Sudeep Jain, Executive VP – Jones Lang LaSalle Hotels (India)
EXECUTIVE SUMMARY:
Existing Supply
Based on our research, Mumbai has 45 operational hotels, with an inventory of 10,537 rooms spread across six categories. Prominent operators with a presence in Mumbai include Hyatt, Marriott, IHG, Starwood, Four Seasons, East India Hotels (Oberoi & Trident) and Indian Hotels Company Ltd. (Taj).
Luxury and upper upscale hotels dominate the total supply with 69% contribution to the overall inventory. The
upscale segment contributes 14% followed by the midscale segment with an 8% contribution. Domestic and internationally branded economy and budget hotels in Mumbai currently represent 5% of the total supply. Serviced apartments in Mumbai are presently offered by four properties in the branded segment, namely Marriott, Oakwood, Grand Hyatt and Taj, collectively contributing 4% of the total inventory.
Future Supply
As per our research, there are 13 hotels currently under construction in Mumbai across different categories with a total inventory of 3,394 rooms. Once operational, the total room inventory of Mumbai will go up by almost 32% from the existing supply.
As per recent press releases, some of the prominent international operators like Jumeirah and MGM have also announced their plans to enter Mumbai’s hospitality space in the coming future
Lodging Market Performance
Based on our research, the chart below represents the historical performance trend for luxury, upper upscale and upscale hotels in Mumbai from 2009-10 through to the Year To Date (YTD) 2012-13.
Over the three year period from 2009-10 through to 2011-12, Mumbai witnessed a marginal increase of 4% in Revenue per Available Room (RevPAR) as a result of a 1% increase in occupancy levels accompanied by a 2% growth in Average Daily Rate (ADR).
FY 2010-11 saw an increase of about 2.5% in occupancy and 5% in ADR after witnessing a steep decline from 2007-08 to 2009-10 due to global economic turmoil and the terrorist attacks at two prominent hotels in Mumbai. In 2010-11 occupancy levels averaged at 63% and ADR at around INR 9,500.
Hotels in South Mumbai have been the worst affected in terms of performance post terrorist strikes at Trident and Taj Mahal Hotels followed by a bomb blast at Zaveri Bazaar in 2011. Furthermore, the corporate movement from traditional CBD to Central and North Mumbai, due to availability of office stock at cheaper rentals, has also affected hotels in South Mumbai adversely.
Trading performance has seen a drop of 2% in RevPAR during the last 11 months, in comparison to 2011-12, in the light of a decline of 8% in ADR to INR 8,450. Occupancy on the other hand strengthened to 64% during YTD 2012-13 from 60% in the previous year. Overall, the Mumbai lodging market has seen fairly stable demand levels over the past four years, along with a decline in average rates, primarily due to recent regular supply additions in the form of Shangri-La, Sofitel and Ibis.