Hotel majors, including Indian Hotels, Royal Orchid and Choice Hotels India plan to set up nearly 20 budget properties, at a cost of over Rs 250 crore, across Karnataka in the next two years.
This expansion will add close to 1,500 rooms and is expected to ease the strain on the hospitality infrastructure in the state. Indian Hotels will add up to five properties, Royal Orchid will come in with around 10 and the remaining will be from Choice Hotels.
Budget hotels, which follow the 'no-frills' principle, offer the ambience and comfort of star hotels but at much lower rates. Room rents, depending on season and availability, typically range from Rs 1,000-Rs 2,500. The number of rooms per hotel may vary from about 60 to 100.
Bangalore-based Royal Orchid plans to expand its budget chain, Peppermint, to Gulbarga, Mysore, Hassan, Mangalore, Hospet, and other tier II and tier III cities in the state in the next two years.
The company has floated a fully-owned subsidiary AB Holdings to manage its budget chain. AB Holdings Managing Director Arjun Baljee told Business Standard that apart from the first hotel presently under construction, the company was scouting for properties in five other locations in the city.
"We are targeting the business as well as the cost-conscious leisure travellers," Baljee said. Royal Orchid intends to set up 50 such hotels across India by 2010, at a cost of Rs 15 lakh per room. The company is believed to have earmarked around Rs 700 crore for the project.
Indian Hotels, which operates its budget chain under the 'Ginger' brand plans to open one more in Mangalore by March 2008. This chain is managed by Roots Corporation, a subsidiary of the Tatas-owned Indian Hotels and has a functional property in Bangalore.
Roots CEO Prabhat Pani told BS that the company was surveying locations in Hubli, Belgaum, Bellary and other tier-II cities.
Indian Hotels will invest Rs 300 crore during the present fiscal to set up 25 budget hotels across the country. While seven of these are are up and running, eight are under construction. With a capacity of about 100 rooms, each budget hotel costs about Rs 11-12 crore (excluding land price).
In April this year, Choice Hotels India, a franchisee of Choice Hotels International, had announced a tie-up with The Royal Indian Raj International Corporation to manage and run 100-125 budget hotels in several major metros including Bangalore by 2010.
According to Choice Hotels India CEO Vilas Pawar, the hotels, in the 2 to 4 star category, will have room rents starting from Rs 1,800 per day.