The Hindu Business Line : `Demand for rooms in premium hotels drops'

WITH the peak tourist season that lasts through the winter months drawing to a close, occupancies and average room rents (ARRs) at the premium segment hotels in the four metros have gradually come down.

While the occupancies have dropped to below 65 per cent in April from above 70 per cent in March, ARRs have also dropped to below Rs 4,500 from around Rs 5,000 over the two-month period.

According to a study undertaken by CRIS INFAC, the demand for rooms in the premium segment hotels in the metros has dropped to about 6,700 per day from around 7,500 in March.

Simultaneously, the RevPAR (revenue per available room) has also dropped to about 2,650 in April from approximately Rs 3,600 in March.

However, providing proof of the buoyancy in the sector, the year-on-year data for April are sharply higher.

With tourist arrivals for April growing by 30 per cent (at 2.2 lakh), year-on-year, occupancies for the month have risen by 6 per cent, and ARRs by 13 per cent.

According to a spokesperson, the sharp rise could be explained to the fact that last year's figures were taken from a low base.

Significantly, in a reversal of recent trends in Mumbai, hotels based in the South have pipped those in the North on most parameters.

According to the report, occupancy in the South was 62.1 per cent as against 57 per cent in the North. Similarly, hotels in the South recorded a higher average ARR at Rs 5,055 (Rs 3,738) and RevPAR at Rs 3,141 (Rs 2,140).

According to an official with the Delhi-based consultancy, HVS India, as with most big cities across the globe, Mumbai too had developed sub-markets within itself.

The newer hotels in the North have developed with the mushrooming of IT companies and the shift of several business, originally based in the South, to suburbs such as Bandra, Andheri and Malad.

The demand from these businesses is expected to continue to spur growth in the North-based hotels. However, trying to explain the stronger performance by the South-based hotels in April, the consultant at HVS said, it could be on account of a well-attended event that happened in that particular month.

Bangalore continued to top both the occupancy and ARR charts. In April, hotels in the city recorded an average occupancy of 78.3 per cent, while the ARRs was about Rs 7,500.

According to the consultant, the Bangalore market was again driven by the IT industry. Hotels in the city were going through an upward cycle, buoyed by both the influx of people to the IT hub, as well as a shortage of rooms to meet the growing demand.

In fact, according to the Corporate Head, Sales & Marketing, The Leela, Mr Sanjoy Pasricha, the current ARR at the Leela Palace Kempinski was upwards of Rs 10,000. Bangalore has four hotels at the premium high-end of the market with a total of 800 rooms, and another 700 rooms at the next level.