Although a major industrial hub for the Punjab, Ludhiana had largely been ignored by the big hotel names. The city is now being keenly targetted by international hospitality chains.
Ludhiana is better known as the ‘Manchester of India’ for its huge industrial set up comprising the textile and cycle industry, besides being a major exporter of machines, tools, sewing machines, and dyes.
It is no surprise that Ludhiana is a hub of major financial institutions, with its own stock exchange. Excellent connectivity and a favourable business environment makes the city a preferred destination for investment amongst Indians, especially NRI’s.
The product/development type in Ludhiana was at a nascent stage with very limited branded hotels being present in the city.
Currently, the demand is largely catered for by three-star unbranded hotels like Chevron International, Hotel Nagpal Regency, Hotel Aditya, and Hotel Gulmohar, while Fortune Hotel Klassik and Majestic Park Plaza are the only branded hotels operating in the city.
It is observed that the major clientele for these hotels comprise of corporates visiting on account of the large trade and commerce base, and NRIs flying into the city for long stays. Mid October-mid March is the peak season for banquets bookings and NRI accommodation.
With an inventory of 738 keys, performance wise the city has seen a marginal increase in average room rates, while the occupancy across the city witnessed a drop from the year 2008.
Category wise, the four-star hotels witnessed an increase of 4.8% in ARR from year end 2008 to October 2009, while three-star hotels recorded a one per cent decrease in the same period.
Occupancy rates in the four-star category dropped by about 11-points from end 2008 to October 2009, while the three-star category witnessed an approximately drop of five points.
However, brands ranging from five-star to the no-frills segment are foraying in the city today with an expected room supply of 1,076 additional rooms by 2012, of which 48% will be in the upper upscale, 33% in upscale, and 19% in midscale segment.
A significant trend witnessed in the city is hotels being accommodated in malls; the Ginger hotel works on this concept, and the format has seen much interest. The idea is to tap the economic viability in terms of cost-to-revenue realisation.
This way the hotels not only benefit from the opportunity of using a fairly large area but also from the brand visibility derived from the premium hotel location.
Though the market seems to be strengthening again after the slack of approximately one year, certain challenges still face the hospitality market in the city.
The absence of supportive infrastructure and facilities for hosting conventions has led non-corporate banquet requirements to farm houses. Lack of other potential segments like spa, shopping arcades, and gymnasiums too fail to realise revenues from the existing hotels.
However, the gap is believed to be attained with the expected inflow of the branded hotel operators in the market by 2012 like the Taj, Radisson, and Intercontinental, to name a few.
Another paradigm shift experienced in the market has been the move to focus on budget categories by hoteliers.
Considering the needs of mass market travellers for good quality service at reasonable prices, this concept is gaining recognition gradually. The entry of budget hotels from premium brands includes brands like Carlson Hotels and Choice Hotels.
With premium brands entering the city, a few hotels have planned to launch serviced apartments to tap the large NRI base.
The lease-back model and concept of luxury suites that are well taken care of by a facilities management company, is one of those novel concepts which the city will experience in the coming two-to-three years.
We anticipate a supply of about 150-300 serviced apartments of various brands to mark their presence in the Ludhiana market. The city has been a focus area for almost all the major hotel chains planning to foray in Tier-2 and Tier-3 cities which include some UK, USA, and Singapore brands.
It is expected that with huge convention space in the pipeline as part of upcoming hotels, the MICE demand in the city that has so long spilt over to Chandigarh or Delhi, will get accommodated locally.
In the coming 2-3 years Ludhiana is expected to graduate to a prime market, with a focus on reasonable pricing and best of services ranging from premium to no frill categories.
About Cushman & Wakefield
Founded in 1917, Cushman & Wakefield is the world’s largest privately held premier real estate services firm, with 230 offices in 58 countries. It caters to every stage of the real estate process from strategy to execution, offering solutions to occupiers, investors, and developers, across the commercial, hospitality, retail, residential, and industrial sectors.
The firm also provides a wide range of consulting services for hotels, resorts, serviced apartments, and mixed-use developments. For more information, visit www.cushmanwakefield.com
