Hotel rents in Bangalore set to fall

After scaling new heights in the last few years, the room rents in five star hotels in Bangalore are set to fall on account of the huge addition in room inventory.

According to market research analysts, the average room rent of five star hotels in Bangalore, which has already started steadying at the current level of Rs 13,576, will dip by at least 20 per cent over the next three to four years. With supply beginning to catch up, the room rents in five star hotels across Bangalore are expected to sink to the 2003-04 level over the next three to four years.

From a total of 1,581 rooms in the premium segment at present, Bangalore is expected to have 4,300 rooms by 2010. About 150 to 200 rooms will be added in the next fiscal and another 825 rooms in 2008-09. “The major supply glut is expected to come in 2009-10 when 2,100 rooms will be added to the inventory”, according to Benaifer Jehani, research analyst from Cris Infac.

Major hotel groups are looking to set up new properties in Bangalore over the next three to five years.

But, hotels in Bangalore already witnessed a slight drop in occupancies during September-October this year. A two per cent drop in occupancy was recorded during September this year in comparison to the same period last year and research analysts attributed the dip to prevailing high average room rent.

Though the average room rents are likely to remain at the same level for most part of 2007, a dip in the rent can be expected from August 2007 by when the addition in room inventory would start, according to Amol Roy, a research analyst from Pioneer Intermediaries.