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Hotels fear 25-30% loss in business

By Swaraj Baggonkar in Mumbai
November 28, 2008 12:43 IST
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Hotels in India may see a 25-30 per cent drop in bookings by foreign in-bound tourists, following the terrorist strike on luxury hotels and blasts in Mumbai, which claimed more than 100 lives and left over 250 injured.

The attack comes at a time when the hotel industry is already suffering from weak demand. Thanks to the credit crunch, companies have decided to curb overseas travels and move to low-cost alternative accommodation.

"As a result of the economic slowdown, cancellations were already happening. The terrorist attack will now lead to substantial losses. We expect cancellations to go up by 25-30 per cent," said SP Jain, president (western region), Hotel and Restaurant Association.

Even though the terror attacks occurred in south Mumbai-based Trident and Taj hotels, tourists in Delhi's Le Meridean , Shangri La and Taj MahalĀ  were seen cancelling scheduled events.

"In the short term, the impact of these attacks on the Indian hospitality industry will be quite visible," said Manav Thadani, managing director, HVS International-India, a hotel consultancy firm. The flow of foreign tourists has dropped 10-15 per cent in the past few months, most of whom come from the US and the UK, according to Thadni.

The English cricket team, which is touring the country, has already announced the cancellation of the remaining tour on security concerns.

Hotel industry expert expect embassies and companies to issue travel advisories warning its citizens and officials against travelling to India.

Authorities of Great Britain, Australia and Canada have advised their citizens visiting India not to travel to Mumbai. Daiichi Sankyo, Japan's third-biggest drug maker, and Germany's Merck KGaA have warned its officials to stay away from Mumbai.

"The attacks will impact the travel plans of international travellers. It is normal for people to feel unsafe at this hour. Business is expected to slow down up to a fair amount", said, Heinz Egli, general manager, Novotel Mumbai. Novotel is a brand owned by the European hospitality giant, Accor Hospitality. India saw an influx of about 5 million foreign tourists last year, which was in line with the average growth of 10-12 per cent recorded in the last few years.

However, company executives of hotel companies fear that it will be difficult to match that level this year.

Julian Groom, COO and executive director, DB Hospitality, said, "This is the peak season for the hotel industry and such attacks will negatively impact the business. The result of this will only be felt in the forthcoming week when we can see corrections happening in bookings".

Globally, terrorists have been attacking luxury hotels, especially patronised by international tourists, to gain international attention and mileage out of the events, which has hurt business of these hotels.

"The income has already slowed down and this is close to a death blow to the business. The international tourist inflow will be impacted for sure specially the luxury segment," said Lalith Seth, managing director, Sree Raj Travels.

Additional reporting with Kalpana Pathak & Neeraj Thakur

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Swaraj Baggonkar in Mumbai
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