As airfares soar, tourist inflow nosedives

NEW DELHI: Hotel rooms that you could not get for love or money till a few months back are now available for song. The increase in price of aviation turbine fuel and economic slowdown has spelt doom for the hospitality and tourism sectors, with hotel room tariff crashing almost 50% in certain cases. Several city hotels have applied summer rates nearly after two years as this is the first time since 2006 that they are witnessing occupancy as low as 50% in June and July. Since pricing is demand-based, the severe room shortage meant they need not have resorted to lower tariff in past two years. "Corporates have cut travel of their executives which has affected our occupancy. Although the tariff is in the range of Rs 5,000-Rs 8,000 in five-stars, they are still pretty affordable. But with airfares being where they are, personal leisure travel is becoming out of reach of the middle class," said an leading hotelier. Hotel consultants HVS International-India's MD Manav Thadani added that the trend is likely to continue in the next 12 months. Thadani said, "There is a slight decline in occupancy levels all over India now and it will remain so in the next 12 months keeping in view the somewhat negative turn the economy has taken. The decline in room rents will be around 10%." Almost all hotels are feeling the pinch. Federation of Hotel and Restaurant Association of India VP Rajendra Kumar said, "Rooms that were in the range of Rs 12,000-Rs 20,000 are now going for Rs 6,000-Rs 9,000. The demand — and rates — could pick up once travel season begins in September." Only top five-star deluxe properties like Oberoi and Imperial have not witnessed a reduction in rates. Oberoi's spokesperson Ketaki Narain said, "Our average room rates haven't fallen. In June 2007, the figure was Rs 9,302 while this June, it was Rs 11,083." The crisis sparked by the rising price of crude oil seems to have come a full circle for the travel industry, as it has affected every sector. In the good old days of low air fares, high hotel tariff in Delhi meant companies started sending their executives on a day trip to Delhi as staying overnight was more expensive than flying again to the Capital next morning. Then airfares started shooting and have now reached such levels that companies are cutting travel costs with a heavy hand. This, in turn, has led to a sharp drop in room tariff. Sushil Wadhwa, MD and CEO of Platinum Incentives and Events Ltd that organises conventions, meetings and events for corporates, said, "Companies are cutting down on spending on travel. There is a clear cut message that executives should travel only when necessary and make do with low cost options like video teleconferencing. People who have the facility to travel business class have been asked to take economy and group conventions and meetings have been hit by about 40%. The individual business traveller has also cut short his/her travel." Blaming the hike in ATF, Indian Association of Tour Operators (IATO) president Vijay Thakur said that long haul destinations like India had suffered resulting in a 10-15% dip in arrivals. "This has caused a slashing of room rents in the five-star category. Delhi has shortage of rooms and we have felt the dent acutely in July. But we hope that the peak season is not impacted as much," he said.