Hotels are in the pink of health

Leaders of the hotel industry in Bangalore debunk the ‘over-supply’ theory. The theory, put forth by hospitality consultants, is that a larger number of hotel options will make the whole industry take a drubbing, as demand fails to keep pace with supply.

However, there has been improved hotel occupancy in the New Year in the city. “The situation is not as rosy as it was only two years ago,” said Vasudeva Adiga, president of the Bangalore hotels’ association, adding, “It is, however, looking up as the New Year advances.”

Adiga feels that if the government markets India abroad more vigorously, the old status of 80-85% occupancy could be attained. Top-end and mid-rate hotels have registered a fall in the second half of December. But this is owing to corporate travelers shifting to leisure travel instead, “This is usual and global, nothing alarming,” says Adiga.

Huvida Marshall, general manager of The Oberoi, Bangalore, concurs. “The overall business this year-end vis-a-vis December 2008 was definitely better. Bangalore is primarily a business destination. Upscale hotels mainly draw their custom from the corporate sector which works out to be 98% of the business volume. Naturally, the tail- end of the year is a dull period.”

Marshall pointed out that the first fortnight of December recorded footfalls averaging 80% occupancy. It dropped to 45% in the second half. Most star hotels in Bangalore dismissed reports from global consultants that over-supply of hotel rooms will bring down average room rent by 2011.

“No, there is no over-supply as of now,” insists Keshav Baljee, president of the Royal Orchid chain of hotels. “Except the ITC hotel, nothing else has become operational in the last six months.” Baljee sees little reason to fear that more and more upper crust hotels might mean less and less business.  “We draw our main strength from the IT-ITeS custom and they are on the rebound,” he says.

Hotels cater to a niche clientele, and each hotel has its own niche, opines Baljee, revealing that his chain of hotels is in the process of opening new ones in the country. The slack in demand has been on account of the global meltdown, and not over-supply of hotel rooms, Baljee explains.

There are, however, hoteliers who fear that demand might not match  supply. Alex Cherian, front office manger of St Mark’s Hotel said, “At one time, the Bangalore Central area had only 14 high-end hotels. Today, there are nearly 40. Whitefield had only one. Now there are 11. Demand might not keep pace with supply.”

Sunil Kumar, manager, Capitol, said, “We now have occupancy of about 40%; it used to be nearly 70% earlier.” But he saw no cause for fear.