Due/Open
Likely Star Positioning
Jones Lang LaSalle Hotels
Digest 2008: Delhi
Major Future Hotel Supply In Delhi (as at March 2008) Project Name
Location
The Leela Palace New Delhi
Delhi
210 2010
Five-star Deluxe
The Oberoi
Gurgaon
150 2010
Five-star Deluxe
Four Seasons Hotel Gurgaon
Gurgaon
230 2010
Five-star Deluxe
Hilton Dwarka New Delhi
Delhi
300 2010
Five-star
Eros Boulevard Hotel
Delhi
350 2010
Five-star
JP Greens
Greater Noida
200 2010
Five-star
Taj Business Hotel
Gurgaon
200 2010
Five-star
DLF Rajiv Chawk - Connaught Place Hotel
Gurgaon
200 2010
Five-star
Hilton Garden Inn New Delhi
Delhi
400 2010
Four-star
Six Senses
Greater Noida
TBC 2010
Five-star Deluxe
Total Proposed Supply
Rooms Due/Open
Likely Star Positioning
7,364
TBC: to be confirmed Source: Jones Lang LaSalle Hotels, Media Sources
32
Jones Lang LaSalle Hotels
Digest 2008: Delhi
Five-Star Deluxe and Five-Star Hotel Market
l
In comparison, occupancy rates remained stable at 75% but are expected to decline in the coming
l
The performance of five-star deluxe and
years on account of upcoming supply in Noida
five-star hotels in Delhi/NCR reached record
and Gurgaon.
levels in 2007 on the back of robust demand and limited supply.
l
With room demand anticipated to stay strong, we expect RevPAR growth to remain driven by ADR
l
ADR rose to historic highs at INR12,500 though
growth in 2008. However, the growth in ADR may
the additional supply coming online could affect
moderate slightly following the anticipated entry
its growth.
of over 3,400 new rooms in 2008 and 2009.
14
80
12
70
10
60 50
8
40
6
30
4
20
2 0
ADR
Occupancy (%)
ADR/RevPAR (INR) (000)
Five-Star Deluxe and Five-Star Hotel Performance in Delhi/NCR
10 2001-02
2002-03 RevPAR
2003-04 2004-05 Financial Year*
2005-06
2006-07
0
Occupancy (%)
* Beginning 1 April to 31 March Source: Jones Lang LaSalle Hotels, Industry Sources
33
Jones Lang LaSalle Hotels
Digest 2008: Hyderabad
HYDERABAD
MARKET OUTLOOK
l
Our research shows that Hyderabad will see the entry of around 5,600 rooms between 2008 and
Hyderabad's tourism and hotel industry has the
2011. About 1,700 rooms are expected to come
potential to develop and grow further in light of the
on stream in 2008 including major brands such as
following key factors:
Marriott and Westin.
l
Hyderabad is a key market for hospitality in India
l
We expect business travel to continue to be the
and will remain so in the coming years. It has
prime demand driver in the coming years on account
established itself as a preferred destination for the
of increased IT/ITeS activity.
IT/ITeS industry after Bangalore and with the new international airport and other infrastructure
l
With the expected room additions, we forecast
improvements, its attractiveness is expected to
occupancies to dip in the coming years. We estimate
increase further.
that occupancies will stabilise at around 65-70% in the next five years with ADR averaging INR15,000.
City Snapshot (as at 2007) Hyderabad
Total Land Area (square kilometres) 625 Resident Population (million)
3.8 (2001 census)
Major Industries
IT/ITeS, Biotechnology
Source: Census of India 2001, City Municipal Website, Jones Lang LaSalle Hotels
34
Jones Lang LaSalle Hotels
Digest 2008: Hyderabad
TOURISM MARKET OVERVIEW
metre facility with a 287-room capacity business hotel, Novotel Hyderabad, the convention centre
Hyderabad is the capital city of the Indian state of
has a seating capacity of 4,000 and can be
Andhra Pradesh. It has an estimated metropolitan
configured to accommodate a seating capacity
population of 6.1 million, making it a mini-metro
of about 6,500 guests.
city and India's sixth largest metropolitan area. The city is renowned for its rich history, culture and
l
The city is an emerging base for semiconductor
architecture representing its unique character as a
fabrication activity. With the opening up of India's
meeting point for north and south India as well as its
semiconductor policy, large manufacturing
multilingual culture.
companies such as Intel and Cypress have shortlisted the city to set up their first fabrication
Also known as The City of Nizams, Hyderabad is today
plants in India.
one of the most developed cities in the country and a modern hub for IT/ITeS and biotechnology.
l
The presence of multiple speciality hospitals has established Hyderabad as a preferred destination
Hyderabad is predominantly a business destination
for medical tourism. Hospital operators including
and derives 98% of tourism revenues from business
Apollo, Max and Fortis have established hospitals
travel. Domestic business travel constitutes 70% of
which cater to domestic as well as international
total revenues.
patients, particularly from the Middle East and Asia Pacific.
Key Trends and Demand Drivers l l
l
Hyderabad is a strong base for local and
With its strong IT/ITeS industry and emerging
international business in precious stones, gems
biotechnology hub, Hyderabad is home to large
and jewellery. The city is a major hub for the
campuses of major international and domestic
processing and export of gems and jewellery and
IT/ITeS companies including Microsoft, Infosys,
draws a large number of international business
Wipro, Deloitte and UBS.
visitors for this purpose.
