Bengaluru’s hotels market has evolved over the last decade, growing in tandem with the city’s emergence as a significant commercial destination largely driven by the IT/ITeS sector. With IT giants such as Infosys, Wipro, TCS, Accenture and HCL setting up bases in the city, it has rightfully been conferred with the status of ‘India’s Silicon Valley’. The implications on the hotels business are fairly obvious, and the effects increasingly evident.
One of the biggest threats to the strength of Bengaluru’s hotel real estate market is a pipeline to the tune of 9,800 rooms in the branded segment, which is slated to enter over the coming five years. At present, Bengaluru’s existing inventory stands at a little over 7,700 rooms. This would mean an increase of more than 100% in the total room inventory.
In terms of market performance, Bengaluru initially numbered among the best-performing hotels markets in India, thereby attracting a number of developers to enter the hospitality space. 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.
The author, Sudeep Jain is Executive Vice President, India, Jones Lang LaSalle India
