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Market InsightChennai, India
April 2012
Hotel Intelligence Report
2 Hotel Intelligence • Chennai, India • April 2012
ContributorsVibhor KalraResearch Analyst, [email protected]
Vibhor Kalra is a part of the advisory team at Jones Lang LaSalle Hotels, India. Apart from publishing research articles and industry white papers, he is also responsible for conducting market research and maintaining databases. Prior to joining Jones Lang LaSalle Hotels, Vibhor has worked with the business development team of a leading financial services firm in India.
Sudeep JainExecutive Vice President, [email protected]
Sudeep Jain is responsible for managing the Indian business of Jones Lang LaSalle Hotels, the region’s market leader in hotel investment and advisory services. Leading the Firm’s dedicated Hotels team in India, he also oversees the Firm’s advisory and transaction services.
Sudeep joined Jones Lang LaSalle Hotels in April 2008 with over six years of experience in the hospitality sector and a career spanning the US and Asia Pacific. Prior to joining the Firm, Sudeep was based in New York with Starwood Hotels & Resorts Worldwide, where he was involved in corporate strategy, asset management, real estate development strategy and marketing and business development. Before that, he was a manager at Bain & Company, Inc. and an investment banker with Merrill Lynch in Singapore.
Sudeep has a Bachelor of Arts degree in Computer Science, Mathematics and Economics from Dartmouth College, USA and a Master’s degree in Business Administration from Harvard Business School. In addition, he has a certification in Real Estate, Development and Hotel Investment from Cornell University’s School of Hotel Administration.
About Jones Lang LaSalle Hotels
Jones Lang LaSalle Hotels is a global real estate services firm focused exclusively on hotels & hospitality. We provide acquisition and financing advice, valuations, investment sales and asset management for luxury hotels, select service and budget hotels, smaller hotels and pubs, from single assets to large portfolios and mixed-use developments.
In the last five years we completed nearly 4,000 advisory and valuation assignments and more sale, purchase and financing transactions than any other hotels real estate firm in the world… worth over $30 billion. With 43 offices in 20 countries and 265 hotels real estate experts, no other firm is better connected. Through our depth and breadth of research and experience, with 75 Research Reports each year, we know the market at every level, we know the players and we know how to get results.
About Jones Lang LaSalle Hotels, India
Jones Lang LaSalle Hotels, India has extensive experience throughout the subcontinent in providing transaction and advisory services to its clients, which include prominent hotel developers, operators, investors and lenders. Members of the team have extensive experience in hospitality consulting and valuation techniques. Our team members come from diverse backgrounds and possess education in hotel management and finance from premier institutions in India and abroad. Such credentials, combined with an extensive experience in domestic and international hospitality consulting, make us a very dynamic team that is well suited to handle important assignments. Services include investment sales, mergers and acquisitions, capital raising, valuation and appraisal, asset management, strategic planning, operator selection, management contract negotiation, consulting, industry research and project development services.
Jones Lang LaSalle Hotels, India was awarded the ‘IPC Hospitality Team of the Year’ by the Property Awards held in December 2010.
Hotel Intelligence • Chennai, India • April 2012 3
Emergence of India’s Detroit
Chennai (formerly known as Madras), the capital city of Tamil Nadu, has a broad industrial base in the automobile, computer, technology, hardware manufacturing and healthcare sectors. A large number of automobile companies such as Hyundai, Nissan, Ford and Ashok Leyland have set up their base in Chennai due to availability of skilled labour, consistent industrial policy, access to a world-class port and financial incentives offered by the government. According to Confederation of Indian Industry (CII), Chennai accounted for 60% of India’s automotive exports in 2006-07. The success of automobile sector conferred Chennai the status of ‘India’s Detroit’.
