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The Government’s austerity measures that ban ministries and departments from conducting meetings and conferences at five-star hotels will have mixed impact on the hotel industry.
The ban comes just before the October-February period, which is considered the peak season for hotels when most MICE (meetings, incentives, conferences and exhibitions) events happen.
M. D. Kapoor, Secretary General, Federation of Hotel & Restaurant Associations of India (FHRAI), said. “The recently announced austerity measures can certainly have a near-term impact on five-star hotels, especially in cities such as Delhi where government departments and ministries may account for 10-12 per cent of their business.”
Five-star hoteliers believe such a ban is coming at a time when the hotel industry is already going through challenging times.
K. B. Kachru, Chairman-South Asia, Carlson Rezidor Hotel Group, said, “Any such measure will have some impact especially on the MICE segment. It also comes at a time when we are battling with pressures of inflation and rising costs and the economic sentiment is cautious.” He said though a chunk of the business even in the MICE segment comes from corporates but added that there has been a tendency to cut costs even among corporates.
It remains to be seen whether public sector undertakings will take a cue from the Government’s austerity measures and cut down on MICE events too at hotels. Irrespective of whether PSUs cut down on their conference spends, some hoteliers believe that being able to charge Government enterprises in tune with the winter season tariff structures could become challenging.
While other hoteliers said they are not dependent too much on Government conferences, analysts have pointed out that there has been a reduction in contribution to hotels from conferences especially in a city like Delhi.
Siddharth Thaker, Managing Partner at Prognosis Global Consulting, said that since 2009, when the Government had launched similar austerity measures the contribution from MICE events to hotels in a city like Delhi has gone down.
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