The Hindu Business Line : Rising rupee impacts star hotels’ topline growth

Snapshot
Rising rupee impacts topline growth by about 8-10 per cent in first quarter.
Increase in supply of room inventory also leads to a drop in the occupancy level in star hotels.

Somasroy Chakraborty

Kolkata, Aug. 8 The hospitality sector is feeling the heat of the appreciating rupee. Senior officials of hotel majors, including Hotel Leelaventure Ltd, Indian Hotels Company Ltd and Royal Orchid Hotels Ltd (ROHL), confirmed that the rising rupee had impacted their topline growth by about 8-10 per cent during the first quarter of the current fiscal. The hotels, however, witnessed an overall growth on the back of a booming economy.

“Nearly 80 per cent of our revenue comes from foreign business travellers. Naturally, the rupee appreciation has hit our topline growth by about 8-10 per cent,” Mr V.L. Ganesh, Chief Financial Officer, Hotel Leelaventure Ltd, told Business Line. A similar view was echoed by a senior official of the Taj Group of Hotels. “A good amount of our revenue comes from payments made in the dollar. There has certainly been an impact as a result of this (rupee appreciation),” he said on condition of anonymity. Mr C.K. Baljee, Chairman and Managing Director, ROHL, also confirmed the impact.

Higher room inventory

Besides rupee appreciation, the increase in supply of room inventory has also led to a drop in the occupancy level in star hotels across India. “The increase in room inventory supply has put pressure on the occupancy levels across all the major cities,” Mr Rajesh Mishra, President, Federation of Hotel and Restaurant Associations of India, said.According to Mr Taposh Chakraborty, President, Chancery Hotels, “There has been about 10 per cent erosion in dollar tariff. Besides, hotels in Bangalore have witnessed a 12-15 per cent drop in occupancy level on account of higher room inventory supply. The situation is more or less similar in other major cities.”

Almost all star hotels in the country until now follow a dual tariff structure where the tariff varies depending on Indian or foreign nationals. However, as a result of the rupee appreciation, which has narrowed down the differences in tariffs, hoteliers are planning to adopt a single tariff structure.

The rupee has appreciated by about 6.6 per cent from Rs 43.10 on March 30, to Rs 40.25 on August 3.

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