Chennai
Administrative Status Capital of Tamil Nadu
Area Chennai Metropolitan Area: 1,189 sq km
• Chennai District: 176 sq km• Thiruvallur District: 637 sq km• Kancheepuram District: 376 sq
km
Population (in millions) 4.7 (2011 census)
Ruling State Government AIADMK-led alliance headed by Chief Minister J. Jayalalithaa
City Economy • Automotive capital of the country• Economic growth further fuelled
by IT-ITeS and manufacturing
City Advantages • Availability of world-class skilled manpower
• Location advantage - good connectivity and linkages
• Presence of major IT and manufacturing companies
• Excellent social, education and health facilities
• Availability of commercial Grade A office space
Fast Facts
Source: Chennai Metropolitan Development Authority
Chennai is also home to industries such as financial services, IT/ITeS (Information Technology/Information Technology-enabled services) and shipping, among others. It is the second-largest exporter of software, next to Bangalore. India’s top IT companies like TCS, Infosys and Wipro have large operations in the city.
Such a development profile has also proven beneficial to Chennai’s lodging industry, which has consequently witnessed substantial growth over the past few years.
4 Hotel Intelligence • Chennai, India • April 2012
Global and Domestic Connectivity
Air
Chennai International Airport is the third-busiest airport in India after Mumbai and Delhi. It includes both an international and domestic terminal from which 22 international and eight domestic airlines operate. It is located about 15 km from Chennai CBD (Central Business District).
Strong growth in passenger and aircraft movements at the airport in recent years has resulted in a second airport being planned in Sriperumbudur, which is almost 40 km from Chennai city centre.
Rail
Chennai is the headquarters of Southern Railways network with two major railway stations located in the city, namely Chennai Central Railway Station and Chennai Egmore Railway Station. While the former connects Chennai to other metropolitan cities and state capitals of India, the latter connects Chennai with other cities in Tamil Nadu and Kerala. Several superfast trains such as Chennai-Bangalore Shatabdi, Grand Trunk Express, Rajdhani Express and Jaipur Express connect Chennai to major cities in India.
Road
Chennai has a total road length of 2,847 km1 including a ring road, arterial roads and highways. Four national highways namely NH-4,
NH-5, NH-45 and NH-205 radiate outward from Chennai to provide excellent road connectivity with other important cities in India.
• NH-4: A 1,235 km-long national highway that connects Chennai to Mumbai via Bangalore and Pune.
• NH-5: Runs along India’s east coast from Chennai to Jharpokharia in Orissa, to connect with NH-6 to Kolkata.
• NH-45: Also known as the Grand Southern Trunk Road, this highway is one of the busiest in South India and runs from Chennai to Theni in Tamil Nadu en route to Trichy (an important industrial hub in Tamil Nadu).
• NH-205: Connects Chennai to Anantpur in Andhra Pradesh en route to Tirupathi and Tiruvallur.
Sea
Chennai is serviced by two major ports, namely Chennai Port and Ennore Port.
• Chennai Port is one of the largest ports handling 2,1812 vessels in 2010-11. This port handles mainly automobile and general industrial cargo.
• Ennore Port was set up to meet the coal requirements of the Tamil Nadu Electricity Board. This port handled 11.01 million tonnes3 of cargo in 2010-11, 85% of which was coal.
1Source: Corporation of Chennai 2Source: Port of Chennai website (http://www.chennaiport.gov.in) 3Source: Ennore Port website (http://www.ennoreport.gov.in)
Hotel Intelligence • Chennai, India • April 2012 5
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Saidapet (UG)
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Gemini (UG)
ThousandLights (UG)
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Corridor 2 Stations
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CHENNAI MRTS ROUTE PLAN
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Corridor 2
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NW
SE
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COPYRIGHT © JONES LANG LASALLE 2010. All rights reserved.
Designed and published by Jones Lang LaSalleMAP NOT TO SCALE
Nandanam
CHENNAI
Micro Markets in Chennai
Central Business District (CBD): Being a state capital, Chennai CBD houses various government departments, head offices of major companies, high-end residential as well as retail space. This micro market also features a large number of branded hotels primarily in the upper upscale and luxury segments. The CBD comprises areas such as Egmore, Mount Road and MRC Nagar.