Hyderabad is a preferred MICE destination.
l
Hyderabad is the origin of a large expatriate and
The Hyderabad International Convention Centre
NRI population based mainly in the US and the Gulf
has established itself as a popular MICE venue
who travel to India for long periods every two years.
and has played host to numerous large and small events including Infocom in 2007 and is set to
l
Its strong IT/ITeS industry, emerging biotechnology
host the PATA Travel Mart in September 2008.
and established MICE segment has helped
The centre was developed by Dubai-based
the city create a niche for itself on the travel
Emaar Properties. An integrated 27,000 square
and tourism map.
35
Jones Lang LaSalle Hotels
Digest 2008: Hyderabad
Key Tourism Data International Tourism
FY2006-07
Change over FY2005-06 (%)
1.2
+21.0
4.5
+51.8
Total International Tourist Arrivals (million) Domestic Tourism Total Domestic Tourist Arrivals (million) Source: Ministry of Tourism, AAI
International Visitor Arrivals
l
Latest available statistics from the AAI show that a total of 0.9 million international passengers were
l
Statistics from AAI show international passenger
received at the airport for April to November 2007,
traffic at Hyderabad International Airport reached
representing an increase of 23% from the
1.2 million in FY2006-07, an increase of more than
corresponding period in 2006.
400% from FY2000-01.
0.9
50
0.8
45
0.7
40 35
0.6
30
0.5
25
0.4
20
0.3
15
0.2
10
0.1
5
0
2001-02
2002-03
2003-04
2004-05
2005-06
Financial Year* Number of Passengers (million)
2006-07
2006-07 (Apr-Nov)
2007-08 (Apr-Nov)
Annual Growth (%)
Number of Passengers (million)
International Passenger Traffic via Hyderabad International Airport
0
Annual Growth (%)
* Beginning 1 April to 31 March Source: AAI, Jones Lang LaSalle Hotels
36
Jones Lang LaSalle Hotels
Digest 2008: Hyderabad
Domestic Tourism
l
According to the latest available statistics from the AAI, a total of 3.6 million domestic passengers were
l
AAI statistics show domestic passenger traffic at
received from April to November 2007, up 29%
Hyderabad International Airport reached 4.5 million
year-on-year.
in FY2006-07, an increase of more than 200% from FY2000-01.
Domestic Passenger Traffic via Hyderabad International Airport 60
5.0
50
4.0 3.5
40
3.0
30
2.5
20
2.0 1.5
10
1.0
0
0.5 0
Annual Growth (%)
Number of Passengers (million)
4.5
2001-02
2002-03
2003-04
2004-05
2005-06
Financial Year* Number of Passengers (million)
2006-07
2006-07 (Apr-Nov)
2007-08 (Apr-Nov)
-10
Annual Growth (%)
* Beginning 1 April to 31 March Source: AAI, Jones Lang LaSalle Hotels
37
Jones Lang LaSalle Hotels
Digest 2008: Hyderabad
HOTEL MARKET OVERVIEW
l
Most of the rooms in 2008 will be in new hotels being developed by the Taj group, while Westin
According to our research and latest available statistics,
is expected to start operations with this year.
Hyderabad has 40 government-approved hotels with a total of 2,000 rooms. Given the importance of the
l
The existing Hyderabad International Convention
city in the economic landscape of India, Hyderabad has
Centre and the new Rajiv Ghandi International
a very low number of rooms compared with cities such
Airport will keep room occupancy rates high for five-
as Mumbai and Delhi. Most of the existing hotels in
star hotels in the near future.
Hyderabad are located in the CBD and upcoming micro markets for the IT/ITeS industry namely Madhapur
l
and Gacchibowli.
Despite the interest generated by mid-market and budget hotel development, more than half of the new properties are concentrated in the luxury and upper tier segment.
Future Supply l
Our research shows that Hyderabad will see the entry of about 5,600 rooms between 2008 and 2011. Most of these hotels will be located in the areas of Banjara Hills, Madhapur, Gacchibowli and Begumpet.
Major Future Supply in Hyderabad (as at March 2008) 3.5
Number of Rooms (000)
3.0 2.5 2.0 1.5 1.0 0.5 0
2008
2009
2010 onwards
Estimated Year of Completion Forecast Supply Source: Jones Lang LaSalle Hotels, Industry Sources
38
Jones Lang LaSalle Hotels
Digest 2008: Hyderabad
The following table details the major supply in the pipeline from 2008 to 2011.
