Cashing in on leisure

HOSPITALITY: Repositioning of India as a leisure destination has spelt bigger profits for the hotel industry.

As the business goes, hotels are raking in moolah. The demand-supply gap has given a boost to hotel rates over the last two years. Leisure traffic, which incidentally was the only segment that was eluding many of them of higher revenues, has now come around in the last one year owing to the push for higher-end leisure traffic by the ministry of tourism.

There has been an overall increase in yields from leisure traffic for hotels. Traditionally, leisure traffic was associated with group travel business, which was low yield. Free individual travellers (FITs) were few. This scenario seems to have changed in recent times with some hotels claiming higher leisure volume and within it, a tremendous growth in FIT traffic.

Shobu J Mathew, GM, sales and marketing, InterContinental The Grand, New Delhi, says the quality of leisure traffic has gone up and they are spending more money within the hotel. The overall yield from leisure traffic for the hotel in 2006-07 has gone up by 30 per cent over 2005-06. The leisure yield for The Imperial is also up 25 per cent.

More spending can also be attributed to an increase in FIT traffic. Certainly so for The Park in New Delhi. "Apart from the hotel room, FITs spend on the spa, food and beverages and other activities within the hotel, which the groups usually don't," says Rohit Arora, director, leisure sales, The Park.

The hotel's leisure yield is up by 60 per cent in one year. This, says Arora, can also be attributed to a change in the hotel's positioning.

Also, India as a destination is now being projected as a high-end destination, compared to its budget stance a few years ago. According to Anirban Sengupta, director marketing, Grand Hyatt, Mumbai, business customers now come all year round and since the hotel doesn't distinguish between seasons, pricing is kept more or less constant. Higher prices, in turn, have meant improved customer profiles. Yields from leisure are up at least 15-20 per cent for them.

"Over the last two years, the difference between corporate and leisure yields has been coming down," says Arora. The difference has come down from 40-50 per cent two years back to 12-15 per cent today. The corporates today have a structures expense control mechanism leading to price control in terms of hotel usage and rent payable by different grades of people.

As India becomes a friendlier destination for investments, more people are combining their business trips with leisure.

There are some hotels though like the InterContinental Marine Drive, where, as their GM, Romil Ratra points out, leisure yields have actually come down by half in the last one year. "This might perhaps be because of our positioning as a boutique business hotel and not really a kiddie hotel," says Ratra.

But what takes the cake is the 150 per cent growth in leisure volume for the Trident Hilton in Gurgaon. Yield from leisure for them is higher than their corporate yield. According to the hotel, leisure yield has gone up 60-70 per cent over last year.