PKF survey shows drop in occupancy rates - Views on News from Equitymaster

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PKF survey shows drop in occupancy rates

Feb 11, 2000

A study conducted by one of India's leading hospitality consultancy firms Pannell Kerr Forster Consultants (PKF) reports a fall of in hotel occupancies from 52.2% in 1997-98 to 49.7% in 1998-99. As per the results average room rates for the same period went up by 2.7% and revenues fell by 2% in 1998-99. This study covered majority of hotel chains as well as quality independent hotels. According to a press release by the company the Indian hotel industry has shown its inability to manage departmental operation expenses such as rooms, food and beverage telephone etc and hence these expenses have gone up by 10.2% in 1998-99. Undistributed operating expenses such as administration, marketing, operation and maintenance were also up by 10.9% for this period. As a result income before fixed charges (IBFC) fell by 20% from 40.9% in 1997-98 to 33.3% in 1998-99.

This survey places the Indian hotel industry in the perspective of hotels across Europe, Middle East and