With three new five-star hotels bringing in an additional 1,300 rooms to the Chennai's existing 2,000-room inventory, tariffs are expected to fall by at least 10%, or the cash discounts may rise.

ITC recently launched its 600-room ITC Grand Chola. Hotel Leela with 320 rooms and Park Hyatt with 201 rooms are set to be inaugurated in October, creating a glut in the industry. Among other luxury properties to be opened soon are JW Marriot and Westin. 

\"Tariff realisation is lower than usual and is between Rs 5,500 and Rs 7,000 now,\" said T Nataraajan, honorary secretary, South India Hotels and Restaurants Association (SIHRA), and CEO, GRT Hotels and Resorts. \"With the global economic slowdown, corporate executives are cutting down on travel, and so are leisure travellers, and this impacts the hotel industry,\" he said.

\"Prices have fallen by about Rs 700 per room compared to last year,\" said an official from Le Royal Meridien. \"But one can\'t say if they would fall further because the new hotels are high capital investments and can\'t drastically drop prices for competition,\" he said. 

Chennai is not isolated in this glut. A research report by Crisil said that occupancy levels in luxury hotels would hit a decadal low. As the increased room inventory intensifies competition, average rentals will dip by about 10% in the next two years. The revenue per available room will dip by around 12% in 2013-14 and will be about Rs 3,900, the lowest since 2005-06, the report said.

(You need to login first to read complete news).
New User? Register for FREE!
» Back to Travel News