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June 10, 2012

Bangalore hotel developers to delay new projects

Hotel developers in Bangalore will only add a small percentage of the targeted luxury-segment rooms in 2012, as many are delaying projects due to a slowdown in demand, low risk appetite and rising cost.

By Srivani Venna

Hotel developers in Bangalore will only add a small percentage of the targeted luxury-segment rooms in 2012, as many are delaying projects due to a slowdown in demand, low risk appetite and rising cost.

Out of the 4,421 rooms planned for 2012, only 500 are set to be open to guests, wrote The Economic Times citing industry estimates.

Due to fears of overcapacity, more than a dozen projects including the Prestige Group’s Hilton Hotels, Nitesh Estates’ Ritz-Carlton, Hyatt in Whitefield and JW Marriott in UB City have been delayed by over a year.

DTZ (India) CEO Anshul Jain said only 11% of originally scheduled inventory is becoming operational.

"Most of the proposed projects have not taken off due to lack of capital, low risk appetite and high interest rates, besides overall slowdown," Jain added.

In the branded segment, Bangalore has about 7,700 rooms and new projects are expected to add some 9,800 rooms over the next five years.

"Most of the proposed projects have not taken off due to lack of capital, low risk appetite and high interest rates, besides overall slowdown."

Marriott International’s 250-room luxury hotel project JW Marriott is already delayed by two years and its opening has been postponed to the first quarter of 2013 from the originally planned 2009-2010.

In total, Marriott has five properties under development in Bangalore, which will add about 1,200 rooms once operational. A second JW Marriott hotel, which was scheduled to open in early 2007, is expected to take up business by the end of 2012.

The $125m 277-room Ritz-Carlton hotel being developed by Nitesh Estates, which was scheduled to open in 2010, has also been postponed to 2013, according to its most recent schedule.

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