Mumbai’s new competitor: Navi Mumbai
As high land cost, intense competition, difficulty to balance the quality and value proposition and saturating market conditions pose problems for hotel developers in Mumbai, they now turn their focus to Navi Mumbai.
India
is providing hotel chains exponential opportunities for growth, within which Mumbai is one of the main focus for the business development efforts of hotel chains. Known as the ‘Sapno ki Nagri’ (City of Dreams), the metropolitan city of Mumbai is indeed the city which offers luxury at the most. Be it the Marriott, Starwood, Oberoi, Taj, Accor, etc., and every international hospitality brand, either has a presence or is in the process of making one in Mumbai. Today, Mumbai houses more than 11,000 branded hotel rooms with more than 7,000 rooms proposed by 2015. With high land cost, intense competition to tap the same audience, difficult times to balance the quality and value preposition and saturating market conditions; hotel developers are now turning their focus on the neighbouring urban area of Mumbai – Navi Mumbai. At present, the city has close to 1,000 rooms under five, four and three-star category. With the latest addition of two more international brands, the total is close to 1,400 rooms with additional 3,000 proposed in next three years. The city will soon welcome a king-size convention centre and an international airport. So, what is it that is attracting the developers to Navi Mumbai?
Test Drive is a must:
Kiran Andicot, Vice President – Hotel Development, India and Subcontinent, Marriott International, Inc recommends testing the market as per the brand of the Hotel Group. Every hotel group studies and understands the market before planning to come up with a property, but it is also necessary to check the brand and the category of the hotel that will suit the market. By explaining with an example, Andicot said, “Navi Mumbai is still a pre-matured market to accommodate a full-service property like a JW Marriott. However, as per the demand and needs of the market, it is perfect for a brand like Four Points, which is apt for corporate guests. Commercial office space demand is always followed by hotel room demand. Presently, Navi Mumbai is still a growing market but in next five to six years, it will be ready to absorb a 5-star deluxe brand.”
Nonetheless, the city already got its first 5-star deluxe property in August this year – first in Asia Pacific - Royal Tulip Navi Mumbai managed by Louvre Hotels Group. Vimal Singh, Managing Director – South Asia, Louvre Hotel Group said, “There is enough demand from Navi Mumbai for us to grow and sustain our business. By positioning our brand at the top end in this market, we are marketing ourselves primarily as a commercial property. Occupancy will take time to build in this market but the time will come soon when we will be registering cent per cent occupancy with healthy competition from other players.”
Micro-market Mumbai:
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Nikhil Manchharam, Vice President – Acquisitions and Development – South Asia, Starwood Asia Pacific Hotels & Resorts tagged Navi Mumbai, as one of the ‘micro’ markets of Mumbai. According to him, in the long term, Navi Mumbai will become an important market for the greater Mumbai area. He said, “The airport development is an important milestone (with the current dispute as a short term bump not unusual from an infrastructure perspective) that should be successfully
Navi Mumbai has the potential to complement Mumbai in the long term with a good infrastructure planning
achieved to. Induce new demand into the Navi Mumbai area.” However, every coin has two sides. Similarly, there are opportunities and challenges to operate a property in Mumbai and Navi Mumbai.
Highlighting few facts about Navi Mumbai, Manchharam said, “With a good planning for the development of Navi Mumbai, it is likely that the urbanisation of this area may happen, as quickly as the next development of Mumbai. The infrastructure development and city planning has been relatively sound till date which should continue to be a focus to showcase itself and attract further investment activity. While developing sound fundamentals to induce new demand through infrastructure development including roads, airports, business hubs, convention centres and entertainment activity, Navi Mumbai has the potential to complement Mumbai in the long term.” According to him, hotels and brands should be viewed as infrastructure that has positive impact on urban development. With this, some ease towards regulations on hotel development including mixed-use can help accelerate the urbanisation of Mumbai itself.
Making a destination work:
Most hoteliers focus on building properties in devel-
With more hotel brands entering Navi Mumbai, the demand will surge higher and will become a strong market like Mumbai
oped markets while Maverik Mukerji, General Manager, ibis hotel Navi Mumbai thinks the other way. According to him, it is often the hotel which makes up the destination. According to the General Manager, the property was planned looking at the commercial availability of the space and the demand index of the city. After Chennai, Navi Mumbai is the most vibrant city in India showing 10 per cent growth every year ( even Pune is showing the same rate but is already getting enough supply of hotel rooms). Explaining the destination building concept by hotels, Mukerji said, “When branded hotels started opening up in Pune, the properties started marketing the city instead of just the brand. So, it’s the hotels which induce the demand in a destination. Navi Mumbai is still at a nascent stage wherein it’s a cosmopolitan corporate market which is high during weekdays and low during weekends. However, with more and more branded properties entering Navi Mumbai, the demand will surge higher and it will become a strong market like Mumbai.”