2- and 3-star hotels hit by IT residential training centres
By Venkatachari Jagannathan | 22 May 2006
Chennai: Training centres with residential facilities built by IT companies have affected the occupancy rates of 2- and 3-star hotels in Bangalore. Hotels that enjoyed 80-85 per cent occupancy rates till not long ago are now down to 60 per cent occupancy.
Says K Syama Raju, managing director, Hotel Maurya, and vice president of South India Hotels & Restaurants Association (Karnataka), "IT companies are allotted large tracts of land and they in turn build residential buildings called training centres. As a result 2- and 3-star hotels that enjoyed 80-85 per cent occupancy ratios till a couple of years ago now have to contended with just 60 per cent." According to him, this has impacted the topline of 2- and 3-star hotels to the extent of 30 per cent.
IT companies like Infosys Technologies Limited, Wipro and Mahindra British Telecom are building huge guest houses-cum-training centres with residential facilities. Infosys is building a Rs37-crore 500-room facility called Infosys Residence.
The companies find it convenient to have their own facilities as it not only saves huge costs but also offers other benefits like saving in travel time for their guests.
Given this situation, Raju terms it wrong to say that hotel rooms are scarce in Bangalore. "One can get a room in 3-star hotel without any hassle on weekends." According to him even 5-star hotels are experiencing lower occupancy ratio in Bangalore. "Earlier it used to be 90 per cent and now the 5-star hotels average around 70 per cent occupancy ratio."
With the demand for rooms expected to go up further, new hotel projects are coming up in Whitefield near Bangalore. According to Raju, ITC is building a 400-room 5-star hotel. And Radisson and Marriott are also building their hotels. In Karnataka 15 new hotels are under construction.
A similar trend has started in Hyderabad. Says Rajiv Narain, vice president, Golkonda Hotels and Resorts and president, Hotels and Restaurants Association of Andhra Pradesh, "HSBC is building a 350-room guest house in Hyderabad and other IT companies may follow suit. The business loss is only for the 2- and 3-star hotels and not for other star hotels."
