Hotel majors firm up Chennai plans

Chennai, Jan 2 | Updated: Jan 3 2006, 06:41am hrs
For the hospitality majors such as Indian Hotels Company Ltd, Hotel Leelaventure, Hilton, Marriott and others, Chennai is fast becoming a hot spot. After lying low for over the years, Chennai is suddenly turning to be the most happening city in India as compared to Bangalore, Hyderabad and Pune.

With a view to cashing in on the expected gap in demand and supply, thanks to increasing business activities in both manufacturing and services sectors, and also major investment proposals from both multinational and domestic companies coupled with encouraging average room rate (ARR), hospitality majors are vying for a big pie in the major southern metro, according to industry sources here.

According to sources, the state government's assurance to look into the possibility of reducing the luxury tax further as well as on the increased floor space index (FSI) on the lines of IT and ITES sectors, has also helped the hotel majors to firm up their Chennai plans. The Tamil Nadu government had brought down the luxury tax from 25% to 12.5% two years back.

"There is going to be an addition of over 1,000 rooms in the next two to three years with an estimated investment of over Rs 1,000 crore," said a senior official of the Federation of Hotel & Restaurant Association of India (FHRAI).

He said that hotels like Leelaventure, Hilton, Marriott (in association with Hotel Viceroy) are entering the city with 300+ rooms each, while Indian Hotels, Courtyard Marriott will be adding over 225 rooms each, adding a total of over 1,000 rooms in the next two to three years.

If the investment proposals by Nokia, Flextronics, Ericsson, BMW and the expansion plans of IT and ITES sector companies in Chennai are any indication, the demand will outstrip the supply and the proposed addition may even fall short, the official added.

"Though business garners a sizeable chunk of the occupational level (running at 85%), the availability of quality healthcare system in Chennai, increased focus on tourism activities by the state government of late, call for more rooms," the official said.

Of the projected demand of 85,000 more rooms in the next five years across the country, south alone expects to add good number of rooms, the FHRAI official added.