City slowdown

Is the party over for Bangalore? We ourselves were surprised when we read this news snippet of dipping ARRs and plummeting occupancies, and, wanting to investigate more fully, we decided to make this the analysis piece of the issue since about 2004, the city has held sway over the rest of the country in terms of the highest recorded ARRs.
 

Now however, although the economic slowdown has had its impact on hotels pan India, Bangalore seems to be the hardest hit, with ARR’s having slumped by 38%.

Recession, which has affected not only the hospitality industry, but also Bangalore’s main room demand driver – the IT industry – can of course, be blamed for a lot of things.

Notwithstanding that, another factor working against the city at the moment is its extravagant room inventory with no takers. With almost another 10,000 rooms slated for the near future, the situation is that of drastic overkill, with most of the city’s hoteliers being pessimistic about business improving before end of next year.
 

Although some developers have wised up to market requirements and have slowed their projects down, Bangalore will still be richer by 4,000 rooms within the next one year.

With this kind of scenario, one can’t but help drop a word of caution to Bangalore’s arch rival, Hyderabad, which has also seen a growth spurt of 12% in the last five years.

Although the city is holding steady fort for now, 75% of the demand is corporate, mainly IT again, in nature; Hyderabad too is expected to see big players such as The Oberoi, The Leela, The Park Hyatt, The Fairmont, and many more, raring to go within the next couple of years.

Currently, the Westin is the latest entrant, with the city’s largest room inventory of 428 keys.