Cost cutting: Executives opt for mid-priced hotels

CHENNAI: With corporates cutting down on expenses due to inflation, executives have no choice stay away from five star hotels while on tour. Mid-priced hotels are cashing in on the opportunity. Virgin Mobile is one of the few companies which has been on a cost cutting drive since April this year.

"As we are a start-up company having operations in a highly competitive field (mobile services), it became imperative to go in for a cost optimization drive,��� says Pravin Patree, head-facility , Virgin Mobile, India. He says the company issues 230 tickets every fortnight and employees mostly travel to metro cities like Mumbai, Bangalore and Pune on work.

"Earlier, most executives stayed in five-star hotels but now people in the middle and junior management who are out of town for longer duration on projects mostly end up staying in nofrills hotels."



"We are witnessing some movement wherein guests who earlier prefered to stay in fivestar hotels are now opting for mid-priced ones," says Sandeep Gupta, executive director, Choice Hotels. While tarrif rates for top end chains are upwards of $300 for a night, the corresponding figures for mid-priced hotels range from $75 to $200 for a night.

Rahul Pandit, vice president, operations, The Lemon Tree Hotel Company, says, "The shift of deluxe hotel users has contributed an additional 10% occupancy premium to our hotels during the last quarter."

Pandit says that Lemon Tree properties across India have delivered 3% occupancy premium and double digit RPAR (revenue per available room) growth compared to last year. "This growth has also been buttressed by the value conscious business and conference traveller and we are delivering aggressive value for money packages to our retail clients."

Patree of Virgin says the switch over from five star to nofrill hotels has resulted in cost savings to the tune of 20%-25% on a month on month basis. "As most of them work long hours, they are keen on having a decent accomodation nearby and a sumptuous breakfast the next morning before heading out again."

While those mid-tier properties located in business zones are witnessing high occupancies, those located in leisure and religious destinations aren���t far behind.