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Hotel industry faces crisis

Mumbai, Aug 8 () Hotels across India are having occupancy rates below 60% and coffee shops, bars and restaurants are near empty. The sales managers are chasing clients to host functions in the conference halls. Travel agents and tour operators are wooed by hotel chain with discounts. This scenario is worse in the metros where room occupancy has dropped by a tenth. The hotel industry says that in the last ten years they have hit such a low.

To reduce this growing crisis, hotels had to slash room rates by 15%, even as they continue to lose money at their restaurants and conference facilities. Executives say restaurants and coffee shops are near empty with the air-conditioning and lights in the on mode. Management staff attending seminars or conferences on behalf of the hotel has been stopped. The company-paid expense account has been slashed.

Tour operators who used to chase hotels to get good deals are now seeing various chains coming to them for business. One reason is that many of them that were under construction had started functioning in the last two years. A total of 40% increase in room capacity was added. This was at a time when the traffic has grown only 15%.

With competition hotting up for the few visitors, the rates fell as the industry panicked and around 30% of the room rents have been slashed. Rooms that used to charge Rs 10,000 plus has gone below Rs 6000 now. The situation will get worse as in two years another 54,000 rooms will come. Last fiscal 12,000 rooms were added. Travellers from Europe have come down due to euro crisis. Airfares keep changing and corporates have cut down travel.

Domestic business through lounges, bars and restaurants has dried up. A hot spot like Le Meridien in Delhi, during this June clocked a drop of 15% occupancy and thereby dropping rates by 20%. Most of the branded ones have hardly all rooms lit up in the nights, with one -third of them vacant.