mumbaibangalore compact hotels with modest rooms and unostentatious common areas are fast becoming a norm a sharp escalation in real estate prices has forced hotel chains and developers to think small so the next time you check into a hotel dont be surprised to find a smaller room tiny lobby or no shopping arcade on the premises industry executives say pointing to the near 50 rise in property prices over the past five years we have spent a lot of time on designing compact models for newer properties which help cut down on building cost operational cost and energy cost the design is such that our new hotels can fit in a smaller area yet they are more efficient says douglas martell vpoperations intercontinental hotel group ihg southwest asia ihg has designed a single centralised kitchen in its hotels instead of three or more kitchens to make effective use of space as well as reduce cost of labour backend areas in the hotels have also been minimised says martell with these measures we can save around 1520 on construction cost and even longterm management cost of the hotels cost of land accounts for more than 50 of the project cost of any new hotel in an ideal scenario land cost should not be more than 3040 of the project cost says akshay kulkarni regional director of hospitality south and southeast asia at cushman and wakefield kulkarni expects that the percentage will rise further as upcoming projects include more midmarket but larger inventory projects on expensive land parcels accor indias budget brand formule 1 has compact rooms of just 135 square metre each with a private bath and working desk compact rooms help optimise the real estate value and offer a room at subrs 2000 per night says vinay gupta vpasset management at samhi which has a joint venture with accor india and a 60 ownership interest in 15 formule 1 hotels in india samhi also has a joint venture with marriott international to develop fairfield by marriott branded hotels in india gupta says that the recently opened fairfield by marriott hotel in bangalore has a smaller lobby which gives it a competitive advantage over other hotels hotels are also increasingly outsourcing services such as laundry bakery food and beverage etc to save costly space midmarket chain keys hotels has outsourced its laundry and bakery services back of the house and fb are the two areas that need special focus for effective use of real estate both laundry and bakery services have a wellevolved outsourced industry and we leverage this says sanjay sethi md ceo of berggruen hotels which owns the keys hotels brand the hotel chain has seen its cost rise from rs 24 lakh per room a few years ago to rs 30 lakh keys hotels has also reduced import of construction material and started buying local furniture for its new properties hotel chains are incorporating more revenueearning outlets in their new properties by doing away with