Hotel occupancy, rates up for 3rd straight yr

Hospitality majors in the country have witnessed a confidence-boosting increase, both in occupancy and average room rates...

Hospitality majors in the country have witnessed a confidence-boosting increase, both in occupancy and average room rates ARRs, for the third year in a row. The industry, which saw a 12-month growth of 23.7 per cent in average rate during 2005-06, continued to grow at a similar pace, as opposed to the 20.7 per cent growth of the previous year. The all-India occupancy mark too touched the 70.8 per cent-mark for the first time and many cities were completely sold out on a number of weekday nights, resulting in hotels hiking their rates sharply. The largest increases were seen in the luxury segment, followed by the mid-market and budget segments.

According to hospitality consulting and appraisal firm HVS International, hotels in cities like Delhi, Hyderabad and Jaipur were able to charge higher tariffs because of the demand-supply imbalance. Hotels across all categories also witnessed an improved foreign-domestic guest ratio. Therefore, despite a stronger rupee, the growth in average rate in dollar terms was higher across all categories.

Hyderabad replaced Bangalore as the fastest growing average rate market, registering a growth rate of 36.7 per cent, an important achievement, considering the city was the weakest in terms of average rate ten years ago. Goa and Kolkata together saw the highest growth in occupancies, followed by Chennai and Hyderabad. The occupancy levels for Hyderabad 83.1 per cent and Delhi 81.7 per cent are those unmatched for nearly ten years. Bangalore, however, saw a marginal decline, with an occupancy level of 79.6 per cent. Chennai, Kolkata and Mumbai achieved 78.3 per cent, 76.4 per cent and 75.3 per cent occupancy levels respectively.

But capacity addition is being planned and according to industry estimates, the potential new room supply has already touched 48,500 new rooms. This does not include Pune, which alone has at least 25 hotels under development. Also, about 4,600 rooms will enter this market in the next five years. The biggest growth in the proposed supply of new hotel rooms is being seen in the two IT cities of Bangalore and Hyderabad. However, HVS believes an acute shortage of rooms will persist in these five or six major markets, at least for the next four years, and will result in huge levels of un-accommodated demand.

Be my guest

RED All-India occupancy at 70.8 per cent for the first time

RED Room shortage to persist next four years despite huge expansion

RED Kolkata, Goa together see highest growth in occupancy

RED At 36.7 per cent, Hyderabad sees highest tariff growth