The increasing number of swine flu cases in the country -- 56 affected people so far -- is putting the hospitality industry on the edge. With the monsoon season to begin and hotels hoping for a robust business at leisure destinations, swine flu could play spoilsport for the hotels, said industry players.
At leisure destinations, international tourists form around 35 per cent of the clientele, with around 20-25 per cent coming from the US alone. Last year, tourist arrival in the country was 5.37 million, a fifth of whom stayed in five star hotels.
"We are keeping a close watch on the change in regulations which might take place if the ministry of external affairs takes a strong stance on the inflow of tourists due to swine flu," said Sanjoy Pasricha, vice-president, sales and marketing, Hotel Leela Venture.
However, Pasricha is quick to add that no outbound reservations have been cancelled so far. Inflow of tourists from the US alone is around 24 per cent at Leela's various properties.
"With the past quarters pretty tough, we are looking forward for doing better business in the monsoon season ahead. While business destinations have suffered, we are positive that leisure destinations will do well. We are watchful of the swine flu condition," said a senior executive from a Kerala-based five star hotel.
At last count, in May, the number of tourist arrivals in the country was about 295,000, compared with 384,000 in the same month last year.
The global economic slowdown, infusion of additional inventory in destinations like Bangalore, Mumbai and Gurgaon, and price correction in the average room rentals have also made the past few quarters tough for the hotel industry.
The recession has had a major impact on the business of five star hotels. "While occupancy in hotels in Delhi is at 20 per cent, as against 40-50 per cent last year, hotels in Mumbai have registered an occupancy level of 30-35 per cent, compared with 50-55 per cent last year. Bangalore's occupancy rate is at 45 per cent, against 60 per cent last year," said Subhash Goyal, chairman, Stick Travel Group.
The Lalit, a five star chain, has also seen a decline of 5 per cent in its business in the April-June quarter. "Other than our Goa property, the occupancy of all other hotels is down by 2-5 per cent," said a spokesperson for The Lalit.
"The five-star hotels have reduced their Average Room Rentals by 30 per cent this season. While last year, the hotels' ARR stood at Rs 7,000-10,000, this year the ARRs are ranging between Rs 5,000 and 8,000 per night," said Himani Singh, equity analyst with Delhi-based Centrum Broking.
"While the average occupancy of the hotels stood at 70-72 per cent last year, this year it is down at 58-60 per cent. The continuing economic recession will have an impact of 24-28 per cent on the top line of the five-star hotels," Singh added.
According to the industry players, the total impact on top lines had been anywhere between 25 and 30 per cent. Tatas-promoted Indian Hotels Company Ltd reported a 64 per cent occupancy in the fourth quarter of financial year 2009-10.
During the year, occupancy stood at 66 per cent, as compared with 73 per cent in the previous year.
According to analysts, occupancy and ARR of the company will continue to be subdued in the first quarter of this financial year, with estimated occupancy of 58-62 per cent and ARR at below Rs 6,000 levels in a majority of the regions.
Only The Claridges is reporting upbeat news during this recession, as the company said it has registered an increase in its occupancy rate for the June quarter. "This year between April and mid-June, The Claridges, New Delhi, has been doing an occupancy of 70 per cent, as compared with 60 per cent earlier," said Peter J Leitgeb, President & CEO.