Major Future Hotel Supply In Hyderabad (as at March 2008) Project Name
Location
Rooms Due/Open
Lemon Tree Hotel
Cyberabad (HITEC City)
260 2008
Three-star
Park Hotels
Raj Bhavan Road, Somajiguda
225 2008
Four-star
Taj Falaknuma Palace
Old City
Taj-Begumpet
Begumpet
189 2008
Five-star
Penna Cements
Banjara Hills
180 2008
Three-star
Taj Residency
Banjara Hills
180 2008
Five-star
Quality Inn
Ameerpet
225 2008
Three-star
Westin
Madhapur
428 2008
Five-star
Courtyard by Marriott (former Viceroy Hotel)
Near Rajiv Gandhi International Airport
TBC 2009
TBC
The Leela Palace, Kempinski Hyderabad
Banjara Hills
225
Five-star
Lemon Tree Hotel
Jubilee Hills
200 2009
Three-star
Taj Krishna
Banjara Hills
200 2009
Five-star Deluxe
Raheja Mindspace
HITEC City
200 2009
Five-star Deluxe
Prajay Engineers Syndicated Group Adis
140 2009
Three-star
Unknown hotel
HITEC City
400 2010
Five-star Deluxe
Ibis
Shamshabad
200 2010
Three-star
Hampshire Hotel
TBC
TBC 2010
TBC
Trident
HITEC City
150 2011
Five-star
Hilton Hyderabad
Saifabad/Adarsh Nagar
299 2011
TBC
Hyatt
Banjara Hills
200 N/A
Five-star Deluxe
Green Park
Ameerpet
120 N/A
Four-star
Mantri group
HITEC City
N/A N/A
Five-star
GoAP
HITEC City
150 N/A
Three-star
ITC
HITEC City
N/A N/A
Five-star
Emaar Golf Resorts
Gacchibowli
70 N/A
Five-star Deluxe
Grand Hyatt
Manikonda
400 N/A
Five-star Deluxe
Holiday Inn
Manikonda
350 N/A
Five-star
GMR Group
Shamshabad
300 N/A
Five-star
Regal Broadway
Shamshabad
N/A N/A
Five-star
Emaar
Shamshabad
70 N/A
Hometel
HITEC City
60 2008
2009
200 N/A
Total New/Proposed Supply
Likely Star Positioning
Five-star Deluxe
Seven-star Four-star
5,621
TBC: to be confirmed N/A: not avaliable Source: Jones Lang LaSalle Hotels
39
Jones Lang LaSalle Hotels
Digest 2008: Hyderabad
Five-Star Deluxe and Five-Star Hotel Market
ADR improved from INR2,700 to INR9,500. Increased business travel and the lack of hotel
l
rooms are the prime reasons for this trend.
The five-star deluxe and five-star market segment in Hyderabad has approximately 1,300 rooms. This is expected to increase to almost 2,800 rooms by
l
Taking into account the future supply in this segment, we expect downward pressures on the
the end of 2009.
RevPAR. l
The occupancies in this segment increased from 65% in 2002 to 73% in 2007. For the same period,
10
78
9
76
8
74
7
72
6
70
5
68
4
66
3
64
2
62
1
60
0
2001-02 ADR
2002-03 RevPAR
2003-04 2004-05 Financial Year*
2005-06
2006-07
Occupancy (%)
ADR/RevPAR (INR) (000)
Five-Star Deluxe and Five-Star Hotel Performance in Hyderabad
58
Occupancy (%)
* Beginning 1 April to 31 March Source: Jones Lang LaSalle Hotels, Industry Sources
40
Jones Lang LaSalle Hotels
Digest 2008: Mumbai
MUMBAI
MARKET OUTLOOK
l
Mumbai has also gained new international connections with direct flights from both private and
Mumbai is the financial capital of India and the base for
national carriers.
most national and international banks, funds and other financial institutions operating in the country. It serves
l
Asia's largest slum, Dharavi, is being redeveloped
as a gateway to western India and has the busiest
by private entrepreneurs in partnership with the
domestic and international airport after Delhi. Apart from
government. This is expected to release prime real
business, it is also popular among leisure tourists, both
estate of about 535 acres that will cater to the
domestic and international, as it serves as a starting
development of new commercial and residential
point for visiting popular tourist destinations in western
real estate in Mumbai.
India such as Goa and Pune. l
In addition to Dharavi's redevelopment, the Mukesh
Further growth and development in Mumbai's tourism
Ambani-promoted Reliance Industries is developing
and hospitality sectors is expected to be supported by
a Special Economic Zone in Navi Mumbai which is
the following key factors:
proposed to comprise 35,000 acres. This will further foster commercial activity in city and generate
l
demand for rooms.
With emerging suburbs as centres of corporate activity and the expansion of Mumbai towards the north and an expanding international airport,
l
Notwithstanding the large volumes of new rooms
Mumbai is expected to see growth in tourist activity
planned, we expect robust demand drivers to
in the coming years. We expect leisure and business
continue the trend of increased ADR and stabilised
travel to be a prime demand driver for the citys
occupancies. Occupancy in Mumbai is expected to
hospitality industry.
remain stable at 75% in the next five years with ADR averaging at INR17,000.
l
Mumbai is also emerging as a popular medical tourism destination with popular hospitals such as Lilavati, Hiranandani, Hinduja and Jaslok offering speciality treatments.
