Room boom: Hospitality sector is in growth mode in Chennai

Chennai: Despite talks of an economic slowdown globally, and panting growth in India, the hospitality sector in Chennai seems to be checking into a new phase of growth. Over the past few years, several luxury  hospitality groups have entered the city, which has witnessed a  significant increase in hotel supply mainly in the luxury and  upscale segments, turning itself into one of the leaders in luxury  experiences in the country, experts say.

Industry watchers say in every three-four months, one new five star  hotel is opened in Chennai. “Premium hotels from international and  national groups come to Chennai in tandem with the business growth the  city has witnessed in recent years,” says T. Natarajan, secretary of South India Hotel and Restaurant Association (SIHRA). “This has made the hospitality industry very much competitive. Today, Chennai  has around 7,000 rooms available in the five-star and above category.”

According to Mr Shalabh Verma, director of sales & marketing, Park Hyatt, in the hotel industry, people develop new property in anticipation of business growth.“Chennai added 3,387 rooms between 2011 and 2014. New industrial outfits in the city have contributed to  a big influx in hotel room demand.” Experts claim that apart from traditional industry sectors such as  automobile and manufacturing, development in the IT/ITeS and  healthcare sectors has also resulted in significant influx of  international and domestic travellers to the city.

“Chennai has seen a  boom in the healthcare sector and a steady increase in medical  tourism. Home to a number of multi- and super-specialty hospitals equipped with the state-of-the-art medical facilities and treatment  expertise, the city has become the heartland of medical tourism in India. This is reflecting on the hospitality segment,” pointed out Mr  Saleem Yousuff, Area Director-Taj Hotels Chennai and general manager, Taj Coromandel.

Business meetings, conferences and exhibitions are also pumping demand  for hotels. That said, because of the new hotels coming in, occupancy  rates hasn’t shown any improvement among city hotels.“On normal period, the occupancy rate in Chennai stands around 50–60 per cent.  This is because our supply is much higher than the demand. The demand supply equation currently is 1:1.87,” Natarajan says.

However, since a majority of the demand comes from business  travellers, the hospitality industry is not witnessing any major  seasonal fluctuation in its business. “Almost 75 per cent of occupants are business travellers. Thus bounce back in any industry will negatively impact the hospitality industry,” Natarajan explains, adding that hotel tariffs in the city were revised almost three times in the last five years.