Hotels reduce tariffs to enhance occupancy
Updated: Mar 28, 2013 12:40:28pm
New Delhi, Mar 28 (KNN) Most hotels have had no option but to reduce tariffs despite reduced occupancy and increase in operational costs, owing to inflation and interest rates. Clearly, the hospitality industry as all other sectors has experienced the impact of the economic slowdown.
Confirming the move, Senior Vice President, Sarovar Hotels Private Limited, Pradeep Kalra said, “The hospitality sector is feeling the pinch of economic slowdown with the industry assuming a revenue loss of over 15 – 20 per cent by the end of the current fiscal year against budgets.”
Given that the tourism industry growth has fallen sharply in the past two years, the hospitality industry, he reasoned, is bound to be affected. Where dynamic pricing was possible through electronic channels and partner Online Travel Agents (OTAs), the corporate industry was following the principle of rationability.
The average room realization at Sarovar Hotels, a mid-segment hotel group has gone down from 2 -10 per cent. “Our dynamic pricing has seen downward correction, impacting overall room realization. Further, contracts have been revised selectively and ad – hoc rates are also being offered,” Kalra explained.
Sarovar Hotels had taken the initiative of offering pre – purchase deals under a special promotion called “MEGAPROM”, where rooms that can be utilized between April and September, 2013 were being sold at preferential price on the Sarovar website prior to March 2013.
The Indian hospitality industry saw a 15-20 per cent drop in tariffs in 2012 due to the global economic slowdown and an increase in supply, knocked down further by a surge in air fares.
According to a newspaper report, the net income for hotels in the country dipped by 3.1 per cent during the year, even though the topline improved by 7 per cent over the previous year, on account of increased overhead costs and high borrowing costs.
Expressing the sentiments of the industry, “The year 2012 was certainly uniquely challenging with our industry having to contend with the adverse impact of sluggish growth in the Indian economy, a tepid economic recovery in the US and the financial crisis in the euro zone, said Secretary General, Federation of Hotel and Restaurant Association of India, MD Kapoor.
However, according to industry experts, occupancy levels remained unaffected at about 60 per cent. The dampener perhaps came in the form of fresh supply which significantly outpaced incremental demand.
In the meantime, the Ministry of Tourism has been hoping that foreign tourist arrivals in India would double to 12 million within the 12th Plan period. For that to happen, the industry would need an additional 1,80,000 hotel rooms, according to Kapoor. (KNN)
Confirming the move, Senior Vice President, Sarovar Hotels Private Limited, Pradeep Kalra said, “The hospitality sector is feeling the pinch of economic slowdown with the industry assuming a revenue loss of over 15 – 20 per cent by the end of the current fiscal year against budgets.”
Given that the tourism industry growth has fallen sharply in the past two years, the hospitality industry, he reasoned, is bound to be affected. Where dynamic pricing was possible through electronic channels and partner Online Travel Agents (OTAs), the corporate industry was following the principle of rationability.
The average room realization at Sarovar Hotels, a mid-segment hotel group has gone down from 2 -10 per cent. “Our dynamic pricing has seen downward correction, impacting overall room realization. Further, contracts have been revised selectively and ad – hoc rates are also being offered,” Kalra explained.
Sarovar Hotels had taken the initiative of offering pre – purchase deals under a special promotion called “MEGAPROM”, where rooms that can be utilized between April and September, 2013 were being sold at preferential price on the Sarovar website prior to March 2013.
The Indian hospitality industry saw a 15-20 per cent drop in tariffs in 2012 due to the global economic slowdown and an increase in supply, knocked down further by a surge in air fares.
According to a newspaper report, the net income for hotels in the country dipped by 3.1 per cent during the year, even though the topline improved by 7 per cent over the previous year, on account of increased overhead costs and high borrowing costs.
Expressing the sentiments of the industry, “The year 2012 was certainly uniquely challenging with our industry having to contend with the adverse impact of sluggish growth in the Indian economy, a tepid economic recovery in the US and the financial crisis in the euro zone, said Secretary General, Federation of Hotel and Restaurant Association of India, MD Kapoor.
However, according to industry experts, occupancy levels remained unaffected at about 60 per cent. The dampener perhaps came in the form of fresh supply which significantly outpaced incremental demand.
In the meantime, the Ministry of Tourism has been hoping that foreign tourist arrivals in India would double to 12 million within the 12th Plan period. For that to happen, the industry would need an additional 1,80,000 hotel rooms, according to Kapoor. (KNN)
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