Hotels in top Indian cities are charging less for rooms than last year primarily due to fresh supply of hundreds of hotel rooms while there was no corresponding surge in demand. Room rates for hotels in Delhi, Mumbai, Bengaluru, Chennai and Hyderabad this winter season are 5-20 per cent less than last year, according to The Economic Times report by Ravi Teja Sharma.
"Many markets have seen new supply of hotel rooms, which is putting pressure on room rates," said Vivek Nair,
Vice Chairman and Managing Director, Hotel Leelaventure Limited.
Room rates at luxury hotels in Chennai have dropped by 10-15 per cent compared to last year because two large luxury hotels have come into the market. In Bengaluru, room rates have slipped by 5-10 per cent while Hyderabad has performed the worst with a 20 per cent drop in rates over last year.
Kaushik Varadharajan, Managing Director – Consulting & Valuation Services, HVS India., said that with slowdown continuing and sentiment remaining low, companies and individuals are being conservative about spending on travel and hotels. "There has been a drop of 5-10 per cent in both occupancy and rates in the top cities," he said.
KB Kachru, President, South Asia operations, Carslon Rezidor Hotel Group, said group hotel rates dropped 5-10 per cent in Delhi-National Capital Region in November and December 2012, 7-8 per cent in Chennai and 5 per cent in Bengaluru. He said the rates in Mumbai have been steady.
"NCR and Chennai have both seen a large amount of new room inventory come in the last one year across the three to five star categories, because of which rates have come down this winter," Kachru said. During April-September 2012, rates for Carlson Hotels were down by 15 per cent, he added.
Close to 5,000 new rooms have been added in the three-to-five star and luxury categories in the five cities, HVS said. About 1,200 rooms became operational in Delhi-NCR this year, 800 in Mumbai, 1,300 in Bengaluru, 800 in Chennai and 750 in Hyderabad. Winter months usually make for 60-65 per cent of a hotels business in a year and October through March is the peak travel time to India both for corporates and leisure travellers. But clearly, this year demand for rooms has not kept pace with the growth in supply, stated the report.
Dilip Puri, Managing Director, India and Regional Vice President South Asia, Starwood Asia Pacific Hotels & Resorts Pte Ltd, said, "India has had a bad year. The economy has been static, which has resulted in a drop in demand for hotel rooms."