Secondary Business District (SBD): SBD comprises areas along Inner Ring Road, Velachery Road, Anna Nagar and Guindy, to name a few. This micro market features offices of primarily BFSI (Banking,
Financial Services and Insurance) companies. Because of this and its close proximity to the airport, a number of hotels including Hilton, Trident and Radisson have come up in the micro market.
Peripheral Business District (PBD): This micro market comprises of GST Road, Old Mahabalipuram Road (OMR) and Sriperumbudur. OMR features large built-to-suit campuses of primarily IT/ITeS companies, often referred to as the IT corridor of Chennai, whilst Sriperumbudur is an industrial/manufacturing hub that houses manufacturing facilities of companies like Nokia, Hyundai, Caparo and Saint-Gobain.
6 Hotel Intelligence • Chennai, India • April 2012
Lodging Demand Drivers
Source: Jones Lang LaSalle REIS, India
Chart 2: Commercial Supply Distribution across Micro Markets (4Q 2011)
Source: Jones Lang LaSalle REIS, India
Chart 1: Grade A commercial Stock and Vacancy in Chennai
6.0
5.0
4.0
3.0
2.0
1.0
0
35.0%30.0%25.0%20.0%15.0%10.0%
0.0%5.0%
2008 2013E2012E201120102009
Stock Vacancy
Stock Vacancy
2,500,000 35.0%30.0%25.0%20.0%15.0%10.0%
0.0%5.0%
CBD SBD PBD
2,000,000
1,500,000
1,000,000
500,000
Comm
ercia
l Stoc
k (sq
. mete
rs)
vaca
ncy (
%)
Comm
ercia
l Stoc
k (in
milli
on sq
. mete
rs)
vaca
ncy (
%)
Chennai has witnessed strong growth in Grade A office stock over the past four years, increasing by around 50%. The city has a total stock of 4.3 million square meters as of 4Q 2011 that resulted in a Compounded Annual Growth Rate (CAGR) of 16.1% over four years. Chart 1 presents the historical and future estimated Grade A commercial stock and vacancy.
SIPCOT (State Industries Promotion Corporation of Tamil Nadu Ltd) has successfully promoted Chennai as an industrial destination by setting up industrial parks at different locations within and around the city. SIPCOT has established industrial parks in Sriperumbudur, Oragadam, Siruseri, Gummidipoondi and Irungattukottai with a total allottable area of 7,988.6 acres.
Being a centre for trade, business, education and culture in southern India, coupled with easy connectivity to other key leisure destinations, Chennai has a fairly well-established hotel market. According to Jones Lang LaSalle Hotels’ research, lodging demand in Chennai is dominated by the business segment contributing 70-75% of the total demand, followed by (MICE) Meetings, Incentives, Conferences and Exhibitions (10-15%) and leisure (5-10%) demand sources.
Business Segment
Chennai is home to various industries such as manufacturing, automobile, auto-ancillaries, IT/ITeS and shipping, thus underpinning strong business demand.
Hotel Intelligence • Chennai, India • April 2012 7
S. No. Company Sector Location
1 Hyundai Automobile Sriperumbudur
2 Nissan Automobile Sriperumbudur
3 Asian Paints Paints Vanagram
4 Infosys IT/ITeS OMR
5 Tata Consultancy Services IT/ITeS OMR
6 Wipro IT/ITeS Guindy
7 Accenture Consulting GST Road
8 Nokia Telecommunication Sriperumbudur
9 Siemens Telecommunication Nungambakkam
10 Ashok Leyland Automobile Guindy
11 Saint Gobain Glass Sriperumbudur
12 Motherson Sumi Auto-ancillary Sriperumbudur
13 Apollo Tyres Auto-ancillary Sriperumbudur
14 Komatsu Heavy machinery Sriperumbudur
15 Cognizant IT/ ITeS OMR
Commercial Supply Distribution across Micro Markets
In terms of micro markets, PBD has the largest stock of Grade A office space in Chennai with a total supply of almost 2.2 million sq m. The availability of bigger land parcels especially on OMR that houses a large number of prominent IT companies has contributed to this. SBD follows with a total supply of 1.8 million sq m, while the CBD has a total stock of 0.3 million sq m only. However, vacancy levels in PBD are also highest at 32% compared to 16% and 21% in CBD and SBD respectively.
