Hotels say fares hold in lean season

With corporate travel picking up, hotels across the key business markets in the country feel the lean season may not be that bad this year.

While tourist destinations such as Goa, Kerala and Rajasthan are witnessing price correction, business destinations like Mumbai and Bangalore seem to be holding on to their rates.

The only exception is the south Mumbai hospitality market that saw a 10-12% decline from the March 2010 levels.

Occupancies, however, are better at hotels such as Trident, Taj Mahal, Taj President, Marine Plaza and InterContinental Marine Drive.

The stranding of travellers due to flight cancellation on account of volcanic eruption in Iceland also helped hoteliers in key cities.

Large groups of travellers were accommodated by their respective airliners in hotels, particularly in Delhi, Mumbai and Bangalore.

Though an incidental (short-term) opportunity, it helped fill the rooms.

“Most properties except The Oberoi, Mumbai, are doing over 75% in occupancies though room rates are still to pick up. While average room rates in the hotels range between Rs 7,500 and Rs 11,000, they are 10% below those seen in March 2010,” said a top official from a leading hotel chain.

As for The Oberoi, Mumbai, it is understood to be doing under 20% in occupancy because of significantly high room rates — upwards of Rs 18,000. “The hotel’s management is holding on to the rates, hence the low occupancy number,” said an industry source.

With over 1,200 new guestrooms added in the last few months, the pricing scenario in the North Mumbai hospitality market appears to be stabilising. While new hotel room inventory did create an imbalance, volumes have been picking up.

The inactivity witnessed in the Mumbai hospitality market last year is being gradually replaced by revival in corporate travel.

Sanjoy Pasricha, vice-president — sales and marketing, The Leela Palaces, Hotels, Resorts, said while leisure destinations are taking a hit on the room rates and occupancies, the business travel markets are looking much better.

“Despite adding inventory, north Mumbai and Bangalore markets saw business grow by 40% largely due to increase in corporate travel. Occupancies are seeing an increasing trend and hotels are able to sustain room rates. However, Delhi is witnessing a correction in room rates and occupancies owing to the leisure-business mix (30%:70%) specific to that market,” Pasricha said.

Hoteliers in north Mumbai say that there are certain days in a month when the hotel are completely sold out on other days the occupancies are in the 65-70% range.

“Hotels are playing the market game and tweaking the rates consistently to optimise the inventory. Increase in the rates, if at all, is very marginal and driven by revenue management practices,” said Sunil Bhatia, director — sales and marketing, The Mirador, Andheri.

Five-star hotels in north Mumbai are charging room rates in the Rs 8,000 to Rs 11,000 bracket. The rates at four-star hotels (including the newly launched Holiday Inn and Courtyard by Marriott hotels in the vicinity of Mumbai international airport) are in Rs 5,500 to Rs 7,500 range.

Anil Chavan, associate director of sales, Oakwood Premier, Mumbai, said the short-stay business from a serviced apartment business point of view is picking up. The property witnessed 85% occupancy in April-May at an average rate of Rs 8,000-8,500.

“Sustaining the rates certainly is the focus and it is working so far,” Chavan said.

Partha Chatterjee, chief marketing officer of Berggruen Hotels Pvt Ltd (Keys chain of hotels), said that April has been much better in comparison to the January-March for their hotels in Thiruvananthapuram and Chandigarh. “Ours were new hotels launched at introductory prices. In fact, we have been able to up the rates marginally from the earlier Rs 1,800-2,000 bracket to Rs 2,000-2,500 now,” he said.