The high and rising inventory coupled with weak global and domestic economic environment has resulted in a decline in domestic hospitality industry in fourth quarter of fiscal 2012-13. Hotels in Gujarat, however, hope the first quarter will result in some growth despite holiday season.
"Ahmedabad, and Gujarat in general, is witnessing a rise in inventory by 5-7 per cent. More and more properties are being added which has forced the industry in the state from not hiking the tariff. Plus, discouraging economic environment has resulted in decline in hospitality business in Gujarat," said SP Jain, CMD of Pride Group of Hotels which has a 164-room property in Ahmedabad.
Though the months of January and February witness some of the highest levels of growth in room occupancy, Gujarat and much of the western part of the country saw either a status quo or decline in the numbers by 10-15 per cent.
According to industry players the fall in occupancy rates had also to do with cut in business travel by corporates.
"Business somehow flattened in the January-March period. Corporates also cut down on business travel and day trips. Add to that, several new properties were added, taking the room inventory levels higher. This led to de-growth in business for the western region," said Malvinder Narang, secretary general of Hotels and Restaurants Association of Western India (HRAWI).
Even bigger hospitality groups like ITC faced the heat of weak economic scenario. Announcing its its fourth quarter results for fiscal 2012-13, ITC Group stated in an official communique that slow down in tourist arrivals as well as rise in room inventory affected the industry. "While growth in foreign tourist arrivals slowed down to 2.8 per cent during the year versus 9.9 per cent in 2011-12, domestic air travel recorded de-growth. Industry performance was also affected due to the significant increase in room inventory in some of the key domestic markets. While the company's Hotels business maintained its leadership position in terms of operating margins, Segment Results were adversely impacted largely by the relatively weak pricing scenario and the gestation costs relating to ITC Grand Chola, which commenced operations in September 2012," the communique stated.
"Ahmedabad, and Gujarat in general, is witnessing a rise in inventory by 5-7 per cent. More and more properties are being added which has forced the industry in the state from not hiking the tariff. Plus, discouraging economic environment has resulted in decline in hospitality business in Gujarat," said SP Jain, CMD of Pride Group of Hotels which has a 164-room property in Ahmedabad.
Though the months of January and February witness some of the highest levels of growth in room occupancy, Gujarat and much of the western part of the country saw either a status quo or decline in the numbers by 10-15 per cent.
According to industry players the fall in occupancy rates had also to do with cut in business travel by corporates.
"Business somehow flattened in the January-March period. Corporates also cut down on business travel and day trips. Add to that, several new properties were added, taking the room inventory levels higher. This led to de-growth in business for the western region," said Malvinder Narang, secretary general of Hotels and Restaurants Association of Western India (HRAWI).
Even bigger hospitality groups like ITC faced the heat of weak economic scenario. Announcing its its fourth quarter results for fiscal 2012-13, ITC Group stated in an official communique that slow down in tourist arrivals as well as rise in room inventory affected the industry. "While growth in foreign tourist arrivals slowed down to 2.8 per cent during the year versus 9.9 per cent in 2011-12, domestic air travel recorded de-growth. Industry performance was also affected due to the significant increase in room inventory in some of the key domestic markets. While the company's Hotels business maintained its leadership position in terms of operating margins, Segment Results were adversely impacted largely by the relatively weak pricing scenario and the gestation costs relating to ITC Grand Chola, which commenced operations in September 2012," the communique stated.