Slowdown dents hotel occupancy by at least 20%

An otherwise bustling coffee shop of one of the leading luxury hotels in Mumbai bore a rather empty look last weekend with only about a handful of people occupying a couple of tables. It was a similar story in Delhi across hotel categories. Even a popular tourist hostel’s dining room in the capital was seen catering to just about 4 or 5 people during its peak lunch hour recently.

Over the past few weeks, hotels are seeing an average drop in business of at least 20%, compared to the same time last year. Although industry experts call this time period as the non-business months, the occupancy rates are hovering at a level of around 50% for most hotels, as against 65-70% in other years during these months.

“If this situation continues for another week or two, it will be a cause of worry,” said Sanjoy Pasricha, vice president-sales and marketing, Leela Hotels and Resorts.

Hospitality companies are attributing this to a variety of reasons, starting with the global economic slowdown, the Eurozone crisis and rupee depreciation to a subdued mood of the business community especially in the telecom and IT sector.

“The BAR or the best available rate is down by 10% compared to last year. This is a time when businesses are developing strategies at the start of financial year, so travel is less. This coupled with the global slowdown has dented occupancy,” said Sudhir Sinha, president, Best Western Hotels. Present in 100 countries, Best Western has 36 hotels in India with 11 more to open by December 2013.

According to industry experts, hotels in Delhi and Gurgaon have been the worse affected compared to other business centres like Mumbai, Bangalore, Pune etc. “The trend is likely to continue. The opening of Aerocity in the DIAL hospitality district by year-end will take a further toll on occupancy and room rates,” a hospitality industry expert said.

In such a scenario, most hotels are looking up to the leisure segment to fill the gap. Online travel company Expedia for instance is seeing hotels coming up with promotional offers for the leisure travellers and for those wanting to cut costs by changing itineraries, hotels are providing with good refund policy etc. “In case of business travel, one cannot juggle with the dates. Most of the times they bring down the category of the hotel by a notch or two to save costs,” said Manmeet Ahluwalia, Marketing Head, Expedia India.