Hotel tariffs in state likely to fall by 2-3%

With the infrastructure status to hospitality industry for three-star category and above resulting in monetary benefits, hotels in Gujarat are set to witness a tariff correction of 2-3 per cent.

"Despite addition of 1,000 rooms in last one year, almost all hotels, especially of three-star category and above are still enjoying a 60 per cent occupancy rate. This means that while occupancy rate may have not moved up but markets have grown. Also, monetary benefits from the government for three-star category and above have also been an incentive," said Rajesh Sinha, vice president (west zone) of St Laurn Hotels.

Currently, in Gujarat, a three-star category hotel offers a 2,000-2,500 per room tariff which will come down by 2-3 per cent, said Sinha. "Input prices were rising so much that the government had to intervene. Now with reduced input costs in terms of loan interest rates being an incentive and hotels in Gujarat will see a tariff correction of 2-3 per cent," he added. Even on its part, the apex body of hotel and restaurant associations, Federation of Hotel and Restaurant Associations of India (FHRAI) has affirmed that the hotel tariffs may go down. "Infrastructure status to hospitality industry under the RBI's Infrastructure lending list would mean bank loan repayment periods will be extended to 10 -15 years and the interest rate would settle around 3-4 per cent compared to 12-13 per cent now. When the interest burdens are reduced, tariffs may come down by 2-3 per cent." said Kamlesh Barot, president of FHRAI.

Meanwhile, the industry body is lobbying to get the same benefits made available for hotels below three-star category. In Gujarat, there are over 25,000 hotel rooms under the star-category. Industry players estimate another 20,000 rooms under the unorganised vertical in the state.

"We were given infrastructure status in this Budget but it only covers 5 per cent of our hotels. The remaining 95 per cent will not enjoy infrastructure status. We have requested the Government to provide this status to the entire segment. We will then be able to compete with the rates at which foreign hoteliers operate," said Barot.