Bangalore, which attracts the maximum number of business travellers in south India, is witnessing a hotel construction boom which is likely to treble the total number of premium hotel rooms and service apartments available.
 
The city is set to add over 3,000 rooms in the next five years in the premium category and a similar number in the the service apartment segment.
 
Currently, the city has over 2,500 rooms in the premium category and around 300 recognised service apartments.
 
This is considered highly inadequate in the face of growing demand, said Knight Frank, international property consultants.
 
As a result of the massive demand, hotel room rates are skyrocketing.
 
The ARR (Average Room Rate) in premium category hotels in Bangalore has grown 18.5 per cent to Rs 13,366 in the nine-month period (April to December 2006) against Rs 11,280 in the corresponding period last year.
 
Buoyant realisation since 2002 (after the twin effects of the tech bubble collapse and 9/11 wore off) has driven existing hotels like the ITC, Taj, Oberoi and Capitol to come up with more properties along Whitefield Road, Outer Ring Road and the north (on way to new international airport) of the city.
 
The development of the new international airport has attracted a number of hotel chains such as Radisson, Hilton and JW Marriott to the city.
 
This is with the anticipation that the number of international travellers to the city will increase once the new airport starts functioning.
 
Also international hotel chains -- Hilton in joint venture with DLF, Accor with Emaar MGF and Wyndham with Royal Orchid Hotel -- are venturing into the city's hospitality sector.
 
The city accounts for 51 per cent of foreign business travellers visiting India annually.
 
International corporate travellers occupy almost 90 per cent of the hotel rooms.
 
Over the last couple of years, the city's booming IT/ITeS sector have been responsible for nearly 45-50 per cent of the overall demand for rooms in the city.
 
There has been no significant change in the domestic and foreign business clientele of five-star hotels.
 
The number of health tourists is increasing rapidly whereas there has been a sharp decline in the number of leisure travellers visiting Bangalore.
 
According to Knight Frank Research, since 2004 there has been a slight shift in room demand from the premium segment to the budget segment due to the increase in room rates.
 
As a result, the occupancy rate of hotels in Bangalore, currently at 75 per cent, has declined declined marginally in recent years.
 
To attract business travellers who are the highest contributors to room demand, hotel operators in the city are offering amenities like Wi-fi, secretarial services and golf on request.
 
Rooms in the premium category contribute almost 66 per cent of the net revenue generated in hotels, while the food and beverage (F&B) segment contributes a substantial 20 per cent.
 
Since Bangalore is not seen as a leisure destination at present, the contribution of the MICE (meetings, incentive, conferences and exhibition) segment is not very significant. It accounts for around 10 per cent of the total revenue.
 
However, demand for rooms is being fuelled by both heightened commercial activity and burgeoning medical tourism.

Source:Buisness Standard, April-17th 2007, Contributed by:Anil Urs.

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