Hoteliers are grappling with the global economic slowdown as corporate houses tighten their purse  strings, forcing them not to hike tariffs this year. Excess capacity has also cast a shadow over the hospitality industry and hotels in major metros failed to cash in during the peak season.

Generally, room rates are the maximum during the final week of December and first week of January and this is the peak season for the travel and hospitality industry. Occupancies in the top hotels have witnessed only a five to seven per cent increase, half of what it normally is during this time of the year as per a report in FC by Jharna Mazumdar.

Ajay Bakaya, executive director of Delhi-based Sarovar Hotels said that the hotel has revised its tarifs in the first week of October only by around 5-7 per cent. “While the room tariffs remained flat occupancy levels are increasing. We are not able to increase room rates as there is too much of competition and oversupply in the market putting pressure on rates.”

Bakaya said that on an average there is around 15 per cent excess supply in the market. Echoing similar view Jyotsna Suri, chairperson and managing director, The Lalit Suri Hospitality Group said, “It has been a mixed year for the Indian hospitality and tourism sector. The hotel occupancies witnessed a marginal improvement by about 4-5 per cent, while the average room rates largely remained stable with 1-2 per cent increase.

In the Union Budget 2011-12, the sector received a blow from the government in the form of 10 per cent service tax that has imposed on hotels.

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