InterGlobe Hotels Sees Huge Opportunity in Key Markets

Mumbai, Mar 20 (PTI) Opportunity to build hotels in key markets is huge amid capacity crunch and higher demand, InterGlobe Hotels' President and CEO J B Singh said on Thursday as the company expanded its budget hotels brand ibis portfolio with a new 206-room property in Bandra- Kurla Complex (BKC) in collaboration with Accor.

Singh also said that Mumbai, where InterGlobe Hotels and Accor already have three properties, will always remain critical and it is always scouting for land in the land-constrained city.

"Demand is multiple - both GDP and business are growing and travel is (also) growing with that. Now, the demand is higher than supply. It takes time to build hotels. We will see that trend, especially in these markets. Land availability takes you two, three years to put a building together but the capacity doesn't come that fast," Singh told PTI.

He said that the classified hotel segment is already under-penetrated, which means "the opportunity to build in key markets is huge."

Noting that the demand will continue to grow as long as the country's economy grows, he said the GDP will continue to grow at 6-6.5 per cent, demand (too) will continue to grow at a multiple of 1.2-2x of the economy.

"We expect to see 10-14 per cent growth (and a ) sustained growth over time," Singh added.

Mumbai will remain a critical market for the company and it continues looking at spaces in the financial capital but for the company, it's very important that they should be AAA sites and well located, he said.

"So, we are constantly scouting for land. We are actually perfectly built to build hotels, perfectly sort of positioned to build hotels in dense cities," Singh added.

Ibis BKC is the fifth property of the brand in the Mumbai Metropolitan region with three other hotels located at Mumbai International Airport, Vikhroli suburb in the north-east part of the city and in Navi Mumbai, and the eighth overall in Maharashtra.

Without disclosing specific investment in the ibis BKC, Singh said that investment in such properties is about Rs 250-odd crore in land and development and so on.

"Real estate in Mumbai is expensive. But depending on where you go, investment keeps changing. But now, we are looking back, going back to the drawing board. And we are evaluating which other markets we want to go to. But I think we are going to continue to remain what has been our strategy - going to market with this clear and present demand-- so far. Stick to these cities, which we understand. Our customers keep asking for more capacity in these cities" he said.

"So, our seven key metros will always remain as the absolute go-to markets. But we keep evaluating tier-two towns as well," he added.

He said that with the BKC property, the company is adding 206 more rooms to its ibis portfolio, adding the occupancy rate across its key markets stands in the high 80s which is expected to keep growing while at airport hotels it (occupancy rate) goes up to 90 per cent also through the year.

Stating that as the economy will grow, there will be more trade shows and events like Coldplay which will drive the demand further for hotels, he said that new venues like Jio Convention centre in Mumbai and Yashobhumi in New Delhi will start operating to almost optimum capacity in about two to three years.