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Little to Cheer For Hospitality Industry in 2011
Tuesday, 20 December 2011, 18:28 IST
New Delhi: As concerns of euro-zone economic crisis and weak rupee cast shadow on India''s hospitality sector, there were few reasons to raise a toast in 2011 for the industry despite increase in both inbound and domestic travel.
Though a there was a modest hike in hotel occupancy, revenues per room remained almost unchanged due to over-supply and on the whole analysts described 2011 as "a bit of a flat year". During the year gone by, the sector that contributes about 9 per cent to India''s GDP saw the international hotel chains, including Las Vegas-based MGM Hospitality and UK''s Whitbread and Best Western, expanding rapidly in the country.
On the other hand, domestic hospitality firms such as Oberoi, ITC and Leelaventure were in the news more for board room actions, although they had their share of expansions, too. There was bad news for both consumers and companies both in the very beginning of the year as the government decided to impose service tax on food served at air-conditioned restaurants, and hotel rooms that charged above 
1,000.
"Hotel occupancies in 2011 improved by about 4-5 percent to touch an average of about 67 percent but the average room rates were almost flat with an increase of 1-2 percent, primarily due to over-supply of rooms," Elara Capital Analyst Himani Singh told.
This was happening in a year when India decided to accelerate efforts to projects itself as a tourist-friendly nation under the ''Incredible India'' campaign and draw more visitors from across the world by expanding tourist visa on arrival scheme to more countries.
The government extended the scheme in January 2011 to tourists coming from an additional six countries -- Vietnam, Philippines, Indonesia, Myanmar, Laos and Cambodia. Earlier this facility was extended to only five countries -- Finland, Japan, New Zealand, Singapore and Luxembourg.
Hospitality consulting company HVS felt the government action was not enough to accelerate growth of the sector. "2011 has been a bit of a flat year. Except for a few cities like Bangalore and Delhi, many other cities have seen a decline in the overall performance," HVS India Managing Director Manav Thadani said.
Part of this has been because of the pure business sentiments which plummeted in the past six months due to government inaction, he said.
Perhaps, the only silver-lining in the near future is that with rupee crashing by 20 percent India suddenly is a much more affordable destination for foreign travellers. "Also the big domestic market may choose to focus on India rather than overseas travel," he said. .
Source: PTI
1,000.
"Hotel occupancies in 2011 improved by about 4-5 percent to touch an average of about 67 percent but the average room rates were almost flat with an increase of 1-2 percent, primarily due to over-supply of rooms," Elara Capital Analyst Himani Singh told.
This was happening in a year when India decided to accelerate efforts to projects itself as a tourist-friendly nation under the ''Incredible India'' campaign and draw more visitors from across the world by expanding tourist visa on arrival scheme to more countries.
The government extended the scheme in January 2011 to tourists coming from an additional six countries -- Vietnam, Philippines, Indonesia, Myanmar, Laos and Cambodia. Earlier this facility was extended to only five countries -- Finland, Japan, New Zealand, Singapore and Luxembourg.
Hospitality consulting company HVS felt the government action was not enough to accelerate growth of the sector. "2011 has been a bit of a flat year. Except for a few cities like Bangalore and Delhi, many other cities have seen a decline in the overall performance," HVS India Managing Director Manav Thadani said.
Part of this has been because of the pure business sentiments which plummeted in the past six months due to government inaction, he said.
Perhaps, the only silver-lining in the near future is that with rupee crashing by 20 percent India suddenly is a much more affordable destination for foreign travellers. "Also the big domestic market may choose to focus on India rather than overseas travel," he said. .
Source: PTI