B'lore Hotels face harsh winter

Upscale hotels to see occupancy rates of 40 per cent, mid-scale 25-30 per cent.

With a reduction in business travel for the next few weeks owing to Christmas and New Year celebrations, occupancy rates are set to be bleak for business hotels. Hotels in Bangalore will especially feel the pinch since business travel predominantly drives the hospitality industry in the city.

The occupancy rate for upscale hotels is expected to drop to around 40 per cent from 60-70 per cent for the next few weeks. For midscale hotels, the rate could be much worse hovering at 25-30 per cent from the present industry average of 60 per cent.

According to Cushman & Wakefield estimates, Bangalore has around 3,198 upscale rooms (five star and above), 2,016 midscale rooms (four-star category) and 3,604 rooms in the budget category. Nearly 76 per cent of guests staying in upscale and midscale hotels in the city belong to the corporate profile category and similarly in budget hotels, close to 60 per cent of the guests visit for business purposes.

To sustain business during the time, hotels are concentrating on their food and beverage (F&B) offerings to compensate for low occupancy.

“F&B takes over from rooms during such times. We have a spread of 6 F&B outlets which is of considerable value. From 20 per cent, we expect revenues from F&B could go up to 30-40 per cent in the next few weeks,” said a spokesperson for Zuri which has a five star hotel in Whitefield.

Similar views were expressed by Chander Baljee, CMD of Royal Orchid hotels who said that business would be back to normal by the second week of January. “This is a time when leisure properties do good business while room business goes down in cities like Bangalore and Pune. During such times, F&B restores business. Banquets for celebrating New Year would be popular,” he said.

Along with organising Christmas and New Year parties to boost revenue, hotels are looking at offering attractive offers for group gatherings. Cost-cutting measures are also being explored. “This would be the time to reduce costs. Floors are shut down and all unnecessary expenditure is curbed,” said the manager of a leading hotel in the city. However, not much can be done about fixed costs with or without guests, he added.

No major changes are expected in the average room rates (ARRs) with most players having corrected prices this year owing to recession and to some extent the terrorist attacks on hotels in Mumbai. ARR of upscale properties in Bangalore is estimated to be around Rs 10,500 at present. Globally, the average price of a hotel room fell by 17 percent in the first six months of 2009 according to Hotels.com’s Hotel Price Index.