A report by the hospitality industry consultant HVS International says occupancies in budget hotels went up significantly in 2005-06, as five-star numbers dipped, reports CNBC-TV18.

Checking into a five-star hotel may be slipping out of reach for many because average room rates have risen by over 26% and crossed Rs 5,000 a night. So travellers are opting for three- and four-star accommodation, which comes for Rs 2,000 to Rs 4,000, even after tariffs rose 23%.

It's hardly surprising then that budget hotels posted the highest occupancy growth of 8.3%, against the traditionally faster growing five-star segment, which dipped 1.1%. Experts say that may be because the highest rate rises also came in that segment.

India has about 7,500 five-star rooms and 5,500 three star rooms. With 32,500 rooms in star hotels, India is grossly under served. Experts say high prices and a short supply of rooms will make India an expensive hotel market and dampen the growth of tourism.

In the next two to three years, India will also face a manpower crunch, which could strain the bottomline of hotels. Estimates suggest in the next five years India will need 138,000 more trained employees in this sector.

In the short run, industry players predict that room rates will harden. And over the next five years about 53,000 more rooms will be added, stabilising rates. Most of this new capacity will come in the mid-market category.

For this and more hospitality industry stories, go to http://www.domain-b.com