Already hit hard due to heavy tax burden and increase in power tariff and fuel surcharge adjustment, the hotel industry is now facing a fresh problem: the impact of the Samaikyandhra stir.
The effect is such that most hotels are resorting to downsizing. There is a drastic fall in occupancy rate and the bookings for wedding receptions and corporate meetings are either being cancelled or are being held on a low scale.
As the indefinite strike by APSRTC and adverse reports on the agitation crippling normal life spread through the media many are not coming forward to go ahead with their scheduled visit to the city.
Operational costs up
During an interaction with some hotel managers, The Hindu could find that the current impasse had increased the operational costs. The increase in vegetables and other essentials are having a telling impact on their operations.
“It’s a fact that the hotel industry is not doing well for the past three to four years. The heavy tax burden and exorbitant electricity charges without ensuring uninterrupted supply have increased our woes,” Sandeep Reddy, Group General Manager of Hotel Palm Beach, said.
He said they increased the workforce from 150 to 250 with the hope of doing good business but now due to so many problems and uncertainty, they were being forced to reduce it to 180. Operation and administrative cost had almost doubled in the past two years. Gross Operating Profit is the lifeline of the hotel industry. “Loss of almost 80 per cent occupancy has cast a heavy burden on our day-to-day operations,” he admitted.
Projects only on paper
Hoteliers feel that there is no pro-active policy on the part of the government. The projects like international convention centre, Ayurveda village-cum-spa, health city and the development of a Buddhist circuit have remained only on paper for long. “We are almost spending three times more on generators due to power problem. Now there is restriction on use of borewells and we are being asked to lay pipeline of our own from the source of supply to get municipal water. We are forced to collect almost 24 per cent of the bill at banquet from our customers towards VAT and service tax,” I.T. Ramakrishna Rao, Deputy General Manager of Hotel Dolphin, said. The hotels are not able to decide whether to offer buffet lunch and dinner or not due to poor turnout. “It is not possible to offer buffet unless there is guarantee of minimum clientele,” a hotel manager said. “Tourists and corporates are scared of visiting our city because of uncertainty. Moreover, we are not sure whether our staff will reach our hotel on time or not due to RTC bus strike and road blockages. Even production cost has gone up so high that we are forced to cough up nearly Rs.100 for a kg of premium quality onions,” pointed out Seshagiri Mantri, director of Vihar, Rushikonda.