MICE
MICE demand in Chennai emanates in the form of meetings and conferences held by local companies. Training workshops, dealer conferences and exhibitions for product launches are the major contributors to the MICE segment in city centre hotels, whereas company off-sites contribute significantly toward MICE demand for hotels/resorts on the East Coast Road (ECR) stretch from Chennai to Mahabalipuram.
Source: Jones Lang LaSalle Hotels Research, India
Leisure Segment
Besides being an established business destination, Chennai is also a tourist’s paradise due to the presence of various tourist attractions within and around the city. Its proximity to destinations like Mahabalipuram and Puducherry add impetus to the growth of leisure demand sources.
Having an international airport, Chennai acts as a gateway to the state of Tamil Nadu with many significant religious temples located in cities like Tirupati, Kanchipuram and Tanjore.
Chennai is an integral part of various South Indian tourism circuits, the most famous of which is called the Golden Triangle of Tamil Nadu. It includes a tour of Chennai, Mahabalipuram and Puducherry through the ECR (also known as Chennai’s Entertainment Corridor). Whilst Mahabalipuram, with its vernacular temple architecture, is a religious destination, Puducherry has emerged over the years as a tranquil beach destination and is regarded as one of the best on the eastern coast of India. Both of these cities are popular with the local residents of Chennai as a weekend getaway.
List of Major Companies in Chennai
8 Hotel Intelligence • Chennai, India • April 2012
Entertainment Corridor of Chennai
Medical Tourism
Chennai is emerging as one of the biggest medical hubs in South-East Asia. The city offers world-class treatments in the fields of cardiology, oncology, eye care, nephrology and orthopedics. Apollo
Hospitals, started in Chennai and was one of the first corporate hospitals in India to provide medical treatments to foreign tourists. Other prominent hospitals in Chennai are Madras Medical Mission Hospital, MIOT Hospital and Fortis Malar Hospital.
Vivanta by Taj Fisherman’s Cove
Radisson Blu Resort Temple Bay
Hotel Intelligence • Chennai, India • April 2012 9
Tourism Market Profile
Being an economic and cultural centre in South India, Chennai has witnessed double-digit growth in international and domestic visitation over the past eight years, from financial year (FY) 2003-04 through 2010-11.
• International passenger traffic has increased from 2 million during 2003-04 to almost 4.2 million in 2010-11, which translates to an absolute growth of more than 100%.
• Domestic passenger traffic has increased from 2.5 million in 2003-04 to 7.8 million in 2010-11, recording a CAGR of 17.6%.
*YTD - April through November Source: Airports Authority of India, Jones Lang LaSalle Hotels Research, India
Chart 3: International Passenger Traffic at Chennai International Airport
4,500,000
2003-04 YTD 20122009-102008-092007-082006-072005-062004-05
CAGR 10.9% Growth 0.7%
Pass
enge
r Tra
ffic
4,000,0003,500,0003,000,0002,500,0002,000,0001,500,0001,000,000
500,000
2010-11 YTD 2011
Chart 4: Domestic passenger traffic at Chennai International Airport
*YTD - April through November Source: Airports Authority of India, Jones Lang LaSalle Hotels Research, India
2003-04 YTD 20122009-102007-082006-072005-062004-05
CAGR 17.6%Growth 13.2%
Pass
enge
r Tra
ffic
9,000,000
8,000,000
7,000,000
6,000,000
5,000,000
4,000,000
3,000,000
2,000,000
1,000,000
2008-09 2010-11 YTD 2011*
10 Hotel Intelligence • Chennai, India • April 2012
List of Existing Hotels in Chennai
Source: Jones Lang LaSalle Hotels Research, India
Chennai Accommodation Market