41
Jones Lang LaSalle Hotels
Digest 2008: Mumbai
City Snapshot (as at 2007) Mumbai
Total Land Area (square kilometres) 4,355 Resident Population (million)
17.8 (2001 census)
Major Industries
IT/ITeS, Manufacturing, Banking & Financial Services
Source: Census of India 2001, City Municipal Website, Jones Lang LaSalle Hotels
TOURISM MARKET OVERVIEW
in the suburbs as well as Hinduja and Jaslok downtown offer state-of-the-art facilities,
Mumbai's tourism prospects are promising in the
renowned doctors and outpatient services to
immediate term. Any unfavourable impact on foreign
international patients.
arrivals arising from the country's political risk, security concerns and airport congestion is expected to be limited.
l
Improvements to the existing airport infrastructure
However, while Mumbai's medium- to longer-term tourism
will boost the airport's passenger handling
prospects remain positive, the development of the
capacity and strengthen Mumbai's positioning
supporting tourism infrastructure needs to keep pace
as a key international gateway. The Chhattrapati
with the inflow of visitors in order to ensure the sector's
Shivaji International Airport (CSIA) is currently
future sustainability and to validate Mumbai's position
the busiest airport in India, handling 22.2 million
as the commercial hub of India.
domestic and international passengers during FY2006-07 against its capacity of 14 million. Upgrading of the airport, including a new passenger
Key Trends and Demand Drivers
terminal is underway, and when completed l
Mumbai offers visitors a number of historical,
will alleviate some of the congestion. The city's
architectural, religious and cultural attractions
airport infrastructure will receive a further boost
unique to the city such as the Gateway of India,
following government approval for the construction
Haji Ali Mosque, Hanging Gardens and the
of Mumbais second international airport at
promenade of Marine Drive also known as the
Navi Mumbai.
"Queen's Necklace". Home to Bollywood, Mumbai also attracts a large number of visitors trying to
l
The addition of new air routes will expand
catch a glimpse of the stars. Additionally, Mumbai
Mumbai's international air network and improve
has two World Heritage sites: the Elephanta Caves
accessibility. For example, the recent liberalisation
and Chhattrapati Shivaji Station (Victoria Terminus).
of the aviation sector has led to the rise of the London-Mumbai route as one of the fastest growing
l
The city's medical tourism segment is expected
sectors with five carriers currently offering services.
to benefit from the government's recently announced
Finnair launched its Mumbai-Helsinki route in June
plans to launch a medical tourism campaign to
this year while Continental Airlines will operate
raise awareness about India's private medical
between New York and Mumbai daily from October.
services as a part of the Incredible India campaign.
EgyptAir also started tri-weekly services on the
Private hospitals such as Lilavati and Hiranandani
Mumbai-Kuala Lumpur route from June 2007.
42
Jones Lang LaSalle Hotels
Digest 2008: Mumbai
l
The Finance Ministry is committed to transforming
construction, competition is expected to intensify.
Mumbai into an international financial hub over
Certain areas, identified as micro-markets for
the next 10 years, and is aligning current urban
international luxury brands, have seen the
infrastructure and lifestyle facilities with global
development of speciality malls. These developments
standards. The state government has launched
will broaden the city's offering and attract both
a number of projects to reduce pressure on
international and domestic visitors.
existing infrastructure. These include drainage system upgrades, road widening and privatisation
l
Realising the acute land shortage situation in
of airports and development of metro train services
south Mumbai, MMRDA started developing
in addition to the construction of 42 new flyovers
a series of new growth centres in Greater
across the city. This long term traffic scheme by
Mumbai to help ease the pressure on offices
the Mumbai Metropolitan Region Development
and commercial activities in south Mumbai. The
Authority (MMRDA) includes expressways as well
Bandra Kurla Complex (BKC) is being developed
as arterial routes in presently traffic-congested areas
as an alternative location where future growth
such as Andheri-Ghatkopar Link Road, S V Road
of offices and commercial activity can be
and L B S Marg.
absorbed and where some of the existing activities from south Mumbai can be relocated. The British
l
Several hotel projects are now being considered in
Deputy High Commission's recent purchase
locations along the Mumbai metro lines. The first
of office space and the construction of the
phase of the 11-kilometre Versova-Andheri-
American Consulate in the BKC are examples
Ghatkopar route of the Mumbai metro became
of the south-to-north Mumbai migration
operational in June this year. When completed in
by corporations.
2011, the metro is expected to dramatically lessen bottlenecks on these roads and reduce travelling
l
Lured by its modern infrastructure, centralised
time by half. To be built over several phases, the
location and its viability as a new commercial hub,
metro will have nine lines of which 32.5 kilometres
more commercial and diplomatic offices are
will be underground and 114 kilometres on elevated
finding the BKC appealing. With limited existing
rails. The first phase will be fully functional by 2011,
supply in the vicinity and two other known
the second phase by 2016 and the third phase
developments underway, the potential demand for
by 2021.
hotel rooms that is created by the shift in activity could exceed supply.
l
The development of the eight-lane Bandra-Worli Sealink will improve intra-city connectivity as it
l
Recent years have seen a trend towards the
will ease the congestion at Mahim Causeway
development of mixed-use projects with a hotel
which is currently the only link along the North-
component. For instance, a High Court order in
South corridor. Once this happens, the travel
late 2005 saw the opening up of 600 acres of
time from one end of the city to the other will be
mill land, of which 200 acres has been allocated
greatly reduced, thus increasing competition
to commercial space. Various bids for these
among hotels that have so far only competed
land parcels are underway for the purpose of
in their micro-markets.
mixed-use developments with a retail and hotel component. Many local landowners are in talks
l
Mumbai has the potential to develop into a key
with international hospitality brands to launch
shopping destination with a number of new malls
new properties and we expect to see more joint
opening in the city. While many are still under
ventures in the future.
