Chennai: Hotels across the country have reported a 12% increase in net income on per available room basis, with the hotels in the heritage, five-star and four-star categories registering the highest growth. The growth was primarily driven by an increase in rooms revenues for all star categories, except for One-Star and Other Hotels.
Among the south India hotel markets, Chennai, enjoys demand from all the major business sectors including manufacturing, IT - ITeS, port and port-related activities, the government and embassies, banking and financial sector and a growing MICE demand base owing to the recent expansion of room inventory and large-scale meeting facilities in the city during 2015-16.
In 2015, the market continued on its path to recovery even in the face of floods that impacted business towards the end of 2015 in Chennai. The city also witnessed the opening of new hotels, including the InterContinental Resort on ECR, Fortune Select Grand on GST Road, and Turyaa by Heritance on OMR in the last calendar year. All the micro-markets in Chennai recorded a growth in occupancy in 2015-16, while average rates declined marginally.
With over 1,000 rooms expected to enter the OMR market over the next two years, the hotel market on OMR is expected to remain under pressure in the short term. Overall, with the Meeting and Conference and Commercial demand growing in the city, it is said the hotels (especially in Guindy) will consolidate and build on their average room rates having achieved a healthy occupancy.
Coimbatore, the second largest city in Tamil Nadu, saw an improvement in the performance of hotels during the year under review. The city’s hotels seem to be coming back from the low in recent years when supply had drastically outpaced demand especially owing to new openings in 2011 and 2012 (over 600 rooms). “Even with the improvement in the market performance, supply is expected to outpace demand in the short term, more so with the Radisson Blu having opened in December 2016 and, hence, we expect the hotel market performance to plateau in the short to medium term before we see growth,” says the Federation of Hotel & Restaurant Associations of India (FHRAI)’s nineteenth annual edition of the Indian Hotel Industry Survey, in cooperation with HVS South Asia.
Coimbatore, known as the ‘Manchester of South India,’ has traditionally been a major textile hub, but also has the presence of the IT, healthcare, manufacturing and education sectors.
Commercial demand is the primary source of room night absorption in the city. While Coimbatore by itself is not a major tourist attraction, it serves as a point of entry to destinations such as Ooty and Kodaikanal due to Coimbatore’s good rail, road and air connectivity.