Serial No. Hotel Location Category Keys1. Taj Coromandel Mahatma Gandhi Road Luxury 2022. Hyatt Regency Anna Salai Upper upscale 3273. Sheraton Park Hotel & Towers T.T.K. Road Upper upscale 2834. Le Meridien GST Road Upper upscale 2405. Hilton Guindy Upper upscale 2006. Trident GST Road Upper upscale 1677. Radisson Blu City Centre Egmore Upper upscale 1608. Vivanta by Taj Connemara Binny Road Upper upscale 1509. Vivanta by Taj Fisherman’s Cove Covelong Beach Upper upscale 13010 Radisson Blu Resort Temple Bay Mamallapuram, ECR Upper upscale 14411. Radisson Blu GST Road Upper upscale 10112. My Fortune Cathedral Road Upper upscale 9013. Raintree Anna Salai Upscale 23014. Taj Club House Club House Road Upscale 22015. The Park Anna Salai Upscale 21416. The Residency Towers T Nagar Upscale 17417. GRT Grand T Nagar Upscale 13318. Asiana OMR Upscale 11419. The Residency T Nagar Upscale 11220. Raintree St. Mary’s Road Upscale 10521. Courtyard by Marriott Anna Salai Midscale 23822. Fortune Hotel Select Palms OMR Midscale 12923. Aloft OMR Midscale 12924. The Pride Hotel Evr Periyar Salai Midscale 11525. Lemon Tree Hotel Sardar Patel Road Midscale 10826. Ginger IITM Research Park, OMR Budget 8527. Comfort Inn Marina Towers Pooniamman Koil Street Budget 8428. Quality Inn Sabari OMR Budget 8429. Somerset Greenways MRC Nagar Serviced apartments 188
Total 4,656
Existing Supply
Based on our research, Chennai has 29 branded hotels with 4,656 rooms spread across different categories. Some of the existing key players operating in the city include ITC, Starwood, Hyatt, Hilton, Marriott, Oberoi, Taj and Carlson. Prominent operators that are coming up with new properties include Leela, IHG and Accor, as shown in tables below.
Hotel Intelligence • Chennai, India • April 2012 11
Future Supply
Chart 5: Room Invetory Categorisation
Source: Jones Lang LaSalle Hotels Research, India
Serivced Apartments 4%
Luxury 35%
Midscale 25%
Upscale 3%
Upper Upscale 18%
Serial No. Name of Hotel Location Category Keys Status Projected Opening1. ITC Grand Chola Mount Road Luxury 600 2012 Under construction2. JW Marriott MRC Nagar Luxury 357 - Construction on hold3. The Leela Palace MRC Nagar Luxury 329 2012 Under construction4. Park Hyatt Velachery Luxury 200 2012 Under construction5. Anantara East Coast Road Luxury 126 - Construction on hold6. Westin Velachery Road Upper upscale 215 2012 Under construction7. Le Meridien East Coast Road Upper upscale 97 2014 Under construction8. Ramada Vandalur Upscale 100 2012 Under construction9. Trader’s Hotel OMR Midscale 302 2014 Under construction10. Gateway Sholinganallur, OMR Midscale 190 2013 Under construction11. Novotel Sholinganallur, OMR Midscale 150 2013 Under construction12. Park Plaza Mylapore Midscale 140 2012 Under construction13. Royal Orchid Radhakrishnan Salai Midscale 126 2012 Under construction14. Ibis Sholinganallur, OMR Economy 200 2013 Under construction15. Ibis Mount Road Economy 160 2014 Under construction16. Sarovar Hometel Sriperumbudur Economy 170 2013 Under construction17. Fraser Residence OMR Serviced apartments 158 2013 Under construction
Total 3,620
According to Jones Lang LaSalle Hotels’ research, there are 17 hotels currently under construction in the branded segment in Chennai with a total inventory of 3,620 rooms. However, this number excludes an inventory of almost 2,500 rooms that are currently in various stages of planning and expected to hit the market within the next five to seven years. It should be noted that the bulk of the upcoming supply is being developed along OMR albeit with a number of projects planned in Sriperumbudur and thus can be refered as the future growth corridors for Chennai’s lodging market.
