Wednesday, May 28, 2008

IT slowdown bites — Bangalore hotel room rates softening

IT slowdown bites — Bangalore hotel room rates softening

Anjana Chandramouly

Bangalore, May 27 The slowdown in the IT industry that drives business for other sectors and the fluctuating dollar have had an impact on the hotel industry in Bangalore. If indications are to be believed, hotels in the city have been witnessing a softening of rates in the past few months. The average room rates (ARR) have come down by at least five per cent .

Also, fewer business travellers because of political instability could have contributed tothis dip, say industry experts.

“The slowdown in the hotel industry, which started last year, is continuing this year too,” an analyst said. “Bangalore has witnessed abnormally high hotel rates in the past. The correction is only natural,” he added. ARRs have even touched Rs 20,000 in some hotels in the past.
Correction happening

Mr Taposh Chakraborty, CEO, Boutique Hospitality Consulting, a Bangalore-based hospitality consultancy firm, said, “Hotel rates have come down by about 3 per cent. It’s a correction that Bangalore has been waiting for, and one that should be sustained.” According to him, occupancy rates have come down by 5-7 per cent.

Mr Subrata Majumder, General Manager, The Park Hotel, Bangalore, said that though rates had come down, there was no cause for concern. He agreed that there had been “dry days recently, which could be due to the elections. There was a two per cent drop in growth in April and May, he added. The hotel has seen a 3-5 per cent dip in occupancy, Mr Majumder said. From about 80-85 per cent during the same time last year, the hotel’s occupancy has now slipped to about 78 per cent. The rates, which were about Rs 12,000 around the same time last year, have fallen down to around Rs 11,500, he said, adding that “if the trend continues, it might fall to Rs 10,500.”
‘No change in tariffs’

However, a top official of the Taj group of hotels said that there has been no change in tariff. He pointed out if at all there is a change in revenues, it could be due to the “subsequential impact of the dollar fluctuation”.

With the dollar showing signs of strengthening in the past week, it has to be seen how it would impact hotel rates. But with supply of room inventory expected to almost treble in the next 2-3 years, “there could be a further dip in rates,” analysts point out.


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