Occupancy rate continues to grow in city hotels

Despite the country-wide ban on sale of liquor along highways by the Supreme Court impacting the hotel industry, just as in the rest of the country, Chennai too has witnessed an overall growth in occupancy and average room rates (ARR). This year (2016-2017) is the first time in a decade that both occupancy and ARR have increased together in the city, a report says. Experts say that while occupancy rates did increase compared to last year, increase in ARRs has been very minimal.

“Occupancy has gone up. There was a lot of business activity. This year’s tourist season is also expected to be normal,” said T. Nataraajan, secretary, South India Hotels and Restaurants Association.

A hotelier said there was a lot of internal MICE (meetings, incentives, conferences and exhibitions) movement. “A lot of conferences by various associations took place in the city as it is centrally located and it is convenient for people from across the country to travel here. People also travelled for weddings and on personal trips. Patients who came for treatments at hospitals in the city also stayed for over a week,” he said.

The report, ‘Hotels in India: Trends and Opportunities’, released last month by HVS, a firm specialising in the hospitality industry, said that overall, Chennai witnessed a growth in occupancy of 2.7 percentage points this year and a marginal increase in average room rate of 0.4%. However, the growth in occupancy was lower than in the preceding two years — 3.8 percentage points in 2015/2016 and 3.5 percentage points in 2014/2015. This could be due to the December 2015 floods and the 2016 cyclone Vardah occurring during peak tourist season, say sources in the hospitality industry.

Another hotelier said the business and the political scenario in the State had not been conducive to growth. “We have been extremely stable though. The world-wide IT slowdown has also affected businesses here. A lot of industrial units have walked out of Tamil Nadu. The slow down in Metro Rail work has also affected hotels in the city,” he explained, referring to the minimal ARR increase. Looking ahead, the study said it expected the city to witness steady growth in occupancy and average rates (barring the OMR micro market) in the short-to-medium term.

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