The majority of the upcoming supply in Chennai will be in the luxury segment (35%), with fewer rooms planned in the midscale (25%), upper upscale (18%) and economy segments (15%). Serviced apartments and upscale segments contribute only 4% and 3% respectively.
Economy 15%
List of Upcoming Branded Hotels in Chennai
Source: Jones Lang LaSalle Hotels Research, India
12 Hotel Intelligence • Chennai, India • April 2012
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Gemini (UG)
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VA
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OA
D JAW
AH
AR
LA
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AD
PERAMBUR MAIN ROAD
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DI R
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D
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CHENNAI BYPASS R
OAD
KUNRATHUR ROAD
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AnnaUniversity
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TheosophicalSociety
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Mandaveli
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IndiraNagar
OkkiyamThuraipakkam
Kannagi Nagar
NehruNagar
BethalNagar
RajaNagar
KathiparaJunction
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kuapehC
K KNagar
KilAyanamba
Sri lyappaNagar
Sembakkam
Nanmangalam Forest
marupamaR
LakshmiNagar
Kanchipuram
ijalaBragaN
PanchapandavaMalai
Tirusulam
SanthanammalNagar
Chromepet
RadhaNagar Keelkattalai
ThiruttaniNagar
Nemilicherry
Jain Nagar
ArunodhayamNagar
VijayaNagar
Perungudi
KasturbaNagar
ValmikiNagar
Dhandeeswaram
IndiraNagar
CITCampus
Puludivakkam
KodandaramaNagar
VSIEstate
RukmaniNagar
CLRI
Adambakkam
UllagaramNanganallur
Parangi Malai
Manappakkam
GuindyIndustrialEstate
Alappakkam
Vanagaram
Towards Sriperumbudur
Rajankuppam
Koyambedu
AlwarThirunagar
Virugambakkam
EkkaduThangal
Arumbakkam
Trustpuram
ShenoyNagar
Tiru VikaPark
ThousandLights
Pudupet
Chintadripet
Gopalapuram
Palmgrove
SIDCOIndustrialEstate
RajaAnnamalaiPuram
Pelican Paradise
PanagalPark
Chetpet
AshokNagar
Teynampet
CHENNAI
KANCHIPURAM
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NC
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UVA
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Taramani
Palavakkam
Thiruvanmiyur
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ArudraIndustries
Mugalivakkam
Nandambakkam
TIRUVALLUR
KANCHIPURAM
Porur
Nolambur
GoldenGeorgeNagar
Vadapalani
Jaffarkhanpet
Nungambakkam
Kilpauk
Egmore
Royapettah
Saidapet
Alwarpet
Pallikaranai
Neelankaral
Vettuvankeni
Palavakkam
Perungudi
Puzhuthivakkam
Old Pallavaram
Neela
ngara
i Beach
SrinivasaNagar
Velachery
Kodambakkam
Mambalam
Nandanam
Nerkundram
MahakaviBharathiyarNagar
Kathibada
Sowcarpet
George Town
Kasimedu
Mannady
Pulianthope
Muthialpet
Royapuram
Old Washermanpet
Washermanpet
Siruvallur Vyasarpadi
Otteri
Vepery
EkangPuram
Purasavakkam
Kondithope
AnnaNagarEast
Dunlop
Ambattur
Mannurpet
JayalalithaNagar
TVSIndustries
SidcoIndustrialEstate
PeriyarNagar
AmbatturIndustrialEstate
Padi
AnnaNagarWest Extn
BalajiNagar
PoompukarNagar
Agaram
Venkatapuram
Attipattu
Chennai
Anna Nagar
Ayanvaram
Perambur
Peravallur
Korukkupet
Ambattur
Kil Ayanambakkam
Maduralvoyal
Ayappanthangal
Pallavaram
Chitlapakkam
SriperumbudurPallavaram
Tambaram
Bethel Nagar
MGRNagar
Nilangarai
Existing Route
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COPYRIGHT © JONES LANG LASALLE 2012. All rights reserved.
