South India may soon see a plethora of star category hotels as skyrocketting land prices coupled with high power tariff rates and lack of skilled manpower force the developers to re-think their business model. The hotel developers here now think that, it makes more economic sense to build a star hotel with higher room tariff, to break even in the shortest possible time. Currently the average spend per room ranges from R15 lakh to R75 lakh.
The South India Hotels and Restaurant Association (SIHRA), the apex body of the owners of hotels and restaurants in the South, apparently has formed a clear view that, in the prevailing situation in south, an emerging tilt towards star category hotels, is very much in the context.
Said T Natarajan, honorary secretary, SIHRA, ?You have to pay a bomb to get a land in Chennai, similar is the case across south India. Hotel developers are happier to have a star hotel which fetches them R12,000 to R15,000 in room tariff, rather than to build a budget or low-end hotel which will have a tariff of somewhere near R3000 crore?.
The hotelier?s body has taken up the issue of land issue with the Parliamentary Standing Committee which had a sitting in Chennai in June. They demanded that government should lease out land parcels for the development of hotels, for which it can take a share from the revenue earned..
According to hoteliers, the high power tariff is also eating into their bottom line. Sudheer Nayar, secretary general, SIHRA says, ?Close to 12% to 15% of our turnover is being utilised to pay our power tariff as the government had not given us industry status. We come under high tension (HT) commercial power category and the rates are very high. Though we had thought about alternate energy sources like solar and wind power, we realised that it is more expensive considering the issues involved in the production and transmission?.
According to the hoteliers, the availability of skilled manpower too is telling on their projects as well as management of services. ?Poaching is rampant and the competition makes things more complicated,? said Natarajan. A total of 178 hotels with around 14, 500 rooms will be added to South India?s 600 odd hotels by 2012, he added
At the 60th annual general body meeting of SIHRA,Syama Raju, a well known hotelier from Bangalore was elected as the president. The other office bearers include Jose Dominic, vice president for Kerala region, K Murali Rao, vice president for Tamil Nadu & Pondicherry, GV Krishnaiah, vice president for Andhra Pradesh, KLRamanatha Bhat, vice president for Karnataka, and T Nataraajan was elected honourary secretary of the association.
Syama Raju said that the industry was going through a bad phase because of several reasons like high electricity and water charges, and non-availability of skilled labour. He wanted the governments both at the Centre and states to take a pragmatic view and bring in legislation that would help the industry and spur growth.
GV Krishnaiah said that the Telengana issue had virtually crippled the hospitality industry in Andhra Pradesh. The occupancy in every star hotel had fallen to 30% while the restaurant business has crashed to almost half.