43
Jones Lang LaSalle Hotels
Digest 2008: Mumbai
l
With the availability of land from the mills area,
l
Cruising is a growing lifestyle choice among affluent
we are likely to witness an increase of commercial
Indians and Mumbai is poised to become a prime
activities at locations such as Worli, Parel and
destination. The economic growth in the city, along
Lower Parel which may also attract hotel
with a new cruise shipping policy, has led to 40
developments. With the new Bandra-Worli Sealink,
international cruise lines calling on the port. We
these locations will also be more accessible.
expect to see a boost in both domestic as well as international leisure travel in future.
Key Tourism Data International Tourism Total International Tourist Arrivals (million)
FY2006-07
Change over FY2005-06 (%)
7.3
+9.2
14.9
+27.6
Domestic Tourism Total Domestic Tourist Arrivals (million) Source: Ministry of Tourism, AAI
44
Jones Lang LaSalle Hotels
Digest 2008: Mumbai
International Visitor Arrivals
l
Indicating the continued growth in international arrivals, latest available statistics for up to the third
l
Our analysis of Mumbai's international tourism
quarter of FY2007-08 showed that the number of
market is based on the international passenger
international passengers at CSIA had increased by
traffic arriving at CSIA. The ease of accessibility to
11% year-on-year to 5.1 million.
other destinations from Mumbai also reinforces the city's reputation as an international gateway to the
l
Given Mumbai's positioning as a commercial hub and logistics centre, business travel remains the
rest of the country.
key motivator for visiting Mumbai. However, the l
leisure segment has further potential for growth.
International passenger movement at Mumbai's CSIA has increased steadily from 4.9 million in FY2001-02 to 7.3 million in FY2006-07. Year-on-
l
Anecdotal evidence suggests international visitors generally stayed for two to four days.
year, international passenger traffic was up 9.2%.
International Passenger Traffic via Chhattrapati Shivaji International Airport 20
8
15
6 10
5
5
4 3
0
Annual Growth (%)
Number of Passengers (million)
7
2 -5
1 0
2001-02
2002-03
2003-04
2004-05
2005-06
Financial Year* Number of Passengers (million)
2006-07
2006-07 (Apr-Nov)
2007-08 (Apr-Nov)
-10
Annual Growth (%)
* Beginning 1 April to 31 March Source: AAI, Jones Lang LaSalle Hotels
45
Jones Lang LaSalle Hotels
Digest 2008: Mumbai
Domestic Tourism
l
The domestic tourism market received a boost from the entrance of local airlines which made air travel
l
l
The burgeoning business sector is fuelling domestic
accessible and more affordable to the masses. For
travel growth. Reflecting the growth of Mumbai's
example, Kingfisher Airlines launched direct flights
domestic tourism market, domestic passenger traffic
in April 2007 from Mumbai to Nagpur, Indore and
at Mumbais Santa Cruz Domestic Airport more than
Guwahati. We expect other domestic airlines to
doubled from FY2001-02 to 14.9 million in FY2006-
follow with more connections between the
07. The annual growth in domestic passenger traffic
commercial capital and other emerging economic
was 27.6%, up from 22% last year.
centres in India.
This growth trend is expected to continue into
l
Anecdotal evidence suggests domestic visitors
FY2007-08, with latest available statistics for the
generally stayed for two to four days, similar to the
first eight months (April to November) of the financial
international segment.
year showing a 24.5% year-on-year increase in domestic air passengers to about 12 million.
16
30
14
25
12
20
10
15
8
10
6
5
4
0
2
-5
0
2001-02
2002-03
2003-04
2004-05
2005-06
Financial Year* Number of Passengers (million)
2006-07
2006-07 (Apr-Nov)
2007-08 (Apr-Nov)
Annual Growth (%)
Number of Passengers (million)
Domestic Passenger Traffic via Santa Cruz Domestic Airport
-10
Annual Growth (%)
* Beginning 1 April to 31 March Source: AAI, Jones Lang LaSalle Hotels
46
Jones Lang LaSalle Hotels
Digest 2008: Mumbai
in these sectors. Moreover, Navi Mumbai Special
HOTEL MARKET OVERVIEW
Economic Zone (NMSEZ) will promise enhanced l
Demand for rooms will remain strong with
development and also push the demand for hotel
expectations of a continued steady increase in
accommodation in north Mumbai. The construction
arrivals, generating healthy yields across the market.
of Navi Mumbai International Airport at Kopra-Panvel
Due to the geographic layout of Mumbai, the south
is expected to increase capacity and connectivity,
offers limited opportunities for real estate
boosting the demand for hotels in Navi Mumbai.
developments. With the saturation of prime land in south Mumbai, most of the development is
Existing Supply
taking place near the commercial centres of central Mumbai and the airport vicinity of north Mumbai.
l
As at end 2007 (latest available statistics), Mumbai had 74 government-approved hotels with a total
l
Traditionally, the Mumbai hotel market has been
count of 9,503 rooms.
skewed towards the upper tier hotels, most likely the result of the high land prices in the city. Most of
l
The concentration of hotels is now in three
the upcoming projects are expected to fall within
broad localities: in south Mumbai, in the Colaba-
the five-star deluxe and five-star hotel category
Marine drive area, in north Mumbai next to the
while the mid- to lower tiers are expected to be
airports and Bandra-Kurla. Central Mumbai has
developed in the outer suburbs.
seen some development with more projects expected in the future.
l
The redevelopment of mill land area in central Mumbai into commercial will add to the supply
l
As the journey from the airport to south Mumbai
and enhance the demand in the hospitality sector.
can take as long as 90 minutes, visitors on a
Two prominent developments are the Four Seasons
short stopover typically stay at hotels near the airport
at Worli and Shangri-La, High Street Phoenix at
such as the ITC Grand Maratha Sheraton, Hyatt
Lower Parel.
