Having filled the breach left by an acute shortage of hotels rooms in India, the service apartments segment is coming into its own with the entry of corporates aiming for consistent quality standards as they try and tap into a lucrative market.
A measure of the shortage is the fact that India has about 1.1 lakh hotel rooms compared to 1.35 lakh rooms in just the Chinese commercial capital Shanghai. The Planning Commission estimates the scarcity at 1.5 lakh rooms by 2010.
On the other hand, there are no reliable estimates of the number of service apartments, largely dominated by unorganised players. “Service apartments have found favour so far only as an offshoot of corporate needs and/or due to shortage of hotel rooms in most cities. In today’s supply shortage scenario it seems like whatever one can build will get filled up, even if only through word of mouth,” says Cushman & Wakefield Hospitality director (South Asia) Akshay Kulkarni.
However, he predicts tariffs to fall by 15%-20% in 4-5 years as branded products become popular and unbranded ones die out. “The occupancy in the unbranded segment of the service apartments will actually drop as more and more limited-service, economy, branded products come to the fore. Without doubt the per-room realisation for the developer or the manager will not be the same in the next 5 years,” Mr Kulkarni adds.
Experts also see international players digging into the Indian market. An example is Brigade Hospitality’s tie-up with the European group Accor for the upcoming Mercure Homestead Residences in Bangalore’s Koramangala suburb.
