The slowing economy has found another victim in the form of hospitality industry with nearly seventy five of the big hotels already putting up ‘for sale’ boards to avoid further losses. Apart from that, several others are raising red flag amidst wilting room rates and falling check-ins. Majority of hotels in India are witnessing half occupancy with GDP growth falling back to five percent levels in this fiscal year. A preliminary report by FHRAI showed that in 2012-13 average hotel occupancy dropped to lowest levels within a decade to 58.3% whereas average room rates dropped to INR 6,214, lowest in 6 years.
In 2005-06, the hotel occupancies reached 71.5% which showed a good growth after 64.8% was recorded in 2003-04. The average room rates reached INR 7,989 in the year 2007-08. Restructuring and disinvestment seem to be the latest buzzwords for the industry with things taking a sudden turn.
HVS India, Managing Director stated that out of the five hundred and fifty top branded hotels present in India, the fate of seventy five is nearly sealed. Some of the hotels include the Hilton Garden Inn located in Saket, Delhi, Shangri La located in Mumbai, Hilton Mumbai, Grand Hyatt located in Pune and the airport hotel of Novotel Hyderaba. The other hotels putting up ‘for sale’ banners include the Best Western located in Shahdara, Delhi, Novotel located in Ahmadabad, the Royal Orchid Hotels entire portfolio and Sheraton located in Chandigarh.
Some of the deals have already taken place. The hotel of Royal Orchid in Ahmadabad has been sold to Samhi Hotels. Ista Hotel’s promoters have already decided to sell its stake to some NRI investor and willing to re-brand to Hyatt for improving marketing, sales and distribution capabilities. Emar-MGF, Parsvnath and DLF which are big estate firms have cancelled all their hospitality plans which were announced a few years back.