Mushrooming of new hotels and increasing number of business travellers have contributed to the city being one of the most economically-priced when it comes to hotel room tariffs.
If the latest Hotel Price Index report by Hotels.com is any indication, Chennai has seen a marginal price rise of one per cent in hotel room rates in 2011 when compared to last year. In other cities such as Mumbai, Bangalore, Delhi, Goa and Agra, the percentage increase for the same period has been between three per cent and 16 per cent.
Hoteliers say the trend in pricing is here to stay with many more hotels coming up in the city in the next few years. Some of the new hotels are ITC Grand Chola Hotel, Westin, Park Hyatt, JW Marriott and SRM Hotels.
“Because of the steady supply of rooms, Chennai is not likely to see an increase in average room rate (ARR),” says Shafee Ahmed, Director, Velacity.
In an indication of the competitive scenario in the city, the number of days on which occupancy was above 90 per cent has dropped from 200 days in 2007-08 to 100 days now.
“In 2013, this may go down to 70 days,” says Mr. Ahmed. This is a positive sign for customers as it means more rooms are available and rates are unlikely to go up. Three years ago, the ARR was increasing by 5 per cent every year, say experts.
More hotels coming to the city would also mean luxury hotels will either slash their ARR or cope with for lower occupancy. “Maintaining rates is an uphill task. In fact, room rates in the city are stuck for the last two years. The ARR in the five-star category for the last two years has been Rs. 7,000,” says T. Nataraajan, secretary of South India Hotel and Restaurant Association.
“Rates of five and four star hotels are almost on par, and on Fridays, Saturdays and Sundays the rates dips to as low as 40 per cent,” says Mr. Nataraajan.
The price index would next see a change after September, and industry sources say with service tax for food, liquor and other services, going uphill, the challenge is to strike a balance.
