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Hoteliers and analysts continue to have a cautious outlook this year on the back of growing political uncertainty ahead of the 2014 elections, economic crisis in key Western nations and oversupply of hotel rooms in certain markets.
Kaushik Vardharajan, Managing Director of the hospitality consultancy firm, HVS, said, “In 2013-14, the demand for hotel rooms is expected to see modest growth. While occupancies are expected to be stable, room rates could drop by about 5 per cent.”
He said in 2014-15, after there is more clarity in the political situation in the country, the hotel industry could see better growth.
Last year was a challenging one for the industry with average room rates and revenue per room being under pressure.
Speaking on the sidelines of a Hotel Association of India event, several hoteliers said they had a cautious outlook this year.
K.B. Kachru, Chairman of the Carlson Rezidor Group, which runs brands such as Raddisson Blu, Park Inn and Park Plaza, said the hotel industry was expected to continue facing challenges due to economic conditions in key Western markets and the supply-demand imbalances. “Due to the impending elections, we do not expect many policy changes. The industry expects pressures on room rates to continue, though we expect tier 2-3 markets to show good growth,” he added.
Jyotsna Suri, Chairperson and Managing Director of the Lalit Hotels, also said that the impending elections could cause some uncertainty in the economic sentiments. In a bid to maintain occupancy levels, the hotel industry has in the past cut down rates to maintain occupancy levels which, in turn, has been impacting their revenues and profit margins.
Rajiv Kaul, President, Leela Palaces, Hotels and Resorts, said that situation varied across cities. Certain markets had seen addition in supply of new hotels. He said while occupancies had been stable, rates had been soft, though there was a growth in demand for hotels.
Hoteliers believe that the growth in the demand has been neutralised by oversupply in certain cities.
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