Bangalore may face oversupply of hotel rooms

BANGALORE: With demand being uncertain and average room rates under pressure, Bangalore is expected to add the highest numbers of keys in the luxury segment hotels. This would mean an increase of more than 100% in the total room inventory.

"Around 9,800 hotel rooms in the branded segment are slated to enter over the coming five years. At present, Bangalore's existing inventory stands at a little over 7,700 rooms," Sudeep Jain, executive vice president, Jones Lang LaSalle Hotels.

As per a recent report by Jones Lang LaSalle, there are over 22 upcoming luxury hotel like Prestige Group's Hilton Hotels, Nitesh Estates's Ritz Carlton, Hyatt and Whitefield and JW Marriott in UB City which are at different stages of constructions.

"In terms of market performance, Bangalore initially numbered among the best-performing hotels markets in India, thereby attracting a number of developers to enter the hospitality," said Jain.

The global recession and addition of new supply led to a steep decline in the market-wide RevPAR levels in 2009-10. However, with the stabilization of domestic and global economies, the market bounced back in 2010-11. "We expect Bengaluru to maintain its position as one of the country's most dynamic and promising hospitality markets in the future, as well," he added.

Bangalore has witnessed a double digit CAGR for both international and domestic passenger traffic, during the eight year period. While International passenger traffic increased by 340% to 2.2 mn in 2010-2011, domestic passenger traffic rose from 2.7 million in FY 2003-04 to 9.4 million in FY 2010-11.

---EOM---