Average occupancy across Mumbai hotels has more or less remained stagnant at 2008 levels, despite average room rates quoted way lower than in 2008.

In the Delhi NCR region, however, the average occupancy was lower than 2008 levels while room rates were higher than in 2008.

With the Indian hospitality industry emerging as one of the key industries driving the growth of the services sector, a FHRAI Indian Hotel Survey has noted a marked downward trend over the last five years in average occupancy and room rates for 33 cities across the country.

While the Delhi NCR region had an average occupancy of 64.8 per cent in 2008-09, it has slipped to 57.1 per cent in 2012-13. However, room rates, which were Rs 6,087 in 2008-09, have climbed to Rs 7,456 in 2012-13, noted the survey.

In the case of Mumbai, average occupancy was flat at 71.5 per cent in 2012-13, as compared to 71.2 per cent in 2008-09, despite lower room rates of Rs 5,971 in 2012-13, to the average rate of Rs 6,822 in 2008-09.

Room rates

Across the 33 cities surveyed, Jodhpur had the highest average room rates at Rs 8,431, while Delhi and Gurgaon were next at Rs 7,000 plus. Thiruvananthapuram was the lowest at Rs 1,474, the survey showed.

As MD Kapoor of the Federation of Hotel and Restaurant Associations of India (FHRAI) pointed out, 2013 was a challenging year for the industry on account of the global and domestic slowdown.

“This is also visible in the pressure witnessed on hotel occupancy and average room rates,”' he said, adding that hotel companies had prioritised realignment of their cost structures, optimising operational efficiencies and were adopting flexible business models.

Rate cuts

The survey has noticed a trend, where hotels are dropping average rates to attract customers in the face of increased supply.

“As a result, a new customer mindset is emerging that is sensitive to the price instead of the traditional one, which was more loyal to a hotel or brand. As operators battle increasing departmental costs and owners struggle with debt service payments, hotel companies need to reconsider their rate strategies,” an official pointed out.

It is estimated that major cities across the country witnessed a growth of 11 per cent in hotel room supply in 2012-13, while demand exhibited a strong increase of 9.2 per cent during the same period.

Branded rooms

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