Branded Hotels More Profitable: Hvs International

Chain-affiliated or branded hotels are 2.7 times more profitable then independent hotels on a per available room basis, says a survey conducted by HVS International.

"Though the chain-affiliated hotels registered lower occupancy of 48.4 per cent compared with 57.5 per cent in the case of independent hotels in 2000-2001, they clocked a higher average room rate of Rs 3,459 as compared with independent hotels with an average rate of Rs 1,308," the survey disclosed. It added that this resulted in a revenue per available room (Revpar) of Rs 1,674 for branded hotels compared with a Revpar of Rs 752 for independent hotels.

The gross profit, after deducting management or franchising fee on a per available room basis, therefore, worked out to 2.7 times more in case of branded hotels, HVS managing director Manav Thadani said. He added that it was partly because all chain-affiliated hotels were in a higher star category with higher rack rates.

The survey said the domestic business traveler comprised 42.6 per cent of the independent hotel market. Foreign guests comprised 45.3 per cent of the branded hotel market as against 21.6 per cent of the independent hotel market.

The annual Indian Hotel Industry Survey was commissioned by the Federation of Hotels & Restaurants Association of India (FHRAI) for the fourth successive year. Conducted by HVS International and sponsored by CNN, the survey 2000-2001 covers data from over 1,103 member hotels covering 59,330 rooms in 19 cities across India.

The survey also disclosed that 2000-01 marked the first year of improvement in hotel performance over the previous three years. "If it had not been for the September 11 terrorist strikes in the US, the current financial year would have witnessed further improvements," Thadani says. He added that this year the hotel industry has witnessed a fall of 20-35 per cent in revenues.

Thadani said the hotel industry is likely to see a recovery some time in the middle of the year as long as there are no other major issues, terrorist strikes or a war at the border. "The recovery if it comes will be mixed with markets like Delhi, Bangalore and Jaipur benefiting, with those in Mumbai, Calcutta struggling due to over supply," he said.

The 2000-2001 study says that Chennai was the market leader with 75.1 per cent occupancy levels. Most southern cities like Bangalore (72.1 per cent), Hyderabad (71.4 per cent) and Kochi (68.2 per cent) also achieved high occupancies. New Delhi similar to last year maintained its position at the top with an average room rate of Rs 3,911. Mumbai was the second highest at Rs 3,591.