Real estate developers to offload hotel land

August 30, 2008	(Be the first to rate this story!)  Loading ...
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Real estate developers who had diversified into the hotel sector are in for rougher times as analysts see trouble coming in the third quarter of FY09 when hotel constructions will fall. Sanjay Dutt, the joint managing director at real estate consultants Cushman & Wakefield India Ltd, said that the hotel industry was expected to add 50,000 keys this year but has now dropped the figure to 30,000. “This figure will plunge further,” he said. “There are hotel portfolios that are up for sale where developers who had entered the market in the last three-four years are giving away their properties to established hoteliers such as the Taj or the Saraf Group and to private equity players,” Dutt said.

Soaring crude prices and reduced travel by corporates started affecting the hotel sector early this year. Dutt said that developers saw an occupancy level of nearly 90% when they announced the projects. But a correction followed, plunging occupancy levels to lower than 60%. “Moreover, raising debt is a huge issue with developers whose balance sheets are already stretched,” he added. Most developers and consultants hope that the 2009 general elections and the formation of a stable government will improve the environment. The market is expected to recover by 2011.

News Published Under:   Real Estate India, Hotel Industry in India |

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