Hotel, Tourism and Leisure. Indian Hotel Market Review. Volume 10

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Martin Wilkinson
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1 Hotel, Tourism and Leisure Indian Hotel Market Review Volume 10

2 India Hotel Market Review Volume 10 INDIA HOTEL MARKET REVIEW Improved occupancy, tentativeness on rates and slowing supply. These sum up the 2015 first half performance. Some key highlights, based on H1 performance for current and past years: Country-wide occupancy crossed 60% for the first time in the last 4 years. While Mumbai and Goa remain the only markets with occupancy >70%, New Delhi and Pune have crossed 65%; further, Delhi NCR, Bengaluru and Chennai have crossed 60% with Hyderabad just below that mark. Every market, bar two (Kolkata and Goa), have registered RevPAR gains. H1-15 RevPAR is highest in the last fouryears for half the cities Mumbai, Bengaluru, Hyderabad, Pune, Ahmedabad, and Jaipur. Goa has lost occupancy and RevPAR, but interestingly has seen an ADR increase. ADRs continue to remain under-whelming. Rate increases in Mumbai, Gurgaon and Pune, are small but a positive sign; however, ADRs in these cities remain at or below H1-13 levels. Mumbai continues to deliver strong occupancies, at 74.3% for H1-15. However, hotels remain diffident on rates; we are not seeing the move for rate increases that would at least follow these occupancy levels. Is the national sentiment wearing down Mumbai hotels? Recent and anticipated (rather limited) supply growth is but an excuse. The stand-out markets are Chennai and Pune, both recovering well from the supply surge in recent past years. Chennai has gained 8.6 pts occupancy since H1-13, inspite of the IT Corridor continuing to bleed. City ADR remains low and muted, though the decline has slowed considerably; -1.6% for H1-15 vs H1-14. City centre hotels are expecting to gain rates and occupancy over the next 18 months; but doubling of supply on OMR is a serious challenge can the IT sector deliver stellar growth to debug this condition?

3 India Hotel Market Review Pune s recovery has been more gradual compared to Chennai; its supply surge significantly coincided with the downturn years rather than the recent hope years. Occupancy grew 8.2 pts over H1-14, and was supported by 1.3% ADR increase. ADRs at Pune s Luxury and Upper-Upscale hotels match this segment s ADR in Chennai; the city loses ADR (relative to Chennai) for the upscale, midscale and economy segments. Recovery of the manufacturing sector, to support a buoyant IT sector, will further boost this city, Bengaluru gained 5.6 pts in occupancy,mainly benefitting from a strong Q2-15 performance. Rates at Luxury and Upper-Upscale hotels breasted the 8k mark with 3.8% growth and remain ahead of Delhi but behind Gurgaon and Mumbai. The Upscale and UpperMidscale tier remains under pressure for rates, while Midscale- Economy segment ADRs grew by 7.6%. New Delhi hotels have seen an occupancy recovery but rates have further declined by 6.7%. While the Midscale-Economy segment was a contra-performer to the market trend, with 5% ADR growth, ADR for this segment is significantly below segmental rates for Mumbai, Gurgaon, Chennai and even Ahmedabad. Volume 10 Hyderabad s recovery has been swift, once the political overhang on business has lifted. The real test begins now, as the market s true depth will be tested particularly as moderate supply growth has also occurred. Ahmedabad is a positive story, with an element of caution. The success of H1-15 is materially predicated on three large events that occurred in Jan and Feb. Early momentum on manufacturing and GIFT city are essential if the city must remain on a good growth path, with new hotels having opened in the upscale and upper upscale segments. Goa s story revolves around a slowdown of group and charter in-bound travel, impacting occupancies but also enabling better rates from FIT and other demand. ADR for the luxury-upper upscale segment grew by 5.6%. However, this trend may be difficult to sustain unless the destination is able to quickly attract demand from newer foreign markets. Kolkata continues a downward slide since H1-12. Real business growth is essential, and soon, for the Rosogolla to again taste just as sweet. Gurgaon RevPAR has been almost flat over H1-13 to H1-15; minor variations have been on the positive side, indicating possibilities for a better future. Gurgaon continues to enjoy the highest ADR for Luxury Upper-Upscale hotels among business cities in India, although at Rs. 8,833 this is significantly below rates for other global economies.

4 India Hotel Market Review Volume 10 If you have any questions or wish to learn more about Horwath HTL, please do not hesitate to contact us. RUSHABH SHAH Associate Director Horwath HTL - India rshah@horwathhtl.com Horwath HTL is the global hospitality consulting brand of Crowe Horwath International. Crowe Horwath HTL Consultants Pvt. Ltd. is a member of Crowe Horwath International; an international network of independent accounting and consulting firms with 650 offices in about 109 countries ranked 9th globally. Horwath HTL practices in 50 countries - Asia Pacific, North and South America, Europe, CIS countries and Africa. The consulting experience of our team covers 93 Indian cities, towns and destinations and 20 international destinations. Assignments have been undertaken for hotel chains, promoters, development companies, private equity investors, international and lenders.

5 ASIA PACIFIC AUCKLAND, NEW ZEALAND BANGKOK, THAILAND BEIJING, CHINA HONG KONG, SAR JAKARTA, INDONESIA KUALA LUMPUR, MALAYSIA MUMBAI, INDIA SHANGHAI, CHINA SINGAPORE, SINGAPORE SYDNEY, AUSTRALIA TOKYO, JAPAN AFRICA CAPE TOWN, SOUTH AFRICA DAKAR, SENEGAL EUROPE AMSTERDAM, NETHERLANDS ANDORRA LA VELLA, ANDORRA BARCELONA, SPAIN BUDAPEST, HUNGARY DUBLIN, IRELAND FRANKFURT, GERMANY ISTANBUL, TURKEY LISBON, PORTUGAL LIMASSOL, CYPRUS LONDON, UK MADRID, SPAIN MOSCOW, RUSSIA OSLO, NORWAY PARIS, FRANCE ROME, ITALY SALZBURG, AUSTRIA WARSAW, POLAND ZAGREB, CROATIA ZUG, SWITZERLAND LATIN AMERICA BUENOS AIRES, ARGENTINA SÃO PAULO, BRAZIL MEXICO CITY, MEXICO DOMINICAN REPUBLIC SANTIAGO, CHILE BOGOTA, COLOMBIA NORTH AMERICA ATLANTA, USA CHICAGO, USA DENVER, USA MONTREAL, CANADA NEW YORK, USA TORONTO, CANADA

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Global leader in hospitality consulting Shanghai Hotel Market Sentiment Survey March 2015 Horwath HTL Shanghai Hotel Market Sentiment Survey March 2015 INTRO DUCTIO N SHANGHAI V.S. CHINA SENTIMENT TRENDS