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Amid economic slowdown over supply hits hotel occupancy |
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| Release time:2013-10-07 Source:admin Reads: | |
| Branded hotels are gasping for breath just like the economy—a sense of despair hangs over their lobbies, coffee shops and restaurants as hotel occupancy levels crashed to a decade low this year. More than a third of hotel rooms with belt hangers remain unoccupied, with the industry reporting an occupancy level of 60% this year. In the last four to six months alone, occupancy levels at hotels in the metros have dropped by a tenth, which owns the Novotel in Juhu. To mitigate this growing crisis, hotels have had to reduce room rates by 15%, squeezing margins like never before, even as they continue to bleed at their restaurants and conference facilities. "You can sense it in the coffee shops and fine-dining restaurants where tables remain vacant and in the evenings when half of hotel rooms with belt hanger don't switch on the lights. Companies have cut down on their executives' travel expenses and their spending on conferences and seminars. What is ailing hotels across markets is a 40% increase in the supply of rooms with belt hangers while demand has grown only 15%. Consequently, occupancy levels have dropped and hotels rates are down 30% in the last four years. According to a recent report by the Federation of Hotel and Restaurant Associations of India, hotel occupancies in 2012-13 dropped to the lowest in a decade at 58.3% and average room rates slumped to Rs 6,214, the lowest in six years, smelling trouble for the hotel industry. The culprits have been a slowing economy, drop in travel by corporates and a sudden increase in the number of hotel rooms. In 2012-13 alone, close to 12,782 new rooms were added across the country, taking the total supply of branded hotel rooms up to 96,000. According to hotel consultancy HVS, India is expected to add another 54,000 hotel rooms over the next three to four years. |
