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After a four-year hiatus, room tariffs of premium hotels are witnessing a significant hike, riding on higher demand and slowdown in supply of new rooms this season.
“Better demand is driving up room tariffs after many years,” said SH Rahman, Corporate Director – Sales & Marketing, of the Kolkata-headquartered Apeejay Surrendra Park Hotels Ltd. The hotel is witnessing a 7-10 per cent rise in tariff.
Slowdown in supply
ITC Hotels, the second-largest chain in the country, expects to close this fiscal with “strong” rate gains, riding on the slowdown in supply and “sturdy ramp up” in business activity.
“Average room rates are certainly witnessing the much-needed increase after a few years of subdued growth. Demand is growing faster than supply in key markets and occupancies are on the rise,” Dipak Haksar, CEO, ITC Hotels, told BusinessLine .
He, however, pointed out that “growth in a few geographies are impacted by the recent influx of supply”.
According to Mayank Saksena, Managing Director, JLL India, the scenario started improving after 2016-17 when average industry occupancy improved from 62 per cent to 66 per cent. However, average tariff increased barely 2 to 3 per cent in 2016-17, as hotels were fearing loss of clients.
With occupancy levels remaining strong, hotels are now hiking rates.
Raj Rana, Chief Executive Officer, South Asia, Carlson Rezidor Hotel Group, said improved occupancy and higher business travel triggered a 10-15 per cent tariff hike across the industry.
Carlson Rezidor owns Radisson Blu, Radisson, Park Plazza, Country Inn & Suites by Radisson and Radisson Red branded hotels.
“We [Carlson Rezidor] have been able to negotiate better corporate rates in the third and fourth quarter of 2017. And it is not just us that have hiked tariffs,” he said. Corporate clients contribute 50 per cent of guests in hotels.
Rishi Jain, Executive Director of the Jain Group – developers of InterContinental Hotel Group’s (IHG) Holiday Inn property in Kolkata – said the group is expecting occupancies to improve in 2018.
“IHG is quite buoyant about India. And average rates [room tariffs] are up,” said Jain.
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