Designed and published by Jones Lang LaSalleMAP NOT TO SCALE
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Hotel Intelligence • Chennai, India • April 2012 13
Existing Hotels1 The Pride2 Comfort Inn Marina Towers3 Radisson Blu City Center4 Vivanta by Taj Connemara5 Taj Club House6 Taj Coromandel7 The Park8 The Residency9 Courtyard by Marriott10 GRT Grand11 The Residency Towers12 My Fortune13 Hyatt Regency14 Raintree Anna Salai15 Sheraton Park Hotel & Towers16 Raintree St. Mary’s Road17 Hilton18 Somerset Greenways19 Lemon Tree20 Le Meridien21 Radisson Blu22 Trident23 Vivanta by Taj Fisherman’s Cove24 Radisson Blu Resort Temple Bay25 Ginger26 Fortune Hotel Select Palms27 Aloft28 Asiana29 Quality Inn Sabari
Upcoming Hotels1 Ibis2 Royal Orchid3 Park Plaza4 JW Marriott5 The Leela Palace6 Park Hyatt7 ITC Grand Chola8 Westin9 Ramada10 Sarovar Hometel11 Le Meridien12 Anantara13 Trader’s Hotel14 The Gateway Hotel15 Fraser Residence16 Ibis17 Novotel
14 Hotel Intelligence • Chennai, India • April 2012
Hotel Trading Performance
Source: Jones Lang LaSalle Hotels Research, India*YTD 2011-12: April to December 2011
Chart 6: Market Wide Performance of Branded Hotels in Chennai
7,000
0.02010-112009-102008-09
ADR,
Rev
PAR
(INR)
6,000
5,000
4,000
3,000
2,000
1,000
56.0%
70.0%
68.0%
66.0%
64.0%
62.0%
60.0%
58.0%
Occu
panc
y (%
)
ADR RevPAR Occupancy (%)
The graph below represents marketwide performance of branded hotels in Chennai, beginning FY 2008-09 through 2011-12 (year-to-date).
Similar to other Indian cities, RevPAR in Chennai peaked in 2008-09 at INR 4,400 before declining over the next year as demand conditions softened and new supply emerged. During 2010-11, occupancy levels reached 68%, which is 4% higher than the market high of 64% in 2008-09 and boosted by the overwhelming rise in domestic as well as international passenger traffic resulting from stabilising global economies. Offsetting this has been the continued decline in average rates with ADR averaging INR 6,100 in 2010-11, 12% below the 2008-09 high of INR 7,000.
For YTD 2012, occupancy levels registered a decline of 300 basis points to reach 65%. A significant increase in supply can be attributed to this decline. Average rates, however, remained stable during this period at approximately INR 6,100.
S. No. Hotel Rooms Year 1. Radisson Blu City Center 160 1Q 20122. Hyatt Regency 327 3Q 20113. Somerset Greenways 188 3Q 20114. Hilton 200 1Q 2011
Total 875
8,000
YTD 2011-12*
Recent Hotel Openings
Hotel Intelligence • Chennai, India • April 2012 15
ConclusionChennai has emerged as India’s bustling business destination with the growth of manufacturing (automobile) and service (BFSI, IT/ITeS) sectors, supported by excellent road, rail and air connectivity, as well as a large sea port.
Growing business activity in the region has caught the attention of developers and operators, resulting in an inflow of branded hotel inventory into the market. Chennai currently has 29 hotels with an inventory of 4,656 rooms. The existing supply in Chennai is expected to experience a significant increase with an upcoming inventory of 3,620 rooms spread across 17 hotels within three years.
As a result of growing demand, occupancy levels have been fairly stable during the past four years. However, with a
continuous addition of branded supply, the market has witnessed a decline in average rates. Because of this, there has been an 11% decline in RevPAR since 2008-09.
In the near term, we expect marketwide average rates and occupancy levels to remain constrained as new supply opens in 2012 and 2013, with a high proportion of new rooms in the luxury and upper upscale segments. However, the adverse impact is expected to be short-lived with significant commercial and industrial developments planned across the city. In particular, the Sriperumbudur submarket is expected to become an attractive and desirable market for hotel investors and operators as it is emerging as a significant growth corridor in Chennai with no branded hotel supply to date.
