Ahmedabad: The Vibrant City of Gujarat

by Jul 23, 2019Market Snapshots, Travel & Tourism

G ujarat, one of the most developed states of India, has become a major hub for businesses. Its commercial and financial capital, Ahmedabad, is supported by tech-savvy infrastructure and a trade-friendly government, in addition to a highly educated and skilled workforce that has helped the city emerge as a bustling metropolitan. With strategic and continuous marketing through Vibrant Gujarat campaigns, the city has attracted significant new investments, and industries such as textiles, chemicals, automobile, and pharmaceuticals, among others, have grown substantially, lending Ahmedabad a strong industrial orientation. While areas like Vanrangpura, Paldi and Vastrapur, located in the heart of the city, constitute the traditional commercial district, the Sarkhej Gandhinagar Highway (SG Highway), Prahlad Nagar and other neighbouring areas have steadily developed into a new central business district in recent years. Apart from the Commercial segment, Ahmedabad is also endowed with a rich architectural heritage that includes the Indo-Islamic monuments of the 15th and 17th centuries, residential clusters of the medieval period and heritage precincts called pols, to name a few, that generate Leisure demand. Moreover, Ahmedabad was the first city in India to be inscribed in UNESCO’s World Heritage City list of 2017.

Ahmedabad’s hospitality industry was previously dominated by local brands; however, in recent times, several branded hotels have entered the market and many more are in the pipeline. The assemblage of new industrial and commercial developments of multi-national companies has led to a surge in demand for quality hotels in the city. Resultantly, the room night demand is mainly generated by the Commercial segment, followed by Extended Stay demand coming in small clusters. Going forward, futuristic infrastructure projects initiated by the central and state governments, such as the Delhi-Mumbai Industrial Corridor Project (DMIC), Gujarat International Finance Tech-City (GIFT City), Sabarmati Riverfront and the new Gandhinagar Railway Station, Mahatma Mandir Convention and Exhibition Centre and the Ahmedabad Metro are anticipated to further fuel demand for the Commercial and Extended Stay segments in Ahmedabad. Moreover, mega-events like Vibrant Gujarat and festivals like Navratri, Uttarayan, International Kite festival, Rann Utsav and Ahmedabad Heritage Workshops bring the city sold-out periods, increasing the demand generated from the M.I.C.E. and Leisure segments. Additionally, the Airline segment has witnessed an increase, with passenger movement growing to about 11.2 million in 2018/19 alongside a rise in the aircraft movement by 24% over the previous year. This demand is expected to grow further with the development of a new terminal at the Sardar Vallabhbhai Airport. New Dholera International Airport is also being established in the horizon, owing to the expansion constraints at the current airport.

Figure 1: Ahmedabad | Hotel Demand Segmentation

Source: Hotelivate Research

Ahmedabad’s hotel market has seen considerable growth in supply over the last five years (by 51%); from 1,500 classified hotel rooms in 2013/14 to over 3,000 hotel rooms in 2018, ranging from upper-upscale to economy hotels. Moreover, new supply of around 2,000 branded hotel rooms is expected to open in the next few years, establishing Ahmedabad as one of the major hotel markets in India.

Figure 2: Ahmedabad | Branded Hotel Supply

Source: Hotelivate Research

Currently, the city records an annual average occupancy of 63%, with the marketwide average rate of approximately INR 4,000. Since Ahmedabad is easily accessible from various neighbouring industrial districts like Sanand, Vithalapur, Bechraji, Godhavi and Dholera, demand for accommodation is expected to keep pace with the increase in the supply of rooms. This is evident from the moderate increase in the marketwide occupancy and average rate witnessed in recent years.

With the ongoing and planned infrastructure/commercial projects in Ahmedabad looking promising, coupled with several leisure festivals that are hosted year-round, Hotelivate believes that the city has the potential for new hotel developments in the medium to long term, mainly in the upscale to mid-market positioning. Overall, given the benefits of the current upcycle that will enable demand growth, the marketwide performance in Ahmedabad is expected to maintain a steady momentum.

 

For more information, please contact Radhika Singh on radhika@hotelivate.com

 

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