June 9, 2017 TnH Global 0

Significant drop in ARRs & declining FTAs are resulting in poor growth for hotels

The Hotel and Restaurant Association of Western India (HRAWI) has strongly contradicted recent surveys suggesting that the Indian hotel industry may have come out of a decade long slumber. The association has opined that while it may be true for a small section or class of hotels, it definitely does not hold good for the overall hotel industry. It has, in fact indicted the opposite to be true.

“The situation on ground is different from what is being claimed. While there may be a spur in the domestic activity or traveling, there is no evidence to establish that hotel business is bouncing back. The Average Room Rates (ARRs) are 30 per cent lower than what they used to be ten years ago. The trend in rising occupancy is presently due to the popularity of the Online Travel Agents & Aggregators (OTAs) and has little to do with hotel business picking up. To the contrary, hotels are barely able to set-off the operating costs and other fixed expenses. The industry also now has to face unfair competition in the trade with the emergence of the so called “Home Stay” option. This too has started to nibble at the hotel industry’s share of the pie without having to deal with the policies, regulations, taxes, laws and licences which the industry has to put up with,” says Dilip Datwani, President, HRAWI.

The association has also pointed out that the Foreign Tourist Arrivals (FTAs) have not really picked-up as much as one would have hoped for despite the Government’s easing up of Visa policies for a host of countries. As per a report by the Ministry of Tourism, Government of India the percentage share of FTAs in India during February 2017 among the top 15 source countries was highest from Bangladesh at 17.46 per cent.

“There is a huge percentage of Indian expats and Indian nationals who stay and travel abroad. So when these visas are stamped on arrival, it may not be taking into account that these are not really all foreign nationals or even tourists in that sense of the term. We do not think there has been much change in the curve for us as far as foreign guests’ stays are concerned,” says Bharat Malkani, past President, HRAWI.

“It has been over a decade that the hotel industry has been operating in a stifled business environment. The numbers do not reflect the ground reality,” concludes Datwani.