Hotels across the board plan hike in room tariffs

Customers will have to shell out more for their hotel rooms this year as hotel chains across the board are looking at an increase in average room rates owing to improved occupancies in the market and favorable demand-supply equations.

Chains such as ITCNSE -0.09 %, Accor Hotels and budget brand Sarovar said revisions are expected across brands and rates could go up between 8 and 10% this year.

“Across ITC Hotels, trends in the financial year 2018-19 have been very positive in terms of increased demand demonstrating an approximately 20% growth in yields. With the inclusion of ITC Grand Goa, ITC Kohenur in Hyderabad and the soon to be launched ITC Royal Bengal in Kolkata, the overall average room rates of the chain are likely to be higher than the corresponding period of the previous year. Most markets are likely to see some sort of rate correction,” said Dipak Haksar, ITC Hotels & WelcomHotels.

Mandeep Lamba, president, South Asia, at HVS Anarock said the Indian hospitality industry’s operating performance has been largely encouraging and has maintained a slow but upward trajectory over the past two years.

“We feel that 2019 could see a significant growth in rates across most key cities and we expect double digit growth which will put the performance on a firm upside as demand outstrips supply by a large measure,” he said.

The Indian hotel sector is inching closer to the 70% average occupancy mark and the nationwide average occupancy rate of around 66% in 2017-18 was the highest the industry has witnessed in almost a decade as per various industry estimates.

A sector report by HDFC Securities in October last year said demand in the near

term is projected to outpace supply, thereby improving occupancies to 68-70% which will drive a healthy average room rates growth over the financial year 2019-21. For Sarovar Hotels, rates could rise by around 8% across its hotels, compared with about 5% last year.

"Rates could rise more in the larger city markets like Delhi, Mumbai, Bengaluru, and Hyderabad. The downturn happened in 2008 but occupancies have gone up over the past few years. Our occupancy rates in 2018 were about 70%," said Ajay Bakaya, managing director at Sarovar Hotels.

Brij Bhushan Chachra, VP, revenue management and distribution at IHCL said the company witnessed an increase in average room rates across markets last year. "Good occupancy levels gave confidence to increase average rates and this trend is expected to continue in the coming year," he said.

Accor Hotels said it is expecting average room rates to increase by about 10% this year on the back of improved air connectivity and better distribution systems.

“In cities where there is no new supply and especially in high demand markets such as Bengaluru, Pune, Hyderabad, Delhi and Mumbai, average room rates will continue to increase. We have achieved greater rate parity between offline and online pricing and availability. Such integrated approach helps to block leakages of rates from offline to online," said Arif Patel, VP, sales, marketing, distribution and loyalty at Accor Hotels.

Chalet Hotels, which went public this year, said in its draft red herring prospectus that average daily rates in markets such as Mumbai are expected to grow at a faster pace than in the recent past years, arising mainly from high occupancies and moderate new supply.

Source:-https://economictimes.indiatimes.com/industry/services/hotels-/-restaurants/hotels-across-the-board-plan-hike-in-room-tariffs/articleshow/67936247.cms