Tariff hike by hotels unlikely this festive season

While hotelliers expect a better occupancy rate, they believe that increasing tariff will be unwise

After an extremely dull first quarter, the hospitality industry is expecting a better response during the festive season though hotels remain cautious about increasing rates due to wide demand-supply mismatch.

The festive season that began with Onam lasts till March and is considered as the peak time in hospitality sector.

"The mood was positive since the declaration of election results, now with economy looking brighter, there has been increase in tourist movement and spending," said Shamsher Singh Maan, Associate Diretor, HVS India.

While hotelliers expect a better occupancy rate, they believe that increasing tariff may not be an option.

" The change in rates primarily depend on the demand and avaliabilty factor, though we are seeing an increase in demand, the number of rooms have also gone up," said Vikram Berry, director of sales, Vivanta By Taj, Dwarka, New Delhi.

According to a recent report by HVS, there are around 103,855 branded hotel rooms and 45,000 are expected to be developed over the next five years.

Berry observed that while the tariffs were raised in the September quarter of last financial year, surplus capacity din't make it suatainable in the long run.

In the last financial year, the overall weighted occupancy across categories increased to 58.9%, a growth of 1.9% over 2012-13; however, ARR (average room rate) dropped by 4.3% over the previous year.

" While we expect a good occupancy rate, there won't be a rise in tarrif," a spokesperson of The Park Hotel, Kolkata said in response to an emailed query, refusing to specify details.

Facing stiff competetion, the premium hotels are coming up with special packages to attract customers during the season.

According to Berry, with the rise in quatity, people are getting a lot of options, so hotels are increasingly focusing on value-added service.

The Park Hotels which belongs to the Apeejay Surendra Group for instance has announced a package which allows customers to avail discount rate at Apeejay-group owned facilities like Oxford Bookstore and Flurys Bakery.

Beside these, dicounts on food and beverages, complimentary dinner, early check-in and late check-out and free extra-night stay are being offered by the premium hotel chains to lure customers.

The hospitality sector contributed 6.2 percent to India's GDP in 2013 and is projected to rise to 7.3 in 2014.