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Impressive Office Leasing Activity to Boost Hotel Sector: JLL

Hightened commercial leasing activity across top seven business cities in India, leading to higher demand for rooms, has been the key driver of growth in Revenue Per Available Room (RevPAR) across most top Indian markets. Nine out of top 11 markets witnessed a continuous rise in RevPAR performance during the October–December 2019 period, according to Hotel Momentum India (HMI) Q4 2019, a quarterly hospitality sector monitor released by JLL Hotels & Hospitality Group.

As per the HMI, while Mumbai has emerged as the leader of RevPAR in absolute terms, Hyderabad is the leader in RevPAR percentage change in Q4 as well as in CY2019 over the same period last year. Both supply and demand have seen growth, with supply up by 2.7% and demand by 4.3%.

A fundamentally strong market has enabled Hyderabad to move to the top of the chart in terms of RevPAR percentage. High room night demand on the back of increased grade A office leasing activity, coupled with limited new hotel supply, has improved hotel performances significantly. It is believed that first occupancies grew followed by growth in room rates.

Jaideep Dang, managing director, Hotel and Hospitality Group-India, JLL, said, “The announcement of the building of 100 new airports until 2024 underlines the endeavour to connect India under the Udaan scheme, which will likely boost tourism prospects in smaller cities and lesser-known destinations.

This will certainly create employment at the local level and help the micro economy. Tourism and hospitality are amongst the largest employment generator in the country. This move, in particular, will provide a fillip to employment, drive tourism demand, and will encourage investors to build hotels in smaller cities.”

“Demand continues to be robust due to growth in the office sector. Another area of growth is the Warehousing and Logistics sector, which could push room night demand to Tier II industrial locations and suburban areas of Tier I cities. Mixed-use IT parks, industrial parks and corporate offices will lead demand for hotels in 2020,’ he added.

While Hyderabad has witnessed a RevPAR change of 13.8%, cities like Ahmedabad with a RevPAR change of -12.5% and Pune with -3.0% have emerged as the laggards in this quarter.

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