India’s Hotel Supply Is Less Than Demand as Development Tries to Catch Up

Daily Lodging Report

Skift’s Daily Lodging Report is a subscription-required, email-only newsletter read by anyone and everyone in the hotel investor, owner, and operator space, including CEOs of some of the industry’s top brands. It covers North America and Asia Pacific with two separate regional editions.

Here are some excerpts from Daily Lodging Report from the past week. If you’re not a subscriber, you should be. Get news on hotel deals, development, stocks, and career moves. Sign up here, now.

Sunday, October 30

While Travel + Leisure’s stock price rebounded a little bit after Thursday’s earnings-induced decline, Credit Suisse lowered the boom on them. CS cut the company’s stock to Underperform from Outperform and lowered the price target to $31, from $77.

Brookfield is acquiring the Ritz-Carlton San Francisco and hotels in Wine Country and San Jose as part of its multibillion-dollar acquisition of Watermark Lodging Trust. Private funds managed by Brookfield Asset Management now control 1,072 hotel rooms across the Bay Area, including the Ritz (336 rooms), the San Jose Marriott (510 rooms) and the Fairmont Sonoma Mission Inn & Spa luxury resort (226 rooms), reported the San Francisco Business Times.

An Arkansas hotelier may soon kick off its planned $73 million transformation of a 109-year old historic building in Kansas City, Missouri. Beechwood Pinnacle Hotels is expected to start construction on its conversion of the 13-story Rialto Building into a 240-room AC Hotel by Marriott – the AC Rialto – late this year, the Kansas City Business Journal reported. The hotel is slated to open next year with a first-floor restaurant and bar, meeting space, and a gym.

Skift Note: There’s been a disconnect this third-quarter earnings season between the optimism and strong numbers reported by hotel companies and the relative cautiousness of investment analysts about next year’s outlook.

Monday, October 31

Hotels are multiplying in India, but possibly not at a fast enough rate to meet demand over the next five years. Hotelivate said there are about 59,000 new rooms proposed across the country in the next five years, with 72 percent, or about 35,000 rooms, under active development, Mint reported. In the upcoming hotel supply, about 6,800 rooms are going up in Bengaluru, followed by 5,400 rooms in Mumbai. (See more on India, below.)

According to the third quarter United States Construction Pipeline Trend Report from Lodging Econometrics, within the first three quarters of 2022, the markets with the greatest number of new openings are New York City, Austin, Nashville, Atlanta and Detroit.

Pipeline

Under Construction

Skift Note: Some areas are booming with hotel development much more than others. India looks set to have a strong cycle ahead.

Tuesday, November 1

Anantara Riverside Bangkok Resort announced the opening of the BDMS Wellness Clinic Retreat in a forward-looking initiative that is set to strengthen Thailand’s position as a wellness tourism leader. The BDMS Wellness Clinic Retreat at Anantara Riverside is part of the Bangkok Dusit Medical Services (BDMS) network, Thailand’s largest operator of private hospitals, with over 50 facilities in Thailand and Cambodia. The clinic offers preventative checkups and treatments along with screenings for aesthetic and health concerns. Anantara Riverside, owned by Minor Hotels Group, offers luxury lodging on the Chao Phraya River amid 11 acres of lush tropical gardens.

Marriott International signed a deal with Australian property developers Pelligra Group and Giannarelli Group to bring Australia’s third Ritz-Carlton hotel to the Gold Coast by 2026. The Ritz-Carlton, Gold Coast will be a key part of a $480 million new waterfront development at Mariner’s Cove. The plan is for 150 guest rooms and suites, a restaurant with semi-opened kitchens, a café, and three bars. An outdoor rooftop pool, fitness center, and a Ritz-Carlton Spa as well as 587 square meters of function space will round out the amenities.

Skift Note: As wellness tourism likely expands, it’s notable that the BDMS Wellness Clinic, part of Thailand’s largest hospital operator, will expand to a new location and help the Anantara Riverside deliver on its wellness offerings. In June 2019, Mӧvenpick Hotels & Resorts opened the Mövenpick BDMS Wellness Resort Bangkok. BDMS plans to open a similar retreat in Phuket in the future, The Nation (Thailand) reported.

Wednesday, November 2

Looking at India’s hotel sector, JLL said India currently has about 150,000 branded hotel rooms, and the forecast supply growth rate is about 4.5 percent, with JLL recently saying that about 25,000 hotel rooms are expected to come up in the top 11 cities in India over the next five years. Contracts in mid-market and budget brands grew 74 percent between January and September, versus the same timespan in 2019, Mint reported. There, management contracts are largely for smaller hotels with about 50 rooms on average in tier 2 and 3 cities. International operator signings went up 36 percent between 2019 and 2022. India has about 150,000 branded hotel rooms. JLL said it’s seeing a lot of conversions from privately-branded hotels to chain hotels in mid-market and budget hotel categories post-Covid. Sarovar Hotels & Resorts, for example, said it has a pipeline of 45 hotels over five years, Mint reported.

Investors did not take the earnings reports from Airbnb, Ashford Hospitality Trust, or Xenia Hotels & Resorts very much. Airbnb was down 13 percent, AHT was down -15 percent, and XHR was down -14 percent.

Airbnb had a strong 3Q report with solid margins but sounded too cautious about the future, adding to an already nervous situation. First, it said it was switching to fully loaded pricing which means a person booking now sees the entire pricing. Pricing changes like that took some time to adjust to when hotels and others did that in the past. Airbnb also warned that holiday-quarter revenue could fall short of market expectations, expressing concern about the strong dollar. We think you get the picture as to why the stock traded as it did.

Xenia missed estimates, enough in this market to be taken to the woodshed by the investment community. Analysts were expecting RevPAR (revenue per available room) growth in the low 30s, they only got high 20s. Meanwhile it looks like XHR was pretty busy with sales and renovations during the quarter, something that will have implications in the future, mostly positive. XHR bought back 536,000 shares in the quarter.

Ashford Hospitality Trust reported 3Q results, already mostly known as they update each month and gave a pre-announcement. AHT said September was finally a month where RevPAR was ahead of pre-pandemic levels.

Skift Note: Only time will tell who is right, the company executives that are cautiously optimistic about 2023 or the investors, analysts, and media folks who are cautiously pessimistic.

Thursday, November 3

Mohegan Gaming & Entertainment’s South Korean integrated resort, Mohegan Inspire, said it’s on track for a late 2023 launch, with construction progress for Phase 1A reaching 30 percent. This property is set to become the largest integrated resort in Northeast Asia if all four phases are fully completed. Considering this project is a good 5 years behind schedule and the terrible results of other integrated resorts in South Korea, the full buildout of this project is far from guaranteed. The plan calls for three 5-star hotels with a combined 1,275 rooms plus a 15,000-seat arena and a foreigner-only casino. Total development costs for the initial phase are US$1.3 billion.

Skidmore, Owings & Merrill revealed plans for Singapore’s new tallest skyscraper, 8 Shenton Way. The mixed-use building will be located in a prominent position near Marina Bay and will reach a height of 305 meters. There will be seven terraces. Space will be split between a hotel, offices, public spaces, retail space as well as the hotel and luxury residences. Perennial Holdings Private Limited is the lead developer. Slated to finish in 2028.

Skift Note: The future is being built in Asia.