Chennai emerges top among Indian cities in hotel room addition

CHENNAI: Chennai has been among the top five Indian cities that has witnessed an addition in hotel rooms. Across the country the number of hotel rooms is anticipated to surge to 3.33 million through 2023 from a meager 18,000 in 1995/96.

As of December 2018, India's accommodation segment had 2.72 million options. All these room options are across traditional chains, new-age hotel chains, independent /unbranded hotels and alternate accommodation like guesthouses and home stays, reveals 'The Ultimate Indian Travel & Hospitality Report' complied by Hotelivate in association with CAPA and WTTC India Initiative.

Looking at the major markets analysed as per CARE ratings, Kolkata saw the highest increase in supply (20.7%) in FY18, adding to the relatively small base of hotels, followed by Chennai (10.5%) and Ahmedabad (8.9%). Nearly 85 % of the room demand in Chennai comes from business travellers. Demand in CBD area comes mainly from BFSI and PSU companies, IT/ITeS companies drive demand in the OMR region. Proximity to electronics and the auto industry players in and around the Sriperumbudur area, makes hotels near airport area attractive for business travellers, the report says.

The metro also enjoys demand from other major business sectors including manufacturing, port and port-related activities, government and embassies, etc along with a growing MICE demand base owing to the recent expansion of room inventories including large-scale meeting facilities in the city. Despite an increase of about 10.6 % in supply in FY18, the market continued on its path to recovery with room rates registering a y-o-y growth of about 2.2% during the year. The city witnessed the opening of new hotels, including the Novotel & Ibis Chennai OMR.

All the micro-markets in Chennai recorded a marginal decline in occupancy in FY18, while average rates marginally increased during the year. Only about 1,000 rooms are expected to be added to Chennai market in the next five years.