Luxury hotels launch promotional schemes to sell their suites and increase occupancy
Tariffs would remain the same, but hotels would add weekend gateways, extra hours to check-out, luxury car pick-ups, free internet access and white-gloved butler service
Tuesday 11-Mar-2014Mumbai
In the spring of 2013, when managers at East India Hotels were grappling with dwindling footfalls at their Oberoi hotels, someone came up with an idea: at their 100-odd pricy suites across India, tariffs would remain the same, but they would add weekend gateways, extra hours to check-out, luxury car pick-ups, free internet access and white-gloved butler service.
The strategy was simple yet aggressive - offering more value to the luxury consumer. It hit the bull's eye. In the first nine months of this fiscal, Oberoi sold 35,000 more rooms than the same period last year when it sold some 3.3 lakh room nights. While its revenues grew 10% during the period, net profit zoomed 145% to Rs 98.8 crore, helping the hotel group tide over the slowdown in hotel business with much aplomb as per a report in ET.
"There is a segment of people who can afford to pay for Canali suits and business class travel. So we decided to aggressively go after this customer base to come and stay with us and come back over and over again," Kapil Chopra, president of Oberoi Hotels, said.
Despite the slowdown in the economy and many consumers looking to curb their avoidable expenses, the top four luxury hotel chains in the country - Oberoi, ITC, Taj and Leela - have managed to sell more rooms this year by aggressively pitching their most expensive offerings, making up for any shortfall in other segments.
Hospitality experts said it made sense for luxury hotels to sell their suites that were otherwise lying vacant in a tough market.
"Rooms are a perishable commodity, how you package them is critical," hospitality consultant Homi Aibara said. "Typically general occupancies of a hotel are at 60% and suite occupancies are 45%. Bringing up the suite occupancies to 60% as well will translate into an incremental increase in income," he said.
PR Srinivas, director of hospitality at real estate consultancy Cushman Wakefield, said, "The down cycle is pushing hotels towards yield management, i.e. without reducing the rate too significantly, they are adding to services offered in the same price."
Luxury hotels have employed a host of marketing activities to lure customers, with some suites starting at approximately Rs 17,000 a night across categories and going up to Rs 30,000 a night. While room rates have remained constant this fiscal year, or went up by about 10% in some cases, they added value to their existing packages and tweaked their suite services for their top-end customers. All this helped the top four luxury hotel chains to report 10%-15% year-on-year increase in room night sales in the three quarters ended December.
The Leela, which has approximately 2,215 rooms across its hotels, introduced over eight types of stay offers to attract more customers. Rajiv Kaul, president at Hotel Leela Venture, said occupancy increased to over 80% across its hotels in the fourth quarter, and average room rate (ARR), too, jumped about 15% in the previous nine months with premium suites accounting for 75% sales.
"This has been through a combination sale of value added packages as well as discounts," Kaul said.
All this helped Leela report 2% rise in sales at Rs 204.08 crore in the quarter ended December, although it made a net loss.