COMPETITION in the Delhi NCR hospitality sector is anticipated to intensify as the hotels in the Delhi Aerocity region were last week granted security clearances that had previously stalled openings and development (TTG Asia e-Daily, February 15, 2013).
The opening of 11 properties in Aerocity will add some 5,000 rooms to the region’s inventory, putting pressure on average room rates (ARR) at a time when hotels are already experiencing a fall in rates.
According to HVS India, occupancy at upscale and luxury hotels in Delhi for 2012/2013 hovered at 60 per cent, with ARRs between Rs8,000-8,500 (US$130-138), a six to seven per cent year-on-year fall.
Mandav Thadani, chairman, HVS India, said: “Over the last two years, growth in supply in the Delhi NCR market have caused city centre hotels to see a decline in demand. This trend is expected to continue in the short term as well. Going forward, with the entry of the Aerocity hotels, occupancy and rate pressures over the next two to three years remain imminent.”
Vishvapreet Singh Cheema, general manager, Radisson Blu Plaza Delhi, expects a 15 to 20 per cent rationalisation of ARRs once all Aerocity properties open. Cheema said the hotel had already upgraded its property, including its meeting space, to rise to the anticipated challenge.
However, Cheema predicted that the new hotels would increase the amount of transit arrivals in the city.
“Yes, there will be initial pressure on ARRs across the city, but after a couple of years it should bounce back to where it is today,” he opined.
Maahesh S Aiyer, vice president-operations, Lemon Tree Premier, pointed out: “All new supply creates new demand. Moreover, (there will not be a deluge in supply as) only three hotels will open first.”
TTG Asia e-Daily understands that only three hotels in the region – Lemon Tree Premier, Ibis Delhi Airport and JW Marriott Hotel New Delhi Aerocity – are ready to start operations, while the rest remain under development.
HVS’ Thadani also said that Aerocity, with a collective and significant amount of meeting spaces, would likely attract a strong MICE sector in the medium to long-term.