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Festivals, F1 to hikes hotel room rates by 10%

This October, room rates for all star properties are set to soar by 10 per cent due to increased tourist inflows on account of business travel, festival season and the upcoming F1 in India.

As the industry grapples with slowdown in sectors such as auto and real estate, hotels are staging a different tale by piggybacking the spurt in demand for rooms. For the last two consecutive years hotels avoided increasing room rates owing to the downturn in the hospitality industry.

According to the hospitality consultancy HVS India, average room rates in top hotel markets will increase by 8-10 per cent compared with the corresponding period last year. “Both business and leisure travel are registering strong growth. So hotels will hike room rates for the October to January period. Last two years didn’t really see any increase in average room rates because of the economic slowdown, but this year as occupancies are strong hotels are hiking rates,” says Kaushik Vardharajan, managing director, consulting and valuation service, HVS India.

In the last 12 months itself the demand for rooms in major markets has gone up by 20-45 per cent. The two markets that might be an exception to this trend are Pune and Ahmedabad because of the oversupply in these markets, Vardharajan adds.

Hoteliers agree that the demand is strong and the euro crisis or fear of a double dip recession should not impact room rates. Vivek Nair, managing director and vice-chairman, The Leela Palaces, Hotels & Resorts, said that they are expecting a 15 per cent growth in the number of bookings this season. Ajay Bakaya, executive director, Sarovar Hotels, feels that there won’t be a dramatic increase, but an eight per cent increase in average room rates is projected.

“This financial year looks good and has been quite stable till now. The good thing is that we will be able to retain occupancies and the metros will register occupancy rates of 70 per cent and upwards,” he adds.

So if you still haven’t booked your holiday, chances are you will have to shell out extra money to book a room in a star property. “Room rates are already moving northwards. They increased in September and October will again see a rise of almost 20 per cent compared with previous months. In Delhi during the F1 the rates will be four times the average. We are seeing strong bookings for Rajasthan, Kerala and of course Goa, too,” says Sabina Chopra, co-founder, Yatra.com. Chopra adds that airfares for these destinations are more stable when compared with room rates.

Despite the increase, industry experts say room rates will not touch the highs of the heyday of the pre-slowdown period. Of course, some rooms in the national capital region are commanding a whopping Rs 40,000 a night during the F1 weekend, but that is an exception.

However, some impact of the inflation and the Euro crisis might be felt later if not immediately by the hotel companies, cautions Bakaya.

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The tourism minister of Israel, Stas Misezhnikov, on his first official visit to India recently brought a delegation of tourism associations, hotelier, and representatives from Al Kiya to promote bilateral tourism relations. Last year Israel saw 40,000 Indian arrivals, “We hope this growth will continue. Tourism in Israel contributes about three per cent to the GDP but has offered as many as 100,000 new jobs at the same time,” he said. He added that in the future they may consider opening a tourism office in India based in Mumbai. “If we manage to get the set up running soon, we may also consider increasing budgets and scale of promotions in India,” he added.

Encouraged by signs of growth Misezhnikov informed that the national carrier El Al Airlines may look at other cities to increase network airlines and is also considering code share with Jet Airways. “The cities we may consider expanding into include Kolkata, Goa, and Kochi. These are places which have a substantial Christian population and will consider coming to Israel for pilgrimage trips,” he said. He also said that he has held extensive talks with the civil aviation minister, “I have discussed India to allow Israel’s second official carrier Al Kiya to enter India and in reverse allow another Indian carries into Israel.”

Israel is also looking at promotion film shooting in the country, Misezhnikov plans to promote Israeli films in India as a way to develop connections. There are also plans of developing business based tourism opportunities like MICE, agro tourism. Tour operators in India have started offering variety of packages supporting leisure, agro, adventure and eco-tourism to Israel.

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