August proves inhospitable for hotels

August wasn’t a very good month for hotels.

Crisil Research, in its latest compilation of hotel business performance for the eighth month of the year, said revenue per available room (RevPAR) across key markets is down by 30 per cent as compared to previous year.

The calculation was based on RevPAR data from premium hotels in six cities — Mumbai, Delhi, Kolkata, Pune, Bangalore and Goa.

“RevPAR in these cities fell by 30.2 per cent i.e. from Rs6,400 in August 2008 to Rs4,400 in August 2009. Similarly, average room rates (ARRs) also edged lower by 25.7 per cent year-on-year to Rs7,400 in August 2009, whereas occupancy rates (ORs) declined yoy from 64 per cent to 60 per cent,” said Sridhar Chandrasekhar, head of research at Crisil.

On the scenario in the coming months, Chandrasekhar said the uptake will not be very significant. “October to February is generally good for the industry. However,
a clearer picture will arise only after we compare the figures with numbers from the previous year,” he told DNA.
 
Pune witnessed the sharpest decline in RevPAR, which fell 58 per cent (yoy) to Rs2,000.

Hyderabad hotels suffered equal heartburn, with RevPAR falling 42 per cent (yoy) to Rs2,800.

“Bangalore, however, showed a relatively lower decline in RevPAR on account of some revival in demand,” said Karishma Shetty and Sudip Mukherjee, analysts at Crisil Research.

The report also pointed out that cities like Pune, Hyderabad and Ahmedabad registered the sharpest decline in occupancy rates.

Occupancies in Pune fell to 33 per cent from 61 per cent in August 2008. “Pune witnessed substantial cancellation in bookings due to HINI influenza,” the analysts said.

Hyderabad saw a decline to 46 per cent from 70 per cent in August 2008, while Ahmedabad hotels saw occupancies fall to 51 per cent from 65 per cent in the same period. Bangalore and Delhi recorded the highest occupancies in August, at 77 per cent and 66 per cent respectively. “With the exception of Bangalore, occupancies across all cities have declined (yoy),” the analysts said.

In terms of average room rates (ARRs), hotels in north Mumbai have been hit really hard, registering the steepest decline. Average room rates in the city fell by 29.5 per cent (yoy) to Rs7,500, followed by Bangalore, where average rates fell around 25.2 per cent yoy to Rs9,500.

“While ARRs across all cities declined in August 2009 compared to August 2008, Bangalore continued to remain the costliest destination, with average room rates at Rs9,500,” the analysts said.