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The hospitality industry is resigned to facing a challenging start to the year. “The first half of 2012 is going to be a little tough for the hospitality industry, and more so for the luxury segment,” said Mr R.K. Krishna Kumar, Director, Tata Sons and Vice-Chairman of Indian Hotels Co Ltd.
He expects rates to be under continued pressure leading to further rationalisation. The occupancy during the period, he said, is likely to be driven predominantly by domestic travellers. However, the second half may spell the beginning of a recovery, he said.
Mr Krishna Kumar was speaking to Business Line on the sidelines of the Taj Vivanta's launch in Coimbatore. The economic downturn had affected the industry here, particularly the top-end hotels, he said, terming the European situation as a cause for concern. As it is, he said, the share of foreign travellers to India is pretty small compared to other global destinations.
The silver lining, however, is the growth in domestic travel. This could help the hospitality industry improve RevPAR (revenue per available room) in the months to come, he felt.
On average room rates last year, Ms Deepa Misra Harris, Senior Vice-President (Sales & Marketing), Taj Hotels, said the rates were under pressure for all chains, and that things are likely to get better as we move into season. Overall, there would only be a marginal growth this year.
Mr Raymond N. Bickson, Managing Director and CEO of Taj Hotels, said the company would focus more on expansion overseas. It currently has 16 hotels abroad. “We are planning to take the total to 50 by 2015,” he said. Africa, West Asia and China are some of the key destinations on the company's radar. In the next few years, it will have at least half-a-dozen hotels up and running in China alone. And majority of the company's expansion in future will be on the asset-light model, or at best “we may go in for a partial ownership.”
According to Mr Bickson, the idea behind the overseas expansion is to achieve a revenue model of 50:50 from domestic and foreign operations.
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