Two out of three premium hotels in the major cities of Kolkata, Pune and Agra are believed to be impacted by the Supreme Court’s judgement of March 31, which bans the sale of liquor along the national and state highways within a distance of 500 metres, CRISIL Research said in a recent note.
Since April 1, 2017, premium segment hotels and roadside liquor vends, which fall within the 500-metre range of a national highway of state highway, have been directed to stop selling or serving liquor.
CRISIL Research, which assessed the impact on 384 premium segment hotels across 12 cities in India, said that 102 hotels stand affected, implying that nearly 27% premium hotels in the top 12 cities will be compelled to stop liquor sales.
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The most significant impact has been in the western Indian city of Pune, where 71% of premium hotels have faced the brunt of the judgement with cancellations in recent upcoming events, CRISIL said. “Demand for premium hotel rooms in Pune is mainly driven by business travellers from sectors, such as IT/ ITeS, automobiles, engineering, defence and education, who typically account for 90-95% of total demand,” CRISIL Research said, adding, “Hotels close to the IT business hubs of Hinjewadi and Kharadi have been the most impacted due to their proximity the Mumbai-Pune expressway and Pune-Ahmednagar road.”
Next major impact is on the eastern city of Kolkata, where 69% of hotels lie along the NH-12. “Most premium segment hotels in Kolkata lie along the NH-12 near Rajarhat and Netaji Subhas Chandra Bose International Airport. Hence, the ban impacts almost 69% of the premium hotels in Kolkata,” CRISIL said in the note.
In the north, Agra, the city of Taj Mahal, is the third-worst hit, with 67% of the premium hotels in the city impacted due to the ban on the sale of liquor. “Sadly most premium hotels in Agra lie along SH-62. The impacted ban will result in a shift of the demand to other hotels in the city creating immense competition,” CRISIL Research said.
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In Delhi NCR, including Noida, Greater Noida and Gurugram, around 25% premium category hotels in NCR have been impacted by the 31st March 2017 judgement. “The hotels lying on NH-8 have been majorly impacted due to the ban. Hotels located in Gurugram and near the Indira Gandhi International (IGI) airport account for nearly 50% of the premium category hotels in NCR,” CRISIL said.
However, in a relief to the hoteliers in the financial capital and the tourist hotspot, the premium segment hotels in Mumbai and Goa have escaped the hit as no major state or national highway pass through premium segment hotels, the report said.
The impact on the hotels would likely be felt on their Food & Beverages sales, also as customers would prefer dining at other restaurants that serve liquor. Another major impact will be on their revenues from meetings, incentives, conferences, exhibitions (MICE) events and weddings, which would shift to hotels that continue to serve liquor. This would further lead to an impact on the demand of rooms at these hotels, which is their main business.