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Will a growth in the hotel supply outpace the growth in demand?
What remains as one of the largest threats to this market’s strength is a pipeline as strong as 9,800 rooms in the branded segment slated to enter in the coming five years. At present, Bengaluru’s existing inventory stands at a little over 7,700 rooms. Hence, this would mean an increase of more than 100% in the total room inventory.
The city’s lodging market has evolved in the last decade with its emergence as a significant commercial destination largely driven by the IT/ITeS sector. With IT giants such as Infosys, Wipro, TCS, Accenture and HCL setting up their base in the city, it has rightfully been conferred with the status of ‘India’s Silicon Valley’.
In terms of market performance, Bengaluru was amongst the best performing hospitality markets in India, thereby attracting a number of developers to enter the hospitality space. The subsequent global recession and addition of new supply led to a steep decline in the market-wide RevPAR levels in 2009-10. However, with stabilization of domestic and global economies, the market bounced back in 2010-11. We expect the market to maintain its position as a prominent hospitality market in India in the future as well.
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