No Room for Slow Down in the Hospitality Industry

Forget slowdown jitters and dollar decline, Indian hospitality industry
registered strong growth in 2007-08. Though hotel occupancies in Bangalore,
Hyderabad and Pune dipped marginally owing to over capacity, average
room rates (ARRs) for branded hotels across star categories continue
to witness robust growth in most cities.

As per hotel consultancy HVS Hospitality Services, Delhi and Mumbai
witnessed highest room rates in the country pegged at around Rs 10,200
per night. Bangalore finally saw a marginal correction in room rates.
It recorded a room rate of Rs 10,100, marginally lower than Rs 10,545
that it commanded last fiscal.

Occupancy-wise the country’s commercial capital Mumbai performed the
best, followed by Delhi and Kolkata. While branded hotels in Mumbai
registered an average occupancy of 80%, Delhi was at 78% and Kolkata
at 77.4%. "Overall the occupancies in most markets softened while
ARRs saw a marginal increase. Going forward, we will see correction
in ARRs in next two years. Most of the markets have peaked out in terms
of occupancies though revenue wise this was one of the best years for
the hospitality industry," says Siddharth Thaker, associate director,
HVS Hospitality Services.

Though occupancies were not significantly higher this year, hotels
still managed good revenues due to dearer room rates. Says Raymond Bickson,
MD, The Taj Group of Hotels, "Across board we registered occupancy
of 75%. The RevPar (revenue per room) for this year has been good. ARRs
may soften a bit though overall tourism sector looks strong."

Most branded hotels, especially in five star categories, though have
cause for concern in Bangalore. As unbranded hotels proliferate in India’s
silicon city, occupancies are softening. "While Delhi and Mumbai
properties performed well, occupancy has decreased for our Bangalore
property. The ARR too is not growing. Bangalore will be the focus of
our sales and marketing strategy this year and in fact for most hotel
chains," says Farhat Jamal, COO, The Grand Group of Hotels . The
group at present operates seven hotels in the country and has witnessed
a growth of 22% over last year.

The rupee appreciation, expected to be a dampner on revenue, didn’t
make any significant impact after all in 2007-08. "Yields were
not impacted primarily as most hotels had started quoting in rupees
in the second half of the year," says Peter Leitgeb, president
& CEO, The Claridges Group of Hotels.

Photo: Luxury hotel room in Hyderabad, India by Fredericknoronha, licensed under CC BY-SA 4.0, via Wikimedia Commons.