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Budget hotels to expand to new frontiers

12 June, 2012

Budget hotels are here to stay. If you want any evidence, just consider this. Mid-budget hotel room chain Ginger on Monday unveiled plans to invest Rs 600 crore to set up 55 new properties across the country, spanning a period of four years. Ginger is Run by Roots Corporation, a Tata group firm. Roots Corporation chose to reveal its mega plans the day when it inaugurated its 25th Hotel property in Faridabad.

According to the Federation of Hotel and Restaurants Association of India, the country has an estimated 2 lakh hotel rooms albeit spread across categories. That itself, according to estimates late last year, is a shortfall of a lakh rooms. And that is the opportunity which budget operators like Roots are trying to cash in.

In August last year, Pride Hotels, had announced plans to acquire an acre each in Kochi and Hyderabad to set up budget hotels under its Pride Biznotel brand, within a span of six months. Though the status of that project could not be verified, the company, a part of the Mumbai-based SP Group, had earmarked an investment of Rs 140 crore then.

Last year itself, Tata Opportunities Fund and Omega TC holdings Pte invested $67.54 million in Roots, with the bulk, or $47.88 million coming from the latter.Now, the opportunities aren’t restricted to metros. The company’s chief executive has reportedly pointed at smaller cities like Nagpur and Patna, linking its plans to set up budget hotels.

Taking into consideration the company’s statement that a property would have on an average 100 rooms, the company itself would add 5,500 rooms over the period.

Seven of Ginger’s Planned 55 hotel properties are under construction in Noida, Greater Noida, Chennai, Bangalore, Jaipur, Chandigarh and Amritsar. They are slated to be start functioning in 12-15 months. Like Ginger, Key Hotels, a brand of Berggruen Hotels, also had announced plans last year to set up 40 hotels over the next five years.

The Union Tourism Ministry had asked the states to establish budget hotels across tourist destinations via the public-private-partnership (PPP) model to address the issue of shortage of rooms, way back in January last year.

According to the ministry’s estimates then itself, there was a shortage of 1.5 lakh rooms. PPP projects are eligible for assistance from the ministry, which can provide a subsidy of up to Rs 50 crore. Perhaps the economic slowdown has also prompted a shift to budget hotels in the recent past.


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Budget hotels to expand to new frontiers

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