Regency, Le Meridien, The Leela Kempinski and InterContinental The Grand Mumbai.
l
Proposed infrastructure projects such as the BandraWorli Sea Link, Mass Rapid Transit System (MRTS)
l
According to our research the 226-room Sahara
and Mumbai Trans Harbour Link (MTHL) between
Star in Vile Parle near the domestic airport was the
Nhava and Sheva will augment growth in hospitality
only major hotel opening in 2007.
47
Jones Lang LaSalle Hotels
Digest 2008: Mumbai
Future Supply
with Sofitel at Bandra-Kurla. Additionally, Starwood is expected to launch its 100-plus
l
Our research reveals more than 3,000 new rooms
room property under the aloft brand in 2010,
in the pipeline from 2008 to 2011. The majority of
and there will be a new 200-room Park Hyatt in
this new supply (51%) is anticipated in 2008.
2011. Searock Sheraton, which was acquired by Claridges Hotels, is being refurbished and
l
The new projects are mainly local brands, many
upgraded to a five-star deluxe hotel and is strongly
of which are brand extensions of existing properties
rumoured to be rebranded as Mandarin Oriental.
expanding to other parts of the city. For example,
The entrance of international brands will raise the
a new Taj Santacruz is coming up near the airport
city's accommodation standards.
while Hyatt International recently announced the development of a Park Hyatt on Marine Lines in
l
There is also an established but small serviced
south Mumbai, making it their third operation in
apartment market in Mumbai. Main developments
the city.
by hotel operators include the Lakeside Chalet Marriott Executive Apartments at Powai Mumbai
l
Mumbai will also see several major international
(177 units) and Grand Hyatt serviced apartments
players enter the market with flagship properties
at Santa Cruz (147 units).
such as the Four Seasons in Worli and Accor
Major Future Supply in Mumbai (as at March 2008) 1.8
Number of Rooms (000)
1.6 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0
2007
2008
2009
2010 onwards
Estimated Year of Completion Completed Supply
Forecast Supply
Source: Jones Lang LaSalle Hotels, Industry Sources
48
Jones Lang LaSalle Hotels
Digest 2008: Mumbai
The following table details the major supply in the pipeline from 2008 to 2011.
Major Future Hotel Supply In Mumbai (as at March 2008) Project Name
Location
Rooms
Due/Open
Likely Star Positioning
New/Proposed Hotel Projects Four Seasons Hotel Mumbai
Worli, Central Mumbai
230
2008
Five-star Deluxe
Fortune Select Exotica
Navi Mumbai
TBC
2008
Four-star
Renaissance Mumbai Hotel & Convention Centre (expansion)
Powai, Central Mumbai
291
2008
Five-star
Ibis Mumbai
Mumbai Airport
145
2008
Three-star
Taj Santacruz Mumbai
Near Santa Cruz Airport
175
2008
Five-star Deluxe
Radisson Hotel Mumbai
Powai, Central Mumbai
275
2008
Five-star
Trident
Bandra Kurla Complex
437
2008
Five-star
Sofitel Mumbai
Bandra Kurla Complex
311
2009
Five-star
Mandarin Oriental (former Searock Sheraton)
Lands End
TBC
2009
Five-star Deluxe
Crowne Plaza Juhu, Mumbai
Juhu
225
2009
Five-star Deluxe
Shangri-La Mumbai
Lower Parel, Central Mumbai
350
2009
Five-star Deluxe
Westin
Goregoan
TBC
2009
Five-star Deluxe
aloft
TBC
130
2010
Three-star
Lemon Tree Hotel
Andheri
250
2010
Three-star
Park Hyatt Mumbai
Marine Lines
200
2011
Five-star
Royal Orchid
TBC
TBC
TBC
Four-star
Total New/Proposed Supply
3,019
TBC: to be confirmed Source: Jones Lang LaSalle Hotels
49
Jones Lang LaSalle Hotels
Digest 2008: Mumbai
Five-Star Deluxe and Five-Star Hotel Market
l
Occupancy rates, however, recorded a marginal 0.8 percentage point increase to about 78.0%
l
over the same period.
Strong demand in the wake of limited supply pushed occupancy and ADR for five-star deluxe and fivestar hotels in Mumbai to a seven-year high in
l
l
With room demand anticipated to remain strong,
FY2006-07 as trading performance improved for
we expect RevPAR growth to be driven by ADR
the fourth consecutive year.
growth in 2008.
Compared with FY2005-06, ADR rose by 40.4% to about INR9,000 in FY2006-07. We anticipate downward pressure due to the additional supply in the pipeline.
