Hotel room rates slide on back of attacks, recession

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A whole host of issues like global recession and the recent terror attacks have made hoteliers a disappointed lot. They had expected a recovery in room rates in January but instead have seen rates fall by 15-20%. CNBC-TV18's Neha Pandey reports.

  

For the Indian hotel industry, the bad news is far from over. After the global economic meltdown and the terror attacks, there aren't many takers for Indian hospitality. Falling occupancy rates are giving hoteliers sleepless nights, and industry-wide room rates have fallen sharply over the last month alone and more so for luxury hotels.

 

Chender Baljee, CMD, Royal Orchid Hotels said that there has been a 10-15% dip and a 25-30% dip in luxury hotels.

 

Anil Madhok, MD, Sarovar Hotels, says, "They are down to about 70-80% in their occupancies. Rates that were at Rs 15,000-16,000 last year are down to about Rs 12,000 now and those that were Rs 12,000 are down to Rs 9,000.  

 

Businesses in bigger cities like Mumbai, Delhi and Hyderabad have been hit harder than in smaller cities like Pune and Indore. Occupancy rates in metros have fallen 25-40% but cost of operations is higher.

 

Vivek Nair, VC and MD, The Leela Kempinski, says, "Costs have gone up substantially over the last year primarily because the heat, light and power and the payroll costs are going up. So that's had an effect on the gross operating profit of the industry."

 

Experts say there are a few positive indications - for instance, the real estate slump has helped because supplies have fallen. But they say a recovery in room rates may be evident only by September.