Reduced occupancy last winter and declining revenues have pushed five-star hotel chains to reduce the cost of their summer packages by 30-40 per cent, even as three-and four-star hotels are benefitting from the downtrading by travellers.
“People are shifting to three- and four-star to save money during recession,” said Shaun Dubash, vice-president, hotels, Travelguru, confirming the summer package price cuts.
According to a Citigroup report, the average occupancy rate of hotels fell to 58 per cent against 78 per cent in January 2008, while average room rentals came down by 14 per cent. Hotel chains are realising that they cannot get the desired occupancy levels without reducing their prices further.
“Summer bookings for five-star hotels are so far 25 per cent down compared to last year. However, bookings in the three-star category are down by only 10-15 per cent and that is why their rates have not been impacted,” said a STIC Travel Group spokesperson.
The hospitality industry has been severely impacted by the ongoing recession. In November last year, 60 per cent of bookings by foreigners were cancelled after the terror attacks in Mumbai. Five-star hotels get the highest number of foreign tourists, and hotel chains like East India Hotels and Indian Hotels (targeted properties during the attacks) have seen a decline in their revenues after the attacks.
The number of foreign tourists who visited India in 2008 was 5.37 million, a fall of 5.7 per cent from the previous year.
“Sixty per cent of the bookings for five-star hotels came from foreigners till last year, but this year it has come down significantly”, said a Mumbai-based sector analyst.
“We have reduced the prices of our property in Goa by 10 per cent. However, our competitors have reduced their prices by 50 per cent,” said Pascal Dupuis, general manager, The Leela, Goa.
East India Hotels and Indian Hotels declined to share statistics of their new rates.
