The contribution of revenues from rooms to the total turnover of hotels is falling in the metros of New Delhi, Mumbai and Chennai, according to a survey conducted by a New Delhi-based hotel and tourism counsultancy firm, Pannell Kerr Forster.
The room revenues of 10 five-star hotels in New Delhi fell from 59 per cent (of the total revenues earned) in 1999 to 52 per cent during 2000. In Mumbai, the revenues were down to 65 per cent from 69 per cent. And, Chennai followed the suit with a record 6 per cent decline.
Uttam Dave, chief executive of Pannell Kerr Forster, said: "The declining revenue contribution from rooms was because of fall in occupancies and declining average achieved room rates. During 1999-2000, the demand had slowed and simultaneously supply increased. In many ways, the hotel industry is a barometer of a destination's economic climate -- the results were early signals of a troubled economy."
Says hotel consultant Rabindra Seth: "It's because of the falling occupancies and average room rates in the cities because of increased competition due to new room supply in the market."
Dave, however, said the good news was that performance in the early months of the current fiscal has shown an arresting of this trend for some cities. For others such as Mumbai and Bangalore, enhanced new supply may take its toll, he added.
The study also brings in the fundamental differences in the revenue streams in New Delhi and Mumbai.
The survey points out that while five-star hotels in Mumbai earned 67 per cent of the income from rooms, New Delhi hotels depend only for 52 per cent of their income from this category during 2000. However, food and beverages category accounted for 30 per cent of New Delhi hotels income, and only 23 per cent in the case of Mumbai hotels.
Senior executives of Pannell Kerr Forster said the disparity was because of the numerous choices of upscale and classy restaurants outside five-star hotels in Mumbai than in New Delhi, which result in customers eating less in five-star hotels.
Another interesting shift is the fact that rentals (from commercial activities in hotels such as shopping) are increasingly becoming more and more important for five-star hotels in New Delhi -- most of which have larger space dedicated to shopping centres or office space.
While the income from this segment in Mumbai, Chennai and Bangalore has remained stagnant at 1 per cent of the total earnings, it recorded a sharp increase from 1 per cent of the total revenue coming from this area in 1999 to 8 per cent in 2000, the survey points out.
The study also points out that there has been a marginal 1 per cent fall in the usage of telephones across the metros -- primarily because of increasing usage of cellular phones by customers.