10
90
9
80
8
70
7
60
6
50
5
40
4 3
30
2
20
1
10
0
ADR
2000-01
2001-02 RevPAR
2002-03
2003-04 2004-05 Financial Year*
2005-06
2006-07
Occupancy (%)
ADR/RevPAR (INR) (000)
Five-Star Deluxe and Five-Star Hotel Performance in Mumbai
0
Occupancy (%)
* Beginning 1 April to 31 March Source: Jones Lang LaSalle Hotels, Industry Sources
50
Jones Lang LaSalle Hotels
Digest 2008: Pune
PUNE
MARKET OUTLOOK
l
Hotels from major international chains such as JW Marriott, Westin and Hyatt are set to start operations by 2010.
Pune's tourism and hotel industry has the potential to grow and develop further due to the following key factors:
l
We forecast business travel to continue as the prime demand driver in the coming years on account of
l
increased IT/ITeS activity
Pune has established itself as a preferred destination for the IT/ITeS industry and is the second most popular city in Maharashtra after Mumbai for
l
With the expected room additions we forecast
business and education. With a new international
occupancies to dip in the coming years. In our
airport and other infrastructure improvements, its
opinion, occupancies will stabilise at around
attractiveness is expected to increase further.
75-80% in the next five years with ADR averaging INR11,000.
l
Our research shows that Pune will record the entry of around 3,365 rooms between 2008 and 2010. Around 1,129 rooms of total supply are expected to come on stream in 2009.
City Snapshot (as at 2007) Pune
Total Land Area (square kilometres) 700 Resident Population (million)
2.5 (2001 census)
Major Industries
IT/ITeS, Manufacturing, Education
Source: Census of India 2001, City Municipal Website, Jones Lang LaSalle Hotels
51
Jones Lang LaSalle Hotels
Digest 2008: Pune
been present in the city and are expanding their
TOURISM MARKET OVERVIEW
existing operations. Pune is in the western Indian state of Maharashtra. Capital of Pune District and the eighth largest urban
l
An established IT/ITeS destination for major domestic and international firms, Pune has large
centre in India with a population of five million, it is
campuses and offices of both domestic and
the second largest city in the state. It is located
international IT/ITeS firms including TCS, Infosys,
approximately 150 kilometres east of Mumbai and is
Wipro, Cognizant and Kanbay.
at the eastern edge of the Western ghats on the Deccan plateau. l
The city is home to several reputed government
Pune is widely considered the cultural capital of
and private universities attended by students
Maharashtra. The city has several reputed colleges
from other parts of India and throughout Asia Pacific.
and other educational institutions and is called the
Pune University has more than 100,000 students
"Oxford of the East" (or "Oxford of India"). It has a
across a diverse range of studies from engineering
very strong presence in the automobile sector and
to medicine to management.
is on its way to consolidating its position as the "Detroit of India". It is now home to numerous software and
l
Pune will host the third Youth Commonwealth Games in October 2008. It is expected that 71
IT companies.
countries will take part in these games and the city will host more than 2,000 athletes and professionals.
Pune is predominantly a business and education destination and derives most of its tourist revenues from business travel. Compared with other prominent
l
With its proximity to Mumbai and ease of access
cities in India, air connectivity to Pune is still undeveloped
on an expressway or a 30-minute flight, Pune is
and is proving to be an inhibitor towards the growth of
easily accessible from international destinations
the city. The Defence Ministry has recently provided in-
via Mumbai. The travel time between Pune and
principle clearence for a proposed international airport
Mumbai has been greatly reduced following the
project in Pune.
opening of the Mumbai-Pune expressway and also with the advent of multiple flight options via LCCs
Key Trends and Demand Drivers l
and private airlines.
Pune is a strong automobile manufacturing base
l
As a hub for colleges and universities, and a
for major domestic and international car
strong automobile manufacturing base, Pune has
manufacturers. Auto majors such as GM, Mercedes
a lot to offer.
Benz, Tata Motors and Bajaj Auto have traditionally
52
Jones Lang LaSalle Hotels
Digest 2008: Pune
Key Tourism Data International Tourism
FY2006-07
Change over FY2005-06 (%)
6.7
+15.4
13.6
+31.7
Total International Tourist Arrivals (million) Domestic Tourism Total Domestic Tourist Arrivals (million) Source: Ministry of Tourism, AAI
International Visitor Arrivals
Domestic Tourism
There are no available statistics for international
l
Domestic passenger traffic at Pune Airport reached 1.5 million in FY2006-07, up by more than 250%
connections to and fro Pune Airport.
from FY2000-01. l
Statistics from AAI show domestic passenger traffic for the period April to November 2007 increased by 19% to reach 1.1 million compared with the same period in 2006.
