Hospitality sees 64% dip in net profit in Q4FY09: study

Hospitality sector has seen a 64 per cent decline in profitability in the fourth quarter of 2008-09, on account of the global meltdown and the terror attacks in Mumbai last year, according to a study by industry body Assocham.

While on one hand the inflow of foreign tourists came down sharply and the room rates shrunk, there has been a rise in expenses simultaneously, the study found after analysing profitability and cost parameters of hotels.

"The Mumbai terrorist attack, combined with the global slowdown, has severely impacted the bottomline of the Indian hospitality sector to the extent of 64 per cent during January–March 2009," the survey said.

Hotels such as Taj GVK Hotels & Resorts, Jaypee Hotels, Oriental Hotels, Jindal Hotel have registered a decline in net profit in the last quarter of 2008-09.

The total income of hotels registered an average decline of 4.47 per cent in Q4FY09 over Q3FY09. The income from sales also showed an average dip of 4.63 per cent during Q4FY09.

"The borrowing cost of the hotels went up by 51.65 per cent in fourth quarter of FY09, while the total income decreased by 4.47 per cent during the period," Assocham said.

Despite the decline in income topline and bottomline, the cost of hotel industry went up by 20 per cent during fourth quarter of FY09 over the year ago period compared to Q3FY09.