Hospitality sector sees decade low hotel occupancy

Published: 26th June 2013 10:24 AM  |   Last Updated: 26th June 2013 10:24 AM   |  A+A-

Every second room in Indian hotels is going unoccupied, as India’s hospitality sector grapples with a slowdown.

According to the Federation of Hotels & Restaurant Associations of India (FHRAI), average hotel occupancy in 2012-13 dropped to the lowest in a decade at 58.3 per cent  and average room rate fell to `6,214, the lowest in six years. Downturn has hit the Indian hospitality sector, dragging occupancy and daily room rates down.

In the first four months of the year, both occupancies and room rates softened. While in January occupancy was marginally up by 3 per cent, in February it dropped by 1.6 per cent and in March by as much as 6 per cent as compared to the same period last year.

The average daily rate and revenue per room (RevPAR) also slipped in the January-April period. 

“On the back of subdued business sentiment and lower than expected growth in FTAs, the occupancies in major metro cities have either been flat or witnessed a marginal dip. However, the average rates and RevPAR has been under pressure, primarily on account of competitive pricing due to the significant addition to room inventory in most markets,” said FHRAI in its report. 

As of April 2013, the active development of supply (i.e hotels which are either in the construction phase or at the final planning stage) is projected to be 54,478 rooms across the country. “It’s a double whammy. On one hand the demand is slackening and on the other there is an increased supply,” said a hotelier.

The foreign tourist arrivals in the month of April didn’t see any growth as compared to last year. Besides Euro-crisis that has led to lower  footfalls from the European market, the reports of India being an unsafe country in the foreign media after the Delhi-gang-rape in December and other rape cases that were reported, have also led to the dip in international arrivals.


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