This is a sharp drop of more than 30% as compared to last year when there was no room available in all star category properties across the country. This augurs well for the consumer who can expect to pay less than half of what he would have paid last year. The tariffs are expected to go down further by another 15-25%.
One 5-star hotel has reported a cancellation of 2000 room nights during the next quarter which normally is peak occupancy period due to a myriad of national and international conferences. Further cancellations are expected.
This is quite a contrast from a couple of months ago when Lehman Bros. collapsed, signifying a dark period ahead. Most hotels had bravely maintained during the following few weeks that they were optimistic of high occupancy in India despite the meltdown. That was before 26/11 Mumbai terrorist attack that opened the floodgates of cancellations with most counties issuing negative travel advisories, with no respite in sight.
Ranjan Bhattacharya, Managing Director of the budget Country Inns & Suites reportedly said, 'We expect a 30% decline in room tariffs as compared to last year. For example, in Delhi, tariffs are expected to be slashed to about Rs 6,000 to Rs 9,000 from about Rs 12,000 to Rs 15,000 a year back. With more rooms coming in, average rates and occupancies will be expected further.'
Early this year, the sector made a perfect start with the government announcing special five-year tax holidays for setting up of two, three and four-star hotels. Investments worth Rs 340 billion by about 25 companies entered the industry from the existing hospitality groups and new real estate player entrants according to a newspaper report.
K B Kachru, country head, Carlson Group (owner of Radisson, Park Plaza etc.) is reported to have admitted, "Hotels in the metropolis are seeing a slump in bookings for this holiday season as compared to Christmas and new year last year due to negative sentiments prevailing in the backdrop of the economic meltdown and terror attacks. There has been a 25-40% dip in major hotels. Big hotels have suffered more as they have more rooms to fill."
According to industry sources, hotels are already reducing their tariffs. Though unwilling to talk about a cut in room tariff, several travel houses are reported to have informed ET, admitting that they had recorded a significant drop in travel bookings of the both leisure and corporate.
In fact, an average room in Delhi that was available for Rs 18,000 to Rs 22,000 last year now comes at a rate of Rs 10,000 to Rs 12,000. The downtrend is not confined to Delhi and metros only. The all-India occupancy in last two months touched 50% to 65% from 85% mark for the first time this year, according to the report.
The average room rate (ARR) in Delhi was around Rs 12,000 in April-September this year but is down to Rs 10,200 according to one hotelier who did not wish to be quoted. Similarly, a hotel room in Mumbai, which would earlier cost around Rs 13,000 is now available at closer to Rs 10,000. In the past three months, ARR in Bangalore, Kolkata and Hyderabad have also dropped to around Rs 10,200, Rs 6,700 and Rs 5,500, respectively.
"The industry could face rate consolidation in the coming year. The rates were not slashed when the contracting season began from October 2008. But the impact of recent incidents are visible, with occupancy coming down and the impact of the same would be visible on their revenues in second quarter of 2009," says Tarun Thakral, COO of Le Meridien.
Industry experts claim that another reason behind this fall is that companies are cutting their travel budgets to deal with the slowdown. However, majority of the hotels are planning to shift their strategy to increase occupancy and concentrate on domestic tourists and corporate travellers who are increasingly staying at company guesthouses, and doing more of day travel thus skipping staying at hotels." This would of course mean that hotels would have to live with lower room tariffs.
Meanwhile, hotels are also being aggressive in marketing their banquet facilities as well. Recently, a 5-star deluxe hotel offered a Guidalberto 2004 (the 'second' label of Tenuta San Guido, makers of the iconic Sassicaia) at the house wine/ banquet rates to keep the guests happy, significantly lower priced than even the Indian wines they sell during the times of prosperity. Their rooms are available for less than half the price they were charging last year-whenever they had them available!
Now only if they would consider decreasing the menu and banquet prices down to make consumers' fantasies come true! |