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Hotel tariffs drop 20% after terror attacks

By Kalpana Pathak in Mumbai
December 03, 2008 07:26 IST
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Hotel tariffs have dropped by as much as 20 per cent after last week's terrorist attacks on Mumbai that forced international tourists to cancel travel plans.

Tariffs may fall as much as 45 per cent in some centres coupled with the impact of a global slowdown that is already forcing companies to cut travel plans, analysts and travel agents say.

According to industry players, tariffs for hotels in Mumbai alone have come off from Rs 12,000 to Rs 10,200, overnight. Five star hotels in Kerala and Jaipur, on the other hand, have seen a 10 to 12 per cent reduction in room rates.

Travel agents say many hotels will see cancellations in the next 15 days.

Travelguru, an online travel agency, said Mumbai tops the list of cancellations it has received, followed by Delhi and Bangalore.

"We are seeing several cancellations not just for Mumbai hotels but for other cities as well. About 25 per cent of our bookings for this week have been either cancelled or rescheduled," said Ashwin Damera, Founder & CEO, Travelguru.

Travelguru is refunding in its entirety for the bookings done for Taj and Oberoi. "We aren't charging any cancellation fee from the customer," Damera said.

While Goa hotels have seen a decline of 20 per cent from Rs 7,500 to Rs 6,000 in the rates, tariff for five-star hotels in Hyderabad are predicted to drop from its present Rs 12,000 to as low as Rs 6,500, over 45 per cent.

"Hyderabad which was just picking up as an international conference destination will see a drop in room occupancy from the current 80 per cent to almost 50 per cent. This will also be due to new inventory coming in the city," said C Venkateshwara Prasad, managing director, Travel Express Limited, a Hyderabad based travel operator.

The drop comes at a time when hotels had revised selling price for the rooms this October by as much as 50 per cent or more. The rack rates however, saw a 10 to 15 per cent increase for representational purpose only.

"Profit levels of the hotels will be severely hit since the travel industry begins its season from November to March. At present the bookings could remain cancelled till January 2009. It might, however, pick up in February," said a Mumbai-based analyst.

Delhi-based The Claridges Hotels and Resorts group has decided to introduce a "Global Meltdown Tariff" to sustain business. The hotel has revised the current rates downward by 25 per cent.

"Keeping in mind the interest of our clients in these tough times, we have decided to offer this special tariff. If the situation doesn't improve, we might slash rates another 15 to 20 per cent," said Peter Leitgeb, president and CEO, The Claridges Hotels and Resorts.

Experts however, believe that leisure travel by domestic tourists within India will help the hospitality and tourism industry sustain itself through tough times.

"Foreign tourist arrivals in India account for less than 5 per cent of the total travel and tourism market across star categories. In the present situation, hotels will be forced to substitute their international leisure guests with domestic guests," said Siddharth Thaker, executive director, HVS Global Hospitality Services.

With inputs from Seema Sindhu in Delhi and Archana M Prasanna in Bangalore
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Kalpana Pathak in Mumbai
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