Hotel Occupancy Rises 20% On Discount

As a result of the 30-70 per cent discount in tariffs, hotels in metros have registered a 10-20 per cent growth in occupancy rates during the first four months of the current financial year as compared with the previous corresponding period. In the first four months of the previous year, hotels had reported an average occupancy rate of 45 per cent. This year, the occupancy rate has gone up to 65 per cent. That this is a result of the huge discounts offered can be seen from the average room rate which has not changed from last year. In the first four months of the present financial year, some five star hotels have even experienced a decline of 3 per cent to 7 per cent in the average room rate. The price war and cut-throat competition have been cited as the reasons for the rise in occupancy levels in five star hotels at the expense of the mid-market segment. "The star category hotels have offered massive discounts to woo customers even from the mid-market segments. This has certainly raised their occupancy level without making significant contribution to their average room rate," hospitality consultant Rabindra Seth said. Another reason for the continued pressure on average room rate has been the demand and supply of hotel rooms. "Although the demand for hotel rooms has gone up, but at the same time, the completion of new hotel projects like Regent and Le Meridien in Mumbai and Nikko in Delhi, has also increased the number of rooms available negating the impact of increased demand," global consultancy firm HVS International associate director, India, Manav Thadani said. Foreign tourist arrivals in the first six months of 2000 have increased to 6.3 per cent from 4 per cent for the same period in 1999. Stating that the average room rate will not touch the 1995-96 level in the near future, Thadani said hoteliers must revise their rack rates (published rates) to a more realistic level. At present, hotels in major metros are offering discounts between 30 and 70 per cent. Average discount rates are assessed at 40 per cent, according to experts. The situation may become worse unless hotels stop the price war, said Jaydeep Chakrabarti, divisional head, sales and marketing, Hotel Nikko. He added that panic selling by hoteliers due to last year's dismal performance has led to the situation. While hoteliers are under pressure, travel agents are happy as they are getting better deals. "We expect that hotel rates will firm up at a realistic level in the season," Pacific Asia Travel Association, India Chapter, vice-chairman, O P Ahuja said. Though there is a difference in discounts offered to the corporate and leisure business segments, even corporate clients are now demanding considerable discounts due to the cut-throat competition, Tarun Thakral, general manager of Le Meridien New Delhi said. According to a survey, hotels are offering about 30 per cent discount to corporate visitors whereas the discount has gone up to 70 per cent in the leisure segment.