With increasing tendency among corporations to cautiously spend on travelling, the vulnerability of revenues of many a premium hotel has increased in the last two years. The recent September 2012 financial performance of the two listed premium hotels-Indian Hotels and East India Hotels (EIH) is a testimony to this fact. Both these companies recorded losses in the September 2012 quarter.
There are three factors, which have impacted revenues of these companies. First, dwindling foreign tourists' arrivals. According to the web site of Ministry of Tourism, foreign tourists' arrivals in January-October period this year has grown at a meagre pace of 6.2% in the same period last year. Second, there is an increasing tendency among companies across sectors to travel when needed. It is estimated that both business and foreign tourists combined form over 70% of the revenues of the premium hotels companies. Lastly, there is a situation of oversupply amidst weak demand, which has impacted revenues of premium hotels. The cumulative impact of these factors has wiped out revenues of premium hotels.