The Euro crisis and the global economic slowdown have cast a shadow over the Indian hospitality industry. The mood is one of caution with occupancies in the top hotels witnessing only a five to seven per cent increase — half of what it normally is at this time of the year.

The average room rates in the top hotel markets will increase by five to seven per cent compared with the corresponding period last year, according to the hospitality consultancy HVS India. “Rates are not going to be high as hotels are likely to be cautious given the global economic slowdown. Due to the Euro crisis, hotels are focussing on maintaining demand rather than pushing up rates,” said Mr Kaushik Vardharajan, Managing Director, HVS India.

The Indian hospitality industry normally experiences high demand during October–April, following which the monsoon months see low demand. Usually the December and March quarters bring in 60 per cent of the year's turnover for Indian hoteliers. In the last 12 months, the demand for rooms in the major markets has gone up by 20-45 per cent compared to last year, Mr Vardharajan added.

“However, inbound tourism is static due to the impact of inflation and the Euro crisis,” observed Mr Anil Madhok, Managing Director, Sarovar Hotels and Resorts.

Hoteliers are grappling with the effects of the global slowdown, and have taken measures to deal with the Euro zone crisis. As a result, they hope it would not impact room rates. “The Euro crisis is currently not showing a direct impact in the luxury segment. Russia is very strong and covering up for a bit of softness in the German and French markets,” said Mr Sanjoy Pasricha, Vice President – Sales and Marketing, The Leela Palaces, Hotels and Resorts.

MICE looks-up

The Leela expects occupancy to increase by six to seven per cent in December. “December occupancies are going to be healthier in both the business and leisure destinations. They will be marginally higher than last year,” Mr Sanjoy added.

The MICE (Meeting, Incentives, Conferences, and Exhibitions) segment has been strong and has gone up by 30 per cent, analysts say. “MICE is definitely seeing an upward trend,” said Mr D. Kavarana, Area Manager - West & General Manager, ITC Maratha.

Corroborating his views, Mr Madhok said, “We are experiencing a revival in demand with a rise in bookings and queries for the ongoing season. November and December are the peak seasons for MICE as well as for corporate travel.”