Inflation plays spoilsport: Hotels' occupancy to dip
Hotels are expecting a 8-10% dip in the projected occupancies for the quarter July-September on the back of high inflation. Hot and cool hotels | Global tipping tips
By Vishakha Talreja, ET Bureau |
NEW DELHI: These are tough times for travel and hospitality industry. First it was fuel price hike and slowdown that impacted business, and now it's inflation that's playing a spoilsport. Hotels are expecting a 8-10 % dip in the projected occupancies for the quarter July-September , which is also the lean period for hospitality industry. Though the people are still travelling, tour operators say that they are opting for a lower category of accommodation and cheaper transport.
Hotels��� ancillary sources of revenue, especially food & beverage and spas, might also clock lower returns as consumers cut expenses on frills.
As Indian travellers are value-conscious , inflation will alter the habits, though people might not exactly cut down on their weekend trips and holidays. ���People staying at five-star hotels will opt for a four-star or mid-segment hotels.
At the same time, with rising airfares, people are opting for trains,��� says Arjun Sharma , managing director, Le Passage to India. This means squeezing margins for tour operators as lower category products and services do not have very high margins. ���As a travel operator, we have to create models to de-risk inflationary pressures,��� adds Mr Sharma.
Hotels��� ancillary sources of revenue, especially food & beverage and spas, might also clock lower returns as consumers cut expenses on frills.
As Indian travellers are value-conscious , inflation will alter the habits, though people might not exactly cut down on their weekend trips and holidays. ���People staying at five-star hotels will opt for a four-star or mid-segment hotels.
At the same time, with rising airfares, people are opting for trains,��� says Arjun Sharma , managing director, Le Passage to India. This means squeezing margins for tour operators as lower category products and services do not have very high margins. ���As a travel operator, we have to create models to de-risk inflationary pressures,��� adds Mr Sharma.
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Hotels, which are already grappling with the lean season, are seeing a lower demand owing to inflation. ���It���s early days but residential business will be affected,��� says Gautam Anand, V-P , operations, ITC Welcomgroup . ���From now onwards there will be a correction in room rates,��� says Sarovar Hotels executive director Ajay Bakaya.
And it���s not only dip in occupancies that hotels are worried about. ���Inflation will have an impact on debt, borrowings and procurement (as food prices have gone up) for hotels ,��� says a source at Taj Group of Hotels. Adds V-P , sales and marketing, Leela Hotels, Sanjoy Pasricha, ���Inflation will impact bottom line by 1-2 %. Come September, we will increase our room rates by 9-12% to offset the inflationary impact.��� Secondary sources of revenue such as retail, spas and F&B will be impacted too as disposable income decreases.
���Eating out at hotels might not get impacted but drinking out will. As prices rise, people prefer drinking at home,��� points out Anand. Tour operators believe that outbound leisure tourism will be hit the most. ���The affordable short-haul trips to Thailand and Malaysia that middle-class has been opting for, will reduce as airfares are soaring and spending power has been hit,��� says a tour operator.
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