THE BOOMING hospitality industry has seen the cities of Mumbai and Delhi recording higher occupancy levels in the five-star and five-star deluxe segments for the first quarter of the current fiscal, but surprisingly Bangalore has registered a fall. Known for its skyrocketing average room rents (ARR), Bangalore has begun witnessing softening of ARRs as well. During the April to June period of FY08, Mumbai registered an occupancy level of 80% with Delhi standing at 74% but Bangalore declined to 68%, showing a 10% fall, when compared to the comparable quarter of the previous fiscal.

The ARR in Bangalore has also gone down to Rs 14,000 in the first quarter when compared to Rs 16,000 in the comparable period of the previous fiscal. Industry sources are attributing this decline in occupancy level to several causes like rapid development of the serviced apartments, unbranded standalone and budget hotels in the city. Also the lower room rents of serviced apartments is leading to a trickle effect in the market.

“Serviced apartments are slowly but steadily eating into the deluxe market. Therefore, we are adjusting our strategy to the softening of ARRs in the five-star deluxe segment as hotels cannot dictate the ARRs anymore,” says Peter J Leitgeb, outgoing president of Leela Palaces & Resorts. The serviced apartments and unbranded hotels are further attracting cost-conscious domestic travellers and corporates. Several corporates are increasingly blocking rooms in serviced apartments.

Aslam Gafoor, Director of Operations (Asia) Hotel Dynamics, a global hospitality consultancy firm, says, “Looking at last year’s occupancy level and ARRs, hotels in Bangalore projected a good jump this year, but many have not even been able to sustain last year’s numbers. Also the leisure travel market in the city is negligible.” Lack of leisure business further leads to a significant dip in occupancy levels over the weekends. This fall in weekend traffic drags down the overall occupancy level on an annualised basis. Like the leisure traffic, the meetings, incentives, conventions and exhibitions (MICE) traffic is also not substantial. Delhi and Mumbai score over Bangalore with better convention facilities. Bangalore is yet to explore the huge potential in the MICE segment, says P K Mohan Kumar, area director & GM, Taj Hotels.
urvashi.jha@timesgroup.com.

Source: Economic Times