Mumbai - The Comeback City!

Mumbai has witnessed turbulent times again. However, the city keeps moving ahead. What makes Mumbai tick? This article talks about Mumbai’s hospitality market and discusses the demand-supply equation in India’s beloved Comeback City.
Achin Khanna

What makes Mumbai tick? Is it the fact it is India’s largest melting pot? Is it the resilience of its people? Whatever may be the reason, the fact is that Mumbai has an uncanny way of jumping right back onto its feet every time it is knocked down.

26/11 hit Mumbaikars in the ribs! The pain lingers on. The global economic crisis hurt our financial capital more than any other major Indian city. The monsoons paralyze Mumbai almost every year. The stock markets in Mumbai have witnessed some scary troughs in the recent past. However, the city keeps moving ahead - it grows and it prospers!

The hospitality saga in Mumbai is interesting and while still relatively nascent (Mumbai has approximately 10,000 branded hotel rooms; compared to some 85,000 in New York or 135,000 in Shanghai), the growth story will certainly be one for the books.

The year 2008/09 was a mixed bag. While the first two quarters went exceptionally well, the November attacks severely dampened the overall occupancies across Mumbai. The city closed at 64% occupancy, down over 10% from the prior year. Consequently, this year is seeing a correction in room rates. This rate rationalization, however, should help the existing hotels revive the business that they had lost to the unbranded segment in recent years. Overall, while the immediate outlook may not give many reasons for cheer, the good news is that the medium to long term forecast is strong. The Mumbai market is expected to see a revival of sorts in the next 12 to 18 months. While the proposed supply pipeline over the next three to five years is strong, there are several demand generators that are likely to boost demand for quality branded guestrooms across Mumbai.

The Trident BKC and The Westin Goregaon will open their doors for business this year. The Oberoi Nariman Point and The Taj Mahal (heritage wing) are slated for a grand re-opening shortly thereafter. Sofitel BKC, Ibis Andheri, Holiday Inn Saki Naka and the Courtyard by Marriott in Andheri are also expected to follow soon.

The Bandra-Worli Sea Link opened for public use in early July. The bridge will provide much needed respite to the weary travelers who need to go from North to South Mumbai and vice versa, without having to deal with a score of traffic signals along the way. Hotels in both parts of the city are likely to benefit from this development as well.

The ongoing up-gradation and expansion of the Chhatrapati Shivaji International Airport is undoubtedly going to have a direct and positive impact on the demand for quality accommodation in Mumbai. The airport is expected to cater to over 50 million passengers per year by 2025.

Mumbai International Airport Limited is in the process of master planning a large mixed-use development around the Domestic and International airport terminals. This mega development is expected to house several Grade A office buildings, large scale retail, several hotels across all segments and various entertainment options of international fame. A large exhibition and convention center is also likely to be a part of this development. Mumbai is currently starved of quality meeting space. The convention center will establish Mumbai as a MICE destination, which in turn will lead to substantial incremental room-night demand.

As the global economy staggers its way out of this massive recession, India has managed to sustain a respectable GDP growth. It is generally agreed that prospects for the country’s growth remain bright. Mumbai is India’s financial nerve-centre, and most global organizations with interests in the sub-continent are increasingly looking at setting up their regional headquarters in this city. Demand for quality hotel rooms in the budget, mid-market, luxury as well as extended stay space is thus expected to steadily grow.

The slum rehabilitation project had been in the books for several years and has recently been revived. In fact, all slum dwellers in Mumbai, who make up more than 50% of the population, are to be rehabilitated. Several slum dwellers have already been relocated, and the recent relaxation of FSI norms and the availability of TDR in most pockets of Mumbai are additional welcome steps. These initiatives are bound to create several additional parcels for infrastructure and real estate enhancement.

Mumbai as we know it today is thus all set to receive a well deserved facelift. Overall, Mumbai is poised for several exciting developments and the next decade will undoubtedly witness exponential growth in India’s beloved Comeback City.

About Achin Khanna

Achin Khanna is the Managing Director of Consulting and Valuation at HVS South Asia. He is a Member of the Royal Institution of Chartered Surveyors (MRICS). Over the past nine years at HVS, Achin has directed a large number of assignments, performed economic feasibility analyses and large scale portfolio valuations, successfully conducted operator searches and management contract negotiations. He has extensive experience in conducting hotel valuations, both in India and internationally. Prior to joining HVS, Achin spent ten years in the United States working across various roles in hotel operations, revenue management, franchise relations and business development. Achin holds a Bachelor of Science in Hospitality Management from Widener University, Chester, PA, and a MBA from the University of Phoenix, Arizona, USA. Contact Achin at


  1. SwapneelSep 1, 2009

    The article missed one more supply of 5-star hotel Shangri La coming up at new CBD area near Worli.

    • Dear Swapneel, Thanks for your comment. The Shangri La is indeed one of the several hotels under various stages of construction in Mumbai. The article mentions a small set of the overall supply pipeline in the city. Kind Regards Achin

  2. Abhishek RaySep 7, 2009

    Most hotels opening are not in the five star or luxury category. How will this adversely affect the ADR ? Will five star hotels have a branding value anymore and if yes, what would you estimate that to be ? Also, in todays market what is more important -- top line or bottom line ?

    • The proposed supply pipeline across all positionings is strong. While it is true that many mid-market and budget players are either planned or under construction, upscale and luxury products are also steadily expected to enter the Mumbai market. Rate rationalization is very likely. However, this is a welcome measure as it would in-turn help attract demand that had moved out of the luxury and upscale properties due to exhorbidant room rates in recent times. Also, both top line and bottom line have their own role to play in a succesfull business venture. A healthy top line points towards ongoing demand as well as organic growth of the hospitality business in general; while a strong bottom line is indicative of streamlined expenses in a maturing industry. Regards Achin

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