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Saturday, September 10, 2011

Mumbai, Delhi hotels to hike room rates upto 67% this business season

An edited version of this news story first appeared in DNA Money edition on Tuesday, September 06, 2011.

Hotel rooms are set to get dearer between 4.76% to 66.67% as business season is expected to kick-start in a month from now. Despite concerns in the international markets, leading operators including the likes of Taj, Oberoi, ITC and Leela groups are hiking room rates across markets primarily in the key Indian gateway cities viz. Mumbai and New Delhi.

Independent data compiled by the writer indicated that best available rates offered by leading hotel chains are set to go up significantly mor so in Mumbai vis-a-vis New Delhi-NCR. The bookings being requested was for base category rooms on a single occupancy basis for a night's stay (in mid-September and mid-October) across 17 hotels hotels operated by Taj, Oberoi, ITC and Leela in Mumbai and Delhi hospitality markets.

The lowest increase in Mumbai is for base category rooms at The Leela Kempinski, Mumbai which are being offered at Rs 10,500 plus taxes in mid-September and Rs 11,000 plus taxes in mid-October showing an increase of 4.76%. The highest increase of 66.67% is with the rates offered by The Trident, Mumbai wherein the rate for superior room during the said period is Rs 7,500 plus taxes and Rs 12,500 plus taxes. Following suit is The Oberoi, Mumbai with an increase of 36% (Rs 11,000 and Rs 15,000 respectively) and The Taj Mahal Palace & Towers at 21.05% (Rs 9,500 and Rs 11,500 respectively.

On the other hand in Delhi, deluxe category rooms at The Oberoi, New Delhi showed the lowest increase at 13.33% offering rates of Rs 13,500 and Rs 17,000 – a hike of Rs 3,500. Indian Hotel Co's Vivanta by Taj Ambassador, New Delhi maintained its lead at 44.44% with the highest rate increase i.e Rs 9,000 vs Rs 13,000, an increase of Rs 4,000. Increasing from Rs 13,000 in mid-September to Rs 17,000 in mid-October, Taj Palace Hotel, New Delhi showed the second highest rate hike at 30.77%. The Leela Palace Kempinski, Chanakyapuri and The Taj Mahal Hotel, New Delhi followed suit with an increase of 21.43% and 20.69% respectively.

The Indian hospitality industry considers May to August months as off-season period while it is business season from October to March wherein business reaches to its peak in the last two weeks of December. The month of September and April are viewed as shoulder months wherein rates start heading northwards during September and vice-versa in the month of March. And beginning October, room rates across key hospitality markets and leisure destinations in the country will see an increase owing to increase in inbound travel coupled with increase in domestic travel with the advent of festivities and related holidays.

Echoing the sentiments, Noshir Marfatia, associate vice-president and GM, sales and marketing, The Park Hotels, said, Mumbai and Delhi are the two markets that will see substantial increase in the room rates this season.
"That's mainly owing to the market dynamics and the demand supply scenario prevalent in these markets. While new inventory in the NCR hospitality market may to some extent soften the rate hike depending on the hotel's profile, properties in certain pockets, for example, Greater Noida where F1 is scheduled in October will see a tremenduous increase in the rates going upwards of 60% to even over 100%. Similarly, there are other venues in Delhi-NCR that will witness events being hosted thereby creating a demand-supply imbalance which will eventually see hotel room rates going northwards,” said Marfatia.

The Bangalore and Chennai hospitality markets, according to industry players, are likely to remain flat though owing to increased inventory there. “Both markets especially Chennai will have to fight it out primarily on the occupancy levels as rates will continue to be under pressure. While 60% to 65% will be a good level to boast of during the business season, there is a possibility of minor uptick in rates once occupancies corss the 70-75% mark. We could then see a hike in the range of Rs 500 to Rs 800 across different properties,” said a top official requesting not to be quoted citing company policy.

The hospitality sector does not see the industrial slowdown having any significant impact on the business travel segment as well. “Industrial slowdown isn't much of a concern as we have experienced in the past that there is no immediate impact on the hospitality sector as such. However, given that we have entered the festive season wih Ganesh Chaturthi, followed by Durga Puja, Dussehra and Diwali, it is likely that business hotels may see some impact as travel will be skewed more towards leisure, holiday as compared to business. November will see a bounce back in business travel followed by another blip in December because of Christmas and New Year,” said a senior sales and marketing official from one of the four hotel companies being surveyed.

On the leisure travel front especially from the international markets, Marfatia is of the opinion that the segment is looking very healthy. “The only difference I have noticed is the fact that lead time for hotel bookings has come down from 30-45 days in the past to 10-20 days at present. A significant number or people are booking closer to their travel dates. The other interesting point is that, the overall number of days (international travellers staying in India) seems to be coming down to an average of 20-odd days as against 25-30 days in the past,” said Marfatia.

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