Domestic Passenger Traffic via Pune International Airport 80
1.6
70 60
1.2
50
1.0
40
0.8
30 20
0.6
10
0.4
Annual Growth (%)
Number of Passengers (million)
1.4
0
0.2
-10
0
-20
2001-02
2002-03
2003-04
2004-05
2005-06
Financial Year* Number of Passengers (million)
2006-07
2006-07 (Apr-Nov)
2007-08 (Apr-Nov)
Annual Growth (%)
* Beginning 1 April to 31 March Source: AAI, Jones Lang LaSalle Hotels
53
Jones Lang LaSalle Hotels
Digest 2008: Pune
HOTEL MARKET OVERVIEW
Future Supply
According to our research and the latest available
l
Our research shows that Pune will see the entry
statistics, Pune has 36 government-approved hotels
of around 3,365 rooms between 2008 and 2010.
with a total of 1,000 rooms. Given the importance of
Most of these hotels will be located in the areas of
the city in the economic landscape of India, Pune,
Hinjiwadi and Senapati Bapat Marg.
like Hyderabad, has a very low number of rooms compared with cities such as Mumbai and Delhi.
l
Hotels from major international chains such as JW
Most of the existing hotels in Pune are located near
Marriott, Westin and Hyatt are expected to start
to the CBD.
operations by 2010.
Major Future Supply in Pune (as at March 2008) 1.6
Number of Rooms (000)
1.4 1.2 1.0 0.8 0.6 0.4 0.2 0
2008
2009
2010 onwards
Estimated Year of Completion Forecast Supply Source: Jones Lang LaSalle Hotels, Industry Sources
54
Jones Lang LaSalle Hotels
Digest 2008: Pune
The following table details the major supply in the pipeline from 2008 to 2010.
Major Known Hotel Supply In Pune (as at March 2008) Project Name
Location
Rooms
Due/Open
Lemon Tree Hotel
City Centre
230
2008
Three-star
Ibis Pune
TBC
180
2008
Four-star
Marriott Courtyard West Pune
Hinjawadi
153
2008
Five-star
Marriott Courtyard
Sassan Road
210
2009
Five-star
The Leela Palace, Kempinski Pune
Yerwada
200
2009
Five-star Deluxe
ISTA Hotels and Spa
NA
150
2009
Four-star
JW Marriott
Airport Road
250
2009
Five-star Deluxe
The Yatra
Nagar Road
319
2009
Three-star
Pune Marriott
Senapati Bapat Road
430
2010
Five-star Deluxe
Royal Orchid
TBC
140
2010
Four-star
Hyatt Regency
Airport Road
250
TBC
Five-star
Radisson
Kharadi
156
N/A
Five-star
Peppermint
NA
90
N/A
Three-star
Westin
Koregaon Park
277
N/A
Five-star Deluxe
Novotel
Magarpatta City
330
N/A
Four-star
Total New/Proposed Supply
Likely Star Positioning
3,365
TBC: to be confirmed N/A: not avaliable Source: Jones Lang LaSalle Hotels
55
Jones Lang LaSalle Hotels
Digest 2008: Pune
Five-Star Deluxe and Five-Star Hotel Market
ADR has increased from INR3,000 to INR7,500. The growth trend can be attributed to increased
l
business travel as well as the lack of hotel rooms.
The five-star deluxe and five-star hotel market segment in Pune has approximately 530 rooms. This is expected to increase to more than 1,300
l
Taking into account the future supply in this segment, we expect the occupancies to stabilise in the near
rooms by the end of 2009.
future and settle at 75% in the next four to five years. l
Occupancies in this segment have increased from
ADR is expected to be about INR12,000, backed
70% in 2002 to 82% in 2007. For the same period
primarily by corporate demand.
8
84
7
82 80
6
78
5
76
4
74
3
72
Occupancy (%)
ADR/RevPAR (INR) (000)
Five-Star Deluxe and Five-Star Hotel Performance in Pune
70
2
68
1
66
0
2001-02 ADR
2002-03 RevPAR
2003-04 2004-05 Financial Year*
2005-06
2006-07
64
Occupancy (%)
* Beginning 1 April to 31 March Source: Jones Lang LaSalle Hotels, Industry Sources
56
Jones Lang LaSalle Hotels
Copyright © Jones Lang LaSalle Hotels 2008
Disclaimer This report is confidential to the recipient of the report. No reference to the report or any part of it may be published in any document, statement or circular or in any communication with third parties without the prior written consent of Jones Lang LaSalle Hotels, including specifically in relation to the form and context in which it will appear. We stress that forecasting is a problematical exercise which at best should be regarded as an indicative assessment of possibilities rather than absolute certainties. The process of making forward projections involves assumptions in respect of a considerable number of variables which are acutely sensitive to changing conditions, variations in any one of which may significantly affect the outcome and we draw your attention to this factor. Jones Lang LaSalle Hotels makes no representation, warranty, assurance or guarantee with respect to any material with which this report may be issued and this report should not be taken as an endorsement of or recommendation on any participation by any intending investor or any other party in any transaction whatsoever.
This report has been produced solely as a general guide and does not constitute advice. Users should not rely on this report and must make their own enquiries to verify and satisfy themselves of all aspects of information set out in the report. We have used and relied upon information from sources generally regarded as authoritative and reputable, but the information obtained from these sources may not have been independently verified by Jones Lang LaSalle Hotels. Whilst the material contained in the report has been prepared in good faith and with due care, no representation or warranty is made in relation to the accuracy, currency, completeness, suitability or otherwise of the whole or any part of the report. Jones Lang LaSalle Hotels, its officers, employees, subcontractors and agents shall not be liable (to the extent permitted by law) to any person for any loss, liability, damage or expense ("liability") arising directly or indirectly from or connected in any way with any use of or reliance on this report. If any liability is established, notwithstanding this exclusion, it shall not exceed $1,000.
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