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Keeping Watch: Transformation of Pune’s Hotel Landscape

Pune’s rapid transformation from a laidback city into the second largest town in Maharashtra has been a surprising one. Once considered the city of retired, it is today a city of many opportunities, be it IT, university education, real estate, sports or hospitality. With IT, automobile and pharmaceutical showing great interest in this satellite city, hospitality industry too has been rushing in with substantial investments.

The Metamorphosis: There was a time when thinking of a hotel in Pune brought to our minds the images of some average accommodations with limited rooms. Looking back at the year 2006, Pune’s supply of hotel rooms was under 1000 but within seven years the city geared up to an excess supply of 5000 guest rooms! Today the ‘Queen of Deccan’ marks the presence of almost all the main domestic hotel chains and several international hotel giants. Pune registered a compounded average growth of 39.9 percent between 2006-07 and 2012-13 in its hotel room supply, which is the highest by far in India.

Demand on Rising: What made the ‘hotel in Pune’ scene change so much is the boom in auto manufacturing, IT and biotechnology. With rising demand came up the micro-markets such as Baner, Aundh, Wakad, Hadapsar, Pimpri-Chinchwad, Chakan and Hinjewadi. As the hotel companies sensed the growth in demand, they grabbed the opportunity and supply were upped in between 2007 and 2010. Today, the hotel & hospitality sector in Pune faces intense competition, and companies have started vying for niche opportunities.

Downward Slide: Similar to the case of other Indian cities, the demand for the hotel in Pune too witnessed a downward spike. Supply outran the demand leading to high competition and drastic cut down in average room rates. Nevertheless, the last couple of years brought in more demand thus making the graph even. Despite the stability, hotel companies are facing challenges like a hike in operating cost and overall inflation.

Way Forward: Irrespective of a slowdown in the market, the hotel industry has been keeping a positive attitude and is confident that rapid infrastructural and other development projects would lead to an upswing in the industry. Both big and small players are eyeing the industrial developments in the city, relocation of domestic companies to Pune, rising inflow of flights to Pune, and government’s plans for better infrastructure.

For now, Pune can be seen as a growing city that has its problems to tackle – from growing traffic and parking issue, poor roads, power supply, and high taxation to not-so-friendly regulations. Also, the city lacks that attractiveness as a tourist spot despite its rich heritage.

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