Want a room? Wait for a year!

With a severe crunch in the number of hotel rooms, guests are finding it tough to get bookings at even vastly inflated rates.

Just yesterday, an ecstatic Peter Leitbgeb, president of Leela Hotels, dashed off a congratulatory letter to his employees in the Bangalore hotel.

The reason: For two weeks the Leela Palace has hit average room tariffs of Rs 20,000, — a record of sorts. Says Leitbgeb: "Our average room tariffs in 2005 were 35 per cent higher than the previous year, and I see this being sustained."

It's a phenomenon that is being replicated across all cities — from major metros to smaller cities like Amritsar, Ahmedabad and Vizag, or tourist cities like Jaipur and Agra. With very few rooms being added, customers are in for a serious crunch. And they'll have to pay through their nose to get rooms.

In its Amritsar property, Sarovar Hotels — which manages 32 hotels across the country — has seen tariffs go up by over 15 per cent. With no new hotels on the horizon, there is a gap of over 300 rooms in this small city.

In Jaipur, Ajay K Bakya, executive director of Sarovar, which manages a property there, has hit average occupancies of 85 per cent, and he says the city has a shortage of a whopping 1,000 rooms.

And St Marks, a business hotel in Bangalore, warns customers that it requires a three-week notice for booking rooms. At ITC Maurya Sheraton in Delhi, which hit occupancies of 96 per cent in November, it's booked back-to-back in February.

At a macro level, according to hotel consultancy company HVS International, there are only 1 lakh authorised

branded hotel rooms across the country. While construction is going on for an additional 40,000 rooms, most of them will come into the market only in 2007/08.

Says Manav Thadani who heads HVS's operations in India: "While the overall demand for hotels is going up by 10-15 per cent annually, there is a large demand/supply gap which will only widen."

For instance, 5,000 rooms will be added in 2006, another 10,000 in 2007, while the rest will only become available in 2008. As a result, 2006 itself will be undersupplied by 5,000-10,000 rooms.

Mumbai has 8,000 rooms, and only 200 more rooms will be added to the market in 2006, so the shortage will worsen in a market growing by 15-20 per cent (requiring between 1,000-1,600 new rooms).

In Delhi (which has 6,000 rooms) except for the opening of the Shangri-La, there is little new stock on the horizon. HVS says 400 rooms will be added, but demand will grow by 10-15 per cent, requiring an additional 800-1,000 rooms in the city.

But hotel companies that have seen their stick prices as well as their bottomlines soar are not complaining. The shortage has helped hotels hike up rates.

Average daily rates in cities like Bangalore, Chennai, Goa and Mumbai between April-August 2005 went up between 16-23 per cent to as high as 40 per cent in Hyderabad and 46 per cent in Delhi. Leela has hiked rates in Goa and Mumbai by 35 per cent.

But will the party last? Most hotel experts expect the market will grow by 15-20 per cent for at least the next few years. So, to answer that, yes, for now the gravy train will continue to roll.