Come October, room rates for all star properties are set to soar by 10% due to increased tourist inflows on account of business travel, festival season and the upcoming F1 in India.
As the industry grapples with slowdown in sectors such as auto and real estate, hotels are staging a different tale by piggybacking the spurt in demand for rooms. For last two consecutive years hotels avoided increasing room rates owing to the downturn in the hospitality industry.
According to the hospitality consultancy HVS India, average room rates in top hotel markets will increase by 8-10% compared with the corresponding period last year. ?Both business and leisure travel are registering strong growth. So hotels will hike room rates for the October to January period. Last two years didn?t really see any increase in average room rates because of the economic slowdown, but this year as occupancies are strong hotels are hiking rates,? says Kaushik Vardharajan, managing director, consulting and valuation service, HVS India.
In last 12 months itself the demand for rooms in major markets has gone up by 20-45%. The two markets that might be an exception to this trend are Pune and Ahmedabad because of the oversupply in these markets, Vardharajan adds.
Hoteliers agree that the demand is strong and the euro crisis or the fear of a double dip recession should not impact room rates. Hotel Leela?s managing director and vice-chairman Vivek Nair says that they are expecting a 15% growth in the number of bookings this season. Sarovar Hotel?s managing director Ajay Bakaya feels that there won?t be a dramatic increase, but a 8% increase in average room rates is projected.
?This financial year looks good and has been quite stable till now. The good thing is we will be able to retain occupancies and the metros will register occupancy rates of 70% and upwards,? he adds.
So if you still haven?t booked your holiday, chances are you will have to shell out extra bucks to book a room in a star property. ?Room rates are already moving northwards. They increased in September and October will again see a rise of almost 20% compared with previous months. In Delhi during the F1 the rates will be four times the average. We are seeing strong bookings for Rajasthan, Kerala and of course Goa, too,? says Sabina Chopra, co-founder and EVP (operations), Yatra.com. Sabina adds that airfares for these destinations are more stable when compared with room rates.
Despite the increase, industry experts say room rates will not touch the highs of the heyday of the pre-slowdown period. Of course, some rooms in the national capital region are commanding a whopping R40,000 a night during the F1 weekend, but that is an exception.
However, some impact of the inflation and the Euro crisis might be felt later if not immediately by the hotel companies, cautions Bakaya.
