Indian Developers Exit Hotel Industry

23rd June 2008 (Last Updated June 23rd, 2008 09:40)

Property developers in India are in "exit mode" – preferring to invest in commercial and residential projects over hotels, as cash flows in the sector dry up. Real estate developers with a presence in areas such as National Capital Region, Bangalore, Chennai and Pune are opting out of f

Property developers in India are in “exit mode” – preferring to invest in commercial and residential projects over hotels, as cash flows in the sector dry up.

Real estate developers with a presence in areas such as National Capital Region, Bangalore, Chennai and Pune are opting out of four- and five-star hotel projects, the Business Standard reports.

“The return on investment in a hotel will not be as high as it will be in putting the land to commercial use. Committing to the hospitality sector means waiting for five or more years to get returns,” Habitat Ventures Executive Director Shivaram Malakala said.

“Developers are looking at realising their money through any alternative means and are thus in the exit mode.”

However, Wyndham Hotel Group International, which is promoting Royal Orchid Hotels and Ramada Worldwide, has denied any such development.

Wyndham Director of International Development, Indian Ocean Region, Sunil Mathur said projects may be delayed a month or two, but “all our projects are doing fine … none have been shelved”.

In 2007, over a dozen global chains, including the Hilton, Accor, Marriott International, Berggruen Hotels, Cabana Hotels, Premier Travel Inn and InterContinental Hotels group, announced plans to set up over 350 five-star, four-star and budget hotels and 50 villas in India – equating to 65,000 additional hotel rooms.

By staff writer