Hotel Rooms Costlier By 2.7%: Study
The Indian hotel industry has experienced a drop in hotel occupancy from 52.2 per cent in 1997-98 to 49.7 in 1998-99, while average room rates in the same period increased by 2.7 per cent in 1998-99, according to Pannell Kerr Forster Consultants (PKF).
The industry showed an inability to manage departmental operating expenses such as rooms, food and beverages, and telephones that rose to 10.2 per cent during 1998-99, the PKF survey says.
"Undistributed operating expenses, including administration, marketing, operation and maintenance were uncontrolled which rose to 10.9 per cent. As a result, operating profit recorded a staggering fall of 20 per cent from 40.9 per cent to 33.3 per cent," it says.
The survey draws some important conclusions. Food sales have shown a growth of only 0.1 per cent, reflecting the supply and popularity of independent restaurants in many Indian cities as well as consumer resistance to the exorbitant pricing and tax levels at in-hotel restaurants.
Telephone revenue has also shown a fall of 8.7 per cent, reflecting the increasing use of e-mail and mobile phones, the survey says.
Commenting on the results, PKF India chief executive officer Uttam Dave said, "The writing is clearly on the wall - in the changing market environment in India, unless the industry demonstrates an ability to drastically cut costs and improve productivity, many hotels will soon find their very existence threatened."
"There must be a paradigm shift towards a value proposition to the consumer and the industry must reinvent itself in terms of product, service and pricing. The government too must play its part by rationalising taxation, which in some cases is as high as 40 per cent," he added.
The survey included the majority of chain hotels in the country, and the qualified independent hotels. "The result of the survey has been drawn from the audited results of participating hotels from almost all major chains and key independent hotels," Dave said.
The survey also found the average achieved room rate has gone up to Rs 2,756.14 in 1998-99 from Rs 2,683.81 in 1997-98 while average daily rooms yield has decreased from Rs 1,401.22 in 1997-98 to Rs 1,370.94 in 1998-99.
It also reveals that average number of rooms per hotel has decreased from 94 in 1997-98 to 92 in 1998-99, whereas the decline in double occupancy for the period is from 40.6 per cent (1997-98) to 36.8 per cent (1998-99).