Hospitality sector to revive not before mid-2010

Hospitality sector to revive not before mid-2010
The Financial Express, July 14, 2009, Page 12

Sulekha Nair, Shweta Bhanot, Mumbai

The hospitality industry is expected to limp back to normalcy not before the second quarter of 2010. Much depends upon the biggest inbound season starting October, thus keeping the profitability of the industry under pressure, say experts.

The industry has seen an overall fall of 25%-30% in revenue per available room (RevPar). RevPar is an important metric relevant to the hotel industry. Often it is utilised as a primary statistic indicating the overall financial performance of a property. Food & beverage (f&b) business including banquet and conferences are also performing under pressure. “Though f&b is showing signs of recovery on the back of strong domestic demand, banqueting and conferences are still way behind from recovery,” said a Delhi-based hotelier. Banqueting and conferences are around 10%-15% down compared to last year.

HVS International-India managing director Manav Thadani said, “The industry has been able to withstand the bad six to seven months of late 2008 on the back of the strong early months in the year. However, the real picture of the industry will be known only next year (once it has gone through the biggest inbound season starting October this year).”

All the major cities in the country are currently operating at around 15% lower occupancy rates compared to last year. The average room rates (ARRs) have slipped down by 15-20% across the major cities in the country.

Pointing that one needs to keep in mind that comparison is being done to peak attained by the industry, Rohit Khosla, general manager, Taj Lands End, Mumbai, claims that despite the slowdown, the industry is still profitable.

“The margins are normal, though not exorbitant as they were, say a year ago,” he said. “This is the time to consolidate and re-position ourselves,” he said talking on the sidelines of the 15th regional convention of Hotel & Restaurant Association (H&RA) Western India last week. The hotels in Mumbai have seen a fall of around 15%-20% drop in room rates in the last couple of months.

Zuri Group of Hotels director Preeti Chand said, “A positive trend in ARRs has been seen since mid-June. From July onwards, the ARRs are looking up and we hope to cover up better than last year.” She added that the company expects this financial year to end positive on both the f&b and banqueting segments.

Corroborating the same, Keshav Baljee, vice-president, corporate affairs, Royal Orchid Hotels Ltd, said, “We expect business to go back to usual by October.” He added that the recovery in the industry has started with f&b and overall businesses showing signs of improvement.