On March 28, DLF Ltd, recognized as India’s largest property developer, announced a substantial investment of $5 billion allocated for the construction of approximately 125 hotels within the world’s most rapidly expanding tourism hotspot. In an interview held in New Delhi, Vice Chairman Rajiv Singh shared the ambitious plan to create about 25,000 hotel rooms, with an initial target of 4,000 rooms slated for completion within the first three years.
According to the World Travel and Tourism Council, spending and investments associated with travel and tourism are projected to surge by 9.4 percent annually over the next decade. In Asia’s third-largest economy, there exists an urgent demand for about 100,000 additional hotel rooms, as noted by U.K.-based Hogg Robinson Group Plc last month, with an estimated 10,000 to 15,000 rooms being developed each year. “There is tremendous opportunity because there is a very large shortage today,” Singh remarked, acknowledging the potential in the market.
To strengthen its position, DLF has embarked on a joint venture with Hilton Hotels Corp., the second-largest lodging company in the U.S., to develop a total of 75 new properties. Notably, DLF purchased Aman Resorts Group in November, which further enhances its portfolio as it now controls over 22 properties across a dozen countries. An Aman Resorts hotel is also set to commence operations in New Delhi this year.
Research by Crisil Ltd. suggests that over the next five years, the stock of five-star luxury hotel rooms will rise from 27,500 to an estimated 58,000 within India’s 12 major cities. However, the average occupancy rate is projected to decline from 75 percent to about 64 percent, indicating a potential oversupply.
Additionally, the average room tariff for luxury hotels is expected to climb to 11,700 rupees (approximately $300) per night by the end of March 31, 2012, up from 3,960 rupees in 2003, per findings from Crisil. The development of new hotels is anticipated to enhance the overall value of real estate ventures. “It seeks to enhance the value of our other asset classes,” Singh affirmed. He further noted, “We find that a hotel in an office park or luxury housing around it actually makes that product work better.”