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Nina Varghese

CHENNAI, Feb. 7

DESPITE the brave noises made by the hospitality sector, the third-quarter results of hotel companies reveal that most of them have posted a loss or a steep decline in profits.

The results of the three hotel companies— Oriental Hotel Ltd, Savera Hotels Ltd and EIH Associated Hotels Ltd — which operate hotels in the city, are indicative of the general trend in the three to five-star categories as these companies have hotels in all the three categories.

All hotels attribute their poor showing during the normally peak period to the fall in foreign tourist arrivals and the impact of the global slump. Hotel industry sources said that the decline in foreign exchange earnings was almost 60 per cent.

Traditionally, the November-February period brings more than half the revenue for the hotels. The cancellations by the tour groups after the September 11 attack created panic in the industry and many hotels began discounting heavily to fill up the rooms.

In Chennai, where a number of new hotels have come up, discount levels are between 30 and 40 per cent. Such high levels of discounting have had an impact on the bottomline, but the industry justifies it by saying that room nights are a perishable commodity and it is better to get at least half price for it.

There had been no major change in rack rates in Chennai, except in the GRT group hotels.

In GRT Grand Days, the rack rate had increased by six per cent and at GRT Radisson, the room rate had come down from Rs 5,500 to Rs 4,500 per room night, Mr M.O. Koshy, Vice-President, GRT Grand Days, said.

Industry sources said that some companies had toyed with the idea of reducing the rack rate since the luxury tax is levied by the State Government on the published rack rate.

But they had not done so as yet.

The industry has been making repeated representations to the Government that the luxury tax should be levied on the actual rate, and not the published rate.

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