The average occupancy for January has nosedived 58% year on year, while average room rates have fallen by about 14% according to a news report by DNA.
Though business performance figures are better than December 2008, post 26/11, the data is disappointing according to the Citi analysts Ashish Jagnani and Karishma Solanki who expect the occupancies to remain muted for the next couple of years. "Our forecast is that occupancies will decline to 63-66% in the next two fiscals compared with 72% in the last fiscal," they said.
"January traditionally forms part of the peak business season for hotels and average occupancy falling by 21% compared with a rise in 79% in January 2008 along with ARRs down 14% across India does raise downside risks to earnings. Bangalore and Pune reported the least occupancy for the month at 49% and 43%, respectively, with Mumbai at 54%," Ashish and Karishma said.
"Occupancy levels are much lower in hotels across the country and might further decline in the coming months if market conditions do not improve. Hotels have also brought down their room tariff significantly to fight the economic slowdown and slump in business," says M P Purushothaman, President of FHRAI.
"Source markets in the west have dried up significantly and that is taking a toll on the arrivals thereby impacting business. This apart, companies themselves have changed their definition of value for money with executives being asked to downgrade their choice of hotel accommodation when travelling. As a result, luxury and upscale hotels are forced to further discount their room rates in several markets across the country," said a hotel chain executive.
More international chains are looking to enter India and existing chains are expanding too. Room rents, therefore, will remain under pressure over the next two years, conclude the duo from Citigroup. |