The Hindu Business Line : `Hotel tariffs will soften only a tad'

The hotel industry expects a rationalisation of tariffs once the expansion and greenfield projects are expected to ease the severe shortage of rooms in the next three years.

The industry had been witnessing buoyancy, pushing room rents to unprecedented levels, in the last two years.However, with the economy on upswing and demand expected to be on the rise, the softening of the room rates could be only marginal.

With the hotel industry itself evolving its products for customisation for different client segments, the additional inventory can only marginally rationalise the tariff levels with a stability factor built into it.

According to Mr Peter J. Leitgeb, President, Hotel Leela Ventures, the tariff levels could witness corrections after the new ventures eases the supply position.However, with the emerging affluent class within the country and foreign businesses focusing on India, the demand for premium deluxe hotels would continue with only a marginal softening in tariffs. The current strength in luxury hotels is estimated at a little over one lakh.

Mr Leitgeb told a group of visiting journalists that the low cost airlines connectivity would play a key role in increasing demand for rooms without affecting the pricing strategy.

Mr Liege said Leela Ventures would be investing about Rs 1,200 crore towards new ventures in different cities, which includes luxury a hotel off Kovalam beach, a second hotel in Mumbai, and new properties in Chennai, Hyderabad, and Pune.

The company would be funding the projects from its internal resources and debt, he added.

It would also be taking up a management contract to run a hotel being developed on the Delhi-Gurgaon border.

The company is also exploring the tapping the potential increased connectivity by new airlines to promote its premium products.