Hotels have room only for profits

Hospitality sector prepares to lay out the welcome mat for bigtime profits.

Hotels in India have never had it so good. The occupancy rate "" expected to be over 90 per cent during the next five months "" is at an all-time high and the average room rate is seen climbing 10 per cent in most leading hotels.

According to the Federation of Hotel and Restaurant Associations of India (FHRAI), occupancy is going to be anywhere between 90 per cent and 95 per cent across cities during the peak season. And hotels expect the trend to continue well into the later part of the season.

"This season is expected to be phenomenally good for hotels. With the expected increase in occupancy and room rates, we expect average realisations will go up," said Shyam Suri, secretary-general, FHRAI.

"If the average room rate is up 15 per cent and occupancy is up 10 per cent, the overall impact on the topline will be about 20 per cent," said an executive with a hotel chain.

In Delhi, hotels are expecting room rates to go up by 15 per cent, leading to an overall annual jump in cost realisation of about 10 per cent. Besides, occupancy is seen well above 95 per cent during the winter season.

"Last year, during the peak season, we had 85 per cent occupancy. This year it will 95 per cent or more. We expect this across the three Taj properties in Delhi," said Abhijeet Mukherjee, sales manager, Taj Hotels. Occupancy in the chain's Delhi hotels is now around 88 per cent.

Mumbai, which has added the most hotel rooms in the last two years, can expect peak season occupancy of 90 per cent. The number could be higher in hotels near the airport like The Grand and Leela.

"Room rates are expected to rise 10 per cent. This despite the massive addition of rooms," said Michael D Horsburg, vice-president, operations, The Grand.

In tourist destinations like Goa, rooms are already booked for December and most hotels are almost full this fortnight. Rates are likely to triple to almost $300 per night in some hotels. Other tourist towns like Agra and Udaipur also expect near full occupancy and a steep rise in rates.

In Kolkata, hotels see average room rates going up by 10-12 per cent, leading to an 8 per cent jump in annual cost realisation. Room rates are firming up by about 5 per cent last year. The city, which has about 1,064 five-star category rooms, sees occupancy for the rest of the year at over 85 per cent.

This also comes at a time when the city saw an increase of over 100 per cent in room numbers over the last two years.

In cities like Bangalore, one is unlikely to get a room this winter. With the Bangalore airshow slated for February, room rates are expected to shoot up. "We expect a 60 per cent increase in room rates during the airshow. Almost all rooms will be sold out," said Horsburg.