Hoteliers and analysts continue to have a cautious outlook this year on the back of growing political uncertainty ahead of the 2014 elections, economic crisis in key Western nations and oversupply of hotel rooms in certain markets.
Kaushik Vardharajan, Managing Director of the hospitality consultancy firm, HVS, said, “In 2013-14, the demand for hotel rooms is expected to see modest growth. While occupancies are expected to be stable, room rates could drop by about 5 per cent.”
He said in 2014-15, after there is more clarity in the political situation in the country, the hotel industry could see better growth.
The industry expects pressures on room rates to continue, though we expect tier 2-3 markets to show good growth,” he added.
Jyotsna Suri, Chairperson and Managing Director of the Lalit Hotels, also said that the impending elections could cause some uncertainty in the economic sentiments. In a bid to maintain occupancy levels, the hotel industry has in the past cut down rates to maintain occupancy levels which, in turn, has been impacting their revenues and profit margins.