Fall In Business Travel Increases Travails Of 5-Star Hotels

Is the international business communitys honeymoon with Destination India over? Thats the question being asked by panicky bureaucrats, concerned diplomats and worried businessmen as the political and business environment turns increasingly uncertain.

Even discounting the hyperbole, there are hard facts to show that international businessmen seem to have scratched India off their agendas. According to sources, the commercial service of the US commerce department has been able to piece together only one trade mission so far, compared with the 12-odd missions it organises each year. This has happened for the first time in the past five years. There have been six cancellations of industry-specific trade missions, two of which pertained to franchising and health care. Businessmen have been postponing visits and investment decisions in view of the political instability and policy deadlocks, sources said.

 

The Australian experience is similar. Says Colin Hook, Senior Trade Commissioner, Australian Trade Commission: We have around 60 business visitors to India on an average every month. But we saw the number slip to 23 in January. Although March and April saw an increase, May again fell away.

The UK experience defies the trend, what with John Majors visit and the 50th anniversary celebrations. This year is an exception as there have been a lot of missions and exhibitions, says an official in the British High Commission. And the `Indo-British Partnership: Towards 2000 exhibition coinciding with the Queens visit is still to happen in October.

This growing disillusionment with India is reflected in the unprecedented fall in five-star hotel bookings. Occupancy rates have nosedived to around 40 per cent, a far cry from the halcyon days of 1994-95 when there was 100 per cent occupancy in the peak season, and 80 per cent during the off-season. There has been a definite slowdown in business travel, admits Soni Srivastav, public relations and advertising manager of Le Meridien, which positions itself primarily as a five-star business hotel. Although we do see a downswing during these off-season months, our dull months used to see 80 per cent occupancy. Forty per cent occupancy rates were unheard of.

Says Peter Fulton, general manager, Hyatt Regency, Delhi: We knew we had a tough season ahead. But nobody expected it to be so bad. There have been days when we have seen occupancy of just 48 per cent. A concerned Anjali Chatterjee, communications and marketing manager, Hilton, New Delhi, points out: 1995 was an unbelievably good year with lot of tendering processes underway. We hit a lean period during the May elections last year. The October season just didnt happen. By November, there was panic in the industry. And now we are in a slump.

No wonder discounts have become commonplace. According to market watchers, a 30-40 per cent discount on published tariffs (approximately $275 for a single room) is not unheard of. Our published rates only indicate the maximum well charge, explains Fulton.

In view of the nervous summer they see ahead, five-star hotels may not go in for the annual tariff hike in September-October. Says Fulton: It is possible that there will be no increase in tariffs in September. Concurs Chatterjee: At most, we might compensate for the inflation. Srivastav too does not expect any substantial increase. Although most hoteliers are upbeat about the October-Nov period as international business conferences will take place then, things look bleak on the whole.

Ssources said many US corporates are postponing investment decisions regarding India, hence the trade mission cancellations. A. According to Hook, these days Philippines is hot. India, much as wed like it to be, is not.