City malls turn to hospitality for growth

Ampa Skywalk, Express Avenue and Phoenix Market City turned out to be early adopters of this trend in the metro. The latest mall to get on board the hospitality space is the Marina Mall near Navalur, on OMR, which is readying for a grand launch this year. And more boutique hotels on the outskirts are slated to add to the city’s 7,000 plus inventory of rooms. 

According to Sanjay Chugh, Founder, Skylines Property Consultants, “The average occupancy of rooms in such malls hovers around 70 per cent.  Typically, these malls have rooms in the range of 20 to 100. The Design Hotel of Phoenix has about 25 rooms while e-hotel of Express Avenue mall has about 100. Such in-house hospitality facilities within malls are not targeted at the luxury segment or affluent customers. They are predominantly meant for the business travellers, who seek affordable pricing and locational advantage.” 

In the southern metro, this is relatively a new trend with those in the mall business waiting for the markets to mature so that the hospitality pie can be exploited. 

Ampa Skywalk Hotel, which launched its Sera Lounge recently, markets itself as a “perfect starting point to explore Chennai,” that offers a wide range of amenities such as free Wi-Fi in all rooms, 24-hour security, daily housekeeping and fireplace.  

T Nataraajan, Honorary Secretary, SIHRA and CEO, GRT Hotels & Resorts, clearly sees a demand for three-star facilities coming on the back of demand and supply mismatch. 

There is a huge demand for hotels in the Rs 3,000-4,000 price band. While there is excess supply of fivestar deluxe hotels in the city, there is a dearth of 3-star hotels in the city owing to the exorbitant land prices. “The value of land is so high that having 3-star hotels is unviable,” he says, and adds repeated pleas from hoteliers, to allow the use of government’s leased landholdings which could be renovated and refurbished into 3-star hotels, have gone unheard. 

It is learnt that those which do not classify as pure-play five-star hotels too have not shied from staking claim to be one and the absence of data magnifies the problem. The hospitality scene in the city, especially, is undergoing a transformation of sorts. 

According to an industry observer, the banquet business has swiftly shifted to ITC Grand Chola, which is providing a perfect stage for weddings and large conferences. Feathers in Porur too has been doing good business, with marriage parties preferring an upmarket ambience to the plain vanilla wedding halls available in T Nagar. 

According to insiders, at the time of the recently-held DefExpo, room rentals in five-star hotels doubled with most of them selling-out. However, hoteliers lament that barring such mega events that the city plays host to, the ARR or the average room rates have not gone up owing to the mismatch in demand and supply.  Incidentally, Chennai has over 7,000 rooms but ranks below Hyderabad and Bengaluru in the hospitality sector. 

There are also other formats in which hospitality and commercial realty are joining forces. For instance, Brigade Group’s Vantage has hospitality managed by the Holiday Inn group. Other hospitality players are also looking at this as a viable model, and have started doing so in mature markets such as Bengaluru.