Gurgaon hospitality boosted

19 Feb 2011

Business boosts Gurgaon hospitality

Gurgaon initially gained prominence as an outsourcing centre for major international companies that found it cheaper to locate their back-end operations in India due to the availability of high-quality but cost-effective employee resources. GE Capital initiated this trend and was the first multinational company to enter Gurgaon in 1997.

Over the last 15 years or so, Gurgaon has established its presence as an important commercial centre of India. However, the nature of companies in Gurgaon has somewhat evolved from being business process outsourcing (BPO) focused industries to including major multinational companies across a variety of industry sectors at present.

Overall, Gurgaon benefits from a deep and diverse mix of domestic and international companies spread across various industry sectors. These companies are also significant contributors of lodging demand to local hotels. Such a diverse corporate demand base bodes well for the future growth of the local lodging market, ensuring that the market is not overly dependent on any specific industry sectors and resilient to global demand shocks.

As a consequence of being an established commercial area with a significant presence of domestic and international companies, the nature of lodging demand in Gurgaon tends to be skewed towards commercial demand sources. As such, commercial demand sources contribute nearly 70–75 per cent to Gurgaon’s overall lodging demand, while the remaining is a mix of leisure (5–10 per cent) and MICE (15–20 per cent) sources.

According to our research, Gurgaon houses approximately 3,000 rooms in the branded luxury, upper upscale, upscale, midscale and economy categories. These rooms are spread across 27 hotels and serviced apartments.

Approximately 29 per cent of the supply is represented by luxury and upper upscale hotels. The tax holiday announced for midscale hotels in context of the Commonwealth Games 2010 further boosted the development activity in this segment across Delhi and NCR recently.

This also led to more midscale hotel rooms being added to the inventory over the past few years, which resulted to the midscale category accounting for majority of the total room supply in Gurgaon (38 per cent) followed by the economy segment at 10 per cent. The serviced apartments concept is relatively new and is offered currently by only two properties namely The Leela Kempinski and Radisson Suites, contributing only 4 per cent to the overall lodging room supply. l

The author is executive vice-president, JLL Hotels (India)

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