Atlanta3344 Peachtree Road, Suite 1200Atlanta, GA 30326United Statestel: +1 404 995 2100fax: +1 404 995 2109
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LeedsSt Paul’s HousePark SquareLeeds LS1 2NDUnited Kingdomtel: +44 113 244 6440fax: +44 113 245 4664
London30 Warwick Street London W1B 5NHUnited Kingdomtel: +44 20 7493 6040fax: +44 20 7399 5694
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Mexico CityMonte Pelvoux 111, Piso 5Lomas de ChapultepecMéxico, DF 11000tel: +52 55 5980 8054fax: +52 55 5202 4377
Miami2333 Ponce de Leon Blvd, Suite 1000Coral Gables, Florida 33134United Statestel: +1 305 529 6345fax: +1 305 529 6398
MilanVia Agnello 820121 MilanItalytel: +39 02 8586 8672fax +39 02 8586 8670
MoscowKosmodamianskaya Nab. 52/3Moscow 115054Russiatel: +7 495 737 8000fax: +7 495 737 8011
Mumbai1st Floor,2 Brady Gladys Plaza,1/447 Senapati Bapat Marg,Lower Parel,Mumbai - 400 013, Indiatel: : +91 22 3985 1400fax: +91 22 2496 0324
MunichHighLight Munich Business TowersMies-van-der-Rohe-Strasse 680807 MunichGermanytel: +49 89 2900 8882fax: +49 89 2900 8888
New DelhiLevel 9 Tower AGlobal Business Park,Mehrauli Gurgaon Road, Sector 26,Gurgaon 122002Haryana, IndiaTel: +91 124 331 9600Fax: +91 124 4605001
New York601 Lexington Avenue33rd Floor New York NY 10022United Statestel: +1 212 812 5700fax: + 1 212 421 5640
Paris40-42, rue La Boétie75008 ParisFrancetel: +33 1 4055 1718fax: +33 1 4055 1868
Perth Level 29Central Park152 - 158 St Georges TerracePerth Western Australia 6000tel: +61 8 9322 5111fax: +61 8 9481 0107
RomeVia Bissolati 20 00187 Rome, Italytel: +39 06 4200 671fax: +39 06 4200 6720
São PauloRua Joaquim Floriano, 72 - cj. 97 04534-000 São Paulo, SPtel: +55 11 3043 6900 fax: +55 11 3043 6999
San FranciscoOne Front Street, Suite 300San Francisco, CA 94111United Statestel: +1 415 395 4900fax: +1 415 955 1150
Shanghai25/F Tower 2 Plaza 661366 Nanjing Road (West)Jing An DistrictShanghai 200040China (PRC)tel: +86 21 6393 3333fax: +86 21 6393 7890
Singapore9 Raffles Place#38-01 Republic Plaza Singapore 048619tel: +65 6536 0606fax: +65 6533 2107
SydneyLevel 26, 420 George StreetSydney NSW 2000Australiatel: +61 2 9220 8777fax: +61 2 9220 8765
Tokyo3rd Floor, Prudential Tower2-13-10 NagatachoChiyoda-kuTokyo 100-0014, Japantel: +81 3 5501 9240fax: +81 3 5501 9211
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Jones Lang LaSalle Hotels, Jones Lang LaSalle Hotels is a global real estate services firm focused exclusively on hotels & hospitality. We provide acquisition and financing advice, valuations, invest-ment sales and asset management for luxury hotels, select service and budget hotels, smaller hotels and pubs, from single assets to large portfolios and mixed-use developments. In the last five years we completed nearly 4,000 advisory and valuation assignments and more sale, purchase and financing transactions than any other hotels real estate firm in the world… worth over $30 billion. With 43 offices in 20 countries and 265 hotels real estate experts, no other firm is better connected. Through our depth and breadth of research and experience, with 75 Research Reports each year, we know the market at every level, we know the players and we know how to get results.
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