Jul 12, 2008

India - Business Travellers check into Budget Hotels

NEW DELHI: In yet another pointer towards bearish sentiments in the economy, corporate travellers are downgrading their hotel stays. The corporate travel segment, which is considered to be the bread and butter of most top city hotels, appears to be shifting from the five star and luxury segment hotels to mid-market and budget hotels.
HVS International executive director Siddharth Thaker said, “We have seen occupancies in the hospitality sector dipping by 8-11% in the quarter ended June, in comparison to the same quarter last year.” He added that this demand has shifted to mid-market and budget hotels besides guest houses as well as service apartments. This is being attributed to the cost pressures facing companies coupled with the slowdown in the Indian economy which has forced them to cut down and rationalise their travel budgets. Players in the travel and hospitality industry add that several companies have asked their executives to stay in 3-4 star hotels or budget hotels during business trips as against five star hotels in the past. Says Lemon Tree Hotels chairman and managing director Patu Keswani, “The mid market hotel segment is operating at nearly 20% higher occupancies this season. A large chunk of it is coming from corporate travellers.” Over the last few months, Lemon Tree’s city hotels in Pune and Gurgaon are completely catering to corporate travel clients.
Industry players believe that going by the current trends, the shift of corporate travellers towards mid market hotels is going to be much higher during the winter season. Says Choice Hotels chief executive officer Vilas Pawar, “During the winter season there is much more corporate activity and so we expect that in the next seven to eight months, we would see a more marked shift of corporate travellers from luxury to mid-market as well as budget hotels.” Choice Hotels operate mid-market brands like Clarion and Comfort Inn among others. However, luxury and five star hotels deny having seen any marked dip in their occupancies and add that the corporate travel segment in particular has not seen any impact. Analysts and tour operators believe that there is a decline in occupancy rates in the top city hotels and this will force them to bring in the much needed rationalisation of room tariffs.

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