Hotels Had Their Best Run In Four Years Last Fiscal

For the first time in four years, both occupancy and average room rates of hotels in the country have witnessed an increase in 2000-01. During the past four years, when occupancy rose, rates would go down and vice-versa.

The trend was witnessed in most segments of the hotel industry in 10 major cities in the country with the only exception of the three-star category.

Both occupancy and room rates have moved northwards despite considerable new supply coming in the market, according to hotel consultancy HVS International.

In 2000-01, on an average, hotels registered a 3.9 per cent increase in occupancy levels compared with a decline of 2.7 per cent in the previous year.

Average rates in rupee terms increased by 4.8 per cent compared to a decline of 11.8 per cent in the previous year resulting in an overall increase of 8.8 per cent in revenue per available room (Revpar) in rupee terms and 5.4 per cent in dollar terms.

The survey said that as Revpar in 2000-01 increased 8.8 per cent and considering that room supply in the branded segment grew at 15 per cent, the overall room night demand increased by about 23 per cent to absorb not only the new supply but also to reflect the overall growth.

HVS said that all segments of the hotel industry showed improved Revpars except three star category in dollar terms which declined marginally by 0.6 per cent.

In rupee terms, while the compounded Revpars have increased 0.5 per cent for five-stars, 4.8 per cent for four-star and 1.1 per cent for three-star hotels, five-star deluxe segment saw a decline of 2.4 per cent.

Hotels in Mumbai, followed by Delhi, once again had the highest average room rates. Interestingly, the disparity between Mumbai and the other cities has narrowed and is likely to continue for some time. In 2000-01, hotels in Hyderabad clocked a 25.5 per cent increase in room rates over last year. Bangalore registered a 16.3 per cent increase and Goa achieved 12.2 per cent increase.

While Hyderabad (9.9 per cent), Jaipur (9.7 per cent) and Goa (6.9 per cent) clocked highest compounded average growth rate since 1996-97, Mumbai (3.2 per cent), Agra (2.3 per cent) and Calcutta (1.1 per cent) registered a negative growth, it said.

In terms of occupancy, all cities except Chennai registered higher levels in 2000-01, which can be attributed to improved business sentiment, according to the report. Apart from business destinations, leisure locations like Goa (9.2 per cent), Jaipur (8.5 per cent) and Agra (7.2 per cent) have done well.

In what the report terms as "the surprise leader in terms of occupancy increase," Ahmedabad saw an increase of 9.8 per cent, while in Kolkata, another weak market, occupancy went up 7.5 per cent.

The report recommended that hoteliers should refurbish their hotels and carry out property improvements which had been put on the back burner for some time. HVS's estimate is that 101 new branded hotels are under development.

At an estimated room number of 100 rooms per hotel, about 10,000 additional hotel rooms in India or approximately 10 per cent of India's current hotel room's supply is likely to come in during the next 2-3 years.

The report suggested that there exists an opportunity for 4-5 high quality luxury resorts preferably in new locations.