The growing numbers of hotels in Delhi’s adjoining area, namely Gurgaon, Noida and Greater Noida, has not only helped in bridging the demand-supply gap, but also offers convenience to travellers. “The development of hotels in micro economic regions of NCR has catered well to the increasing demands in these business pockets. These hotels have been especially beneficial for the business travellers as they now have accommodation options available closer to their business venues. The increase in hotels across the region has resulted in fierce rate corrections in the last few years for Delhi hotels,” said Ravi Khubchandani, General Manager, ibis Gurgaon.
According to Philip Logan, Vice President, Formule1 Hotels, India, Gurgaon is the most mature market in NCR from a demand perspective and hence has its own demand drivers. “Noida is the next planned city and is clearly closer to Delhi. Greater Noida has more space and institutions, sports amenities, entertainment, and facilities such as the expo Centre and F1 track. These are all room night generators,” Logan said.
Jagan Lacsher, General Manager, Pullman Gurgaon Central Park, however, feels that the development of hotels in the NCR region does not have much impact on hotels in Delhi. “Many new names and renowned brands have entered the Delhi NCR hospitality scene. The region has also contracted into micro-markets due to increasing distances and better infrastructure. Greater Noida and adjoining areas have offered better infrastructure to corporates and upcoming hotels. There hasn’t been much impact on ARRs, they remain constant with slight adjustment in the 5 star segment. It’s just that catchment areas have become more regionalised,” Lacsher said, adding that Delhi hotels have been able to maintain their traditional business base from large international conferences and business originating from Embassies without affecting their ARRs.
Vinay Nair, General Manager, Park Plaza Gurgaon, opined that there has been 40 per cent increase in the supply while demand has grown only by 15 per cent. “As a consequence, occupancy levels have dropped and hotel rates are down 30 per cent in the last four years. I would not say this has rationalised the ARR. However, it has to a large extent compromised profit margins for Delhi hotels,” Nair said.
Anirban Sarkar, Executive Assistant Manager, Radisson Blu Suites Gurgaon, feels that Gurgaon, Noida and Greater Noida will continue to witness tremendous growth as far as opening of new hotels are concerned. “NCR didn’t have developed hotel infrastructure during mid 90s and all the requirements were being catered to by the Delhi hotels. This created huge demand supply mismatch for Delhi hotels and the rates went up like anything. Later on, when hotels started opening in Gurgaon, Noida and Greater Noida, the rationalisation started happening,” Sarkar said.
Responding to a question over business travellers’ preference to stay in Noida, Greater Noida, Gurgaon and Ghaziabad, Logan said these micro-markets all operate off different demand drivers so they are not comparable either by distance, segment nor maturity. “Gurgaon is most rapid to mature while Ghaziabad is the least. DN expressway will be the next growth corridor; DIAL hotels will slow the growth of toll gate hotels on the Gurgaon side as supply kicks in,” Logan said. Khubchandani believes that travellers prefer to stay closer to their business venues and this has diluted the occupancies in Delhi. Business demands have grown for Delhi travellers and this has kept the decline from being very steep, he added.
Lacsher also feels that the new age business traveller prefers to stay closer to his interest of work. Hence NCR has witnessed increased footfalls with addition of new hotel brands. “It can also be attributed to the organic growth of our business. Delhi hotels haven’t got affected much by this segmentation yet; rather they have been able to cater to their fair source of business more effectively,” Lacsher said.
Nair, becoming more precise, stated that Gurgaon hotels command an approximate 65 per cent share of corporate travel into NCR. “While there is demand for Noida and Greater Noida hotels, due to lack of sufficient inventory, a fraction of that travel gets diverted to Delhi hotels. Delhi Hotels majorly enjoy all state visits and other MEA and PSU visits, which do not compare to the corporate inflow into Gurgaon, which is now officially the main business hub of NCR,” Nair added.
Sarkar opined that the Gurgaon, Noida and Greater Noida areas have started having competitive lodging / hotel infrastructure in different price bands and these hotels are beginning to attract all segments of business that are there in their respective areas.” It has certainly started to impact the occupancy levels of Delhi hotels,” reaffirmed Sarkar.
These areas are now continuously witnessing the arrival of new hotels, and hence, increased competition also. “As more inventories get introduced in the market, competition will only get fiercer. The biggest impact in the near future will be from the Aerocity hotels. These hotels will dilute the rates and occupancies of both Delhi and Gurgaon hotels,” said Khubchandani.
Sarkar echoes his views. “A lot of inventory is coming up in these regions. Competition will increase and this will impact profitability more than anything else. So it is extremely important that we try and increase our market share as the demand level is not catching up with the pace of the supply that is coming in,” he opined.
According to Lacsher, increased inventory means more options for the customer. “Today’s customer is also well aware and very demanding as far as his hospitality needs are concerned. We aim to remain consistent in our service delivery promise to retain our loyal customer base and will continue to offer exciting and varied packages across the board at regular intervals to keep the interest intact in our hotels,” Lacsher concluded.
