The Indian hotel sector is finally breathing a sigh of relief as demand has recovered dramatically in recent months, even helping push occupancy and average rates closer to pre-pandemic levels in a few markets. However, the hotel sector, like most others, is reeling under the pressures of rising prices, affecting not only operations but also hotel development plans in the country.
In any case, hotel supply growth was limited in 2020, as several projects were delayed, deferred, or put on hold due to the pandemic-related restrictions. Only 4,537 keys entered the branded space in 2020, far less than the 15,000 keys projected for the year before the pandemic. The situation seems to be improving in 2021, as over 4,400 keys have been opened in the first nine months of the year. Despite the higher growth in 2021, the aggregate supply of 2020 and 2021 still falls short of the pre-pandemic estimates and the rising construction costs are not helping matters.
With rising input costs, hotel developers have a compelling reason to consider and adopt alternative construction methods like prefabrication and modular construction. These methods are not new, and several international hotel chains, such as Marriott, Hilton, Accor, and CitizenM are increasingly adopting them for their global projects. Even luxury hotels are being developed utilizing prefab and modular technology because of the vast range of benefits they provide, including shorter development timeframes, reduced construction costs, and greater sustainability.
In India, however, most developers, except for a few in the economy segment, are still wary of these novel construction methods, owing to a lack of awareness of the benefits and perception of design restrictions. With technology advances, prefab and modular construction can now provide greater customization in project designs and can be used for a wider range of projects than before, which is likely to increase its acceptance in India. The rising construction costs are also likely to help correct the perennial problem of overbuilding and overspending on hotels in India, as building efficiently designed hotels at the right cost and the right leverage will be critical in the post-COVID world.
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Mandeep S Lamba
Mandeep S. Lamba, President – South Asia, oversees the HVS practice in South Asia. Mandeep has spent over 30 years in the hospitality industry having worked with International Hotel Companies such as Choice Hotels, IHG and Radisson Hotels before becoming President for ITC Fortune Hotels in 2001. Having successfully built the Fortune brand in India’s mid-scale hospitality sector, Mandeep ventured into an entrepreneurial stint for over 8 years, setting up JV companies with Dawnay Day Group UK and Onyx Hospitality Thailand before joining JLL in 2014, as Managing Director, Hotels & Hospitality Group – South Asia. An established industry leader, Mandeep has won several awards and recognitions for his accomplishments. Recently, he was featured in the Hotelier India Power List of the most respected hoteliers in India for the second year in a row. Contact Mandeep at +91 981 1306 161 or firstname.lastname@example.org.
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Mandeep S Lamba
President (South Asia), New Delhi
Phone: +91 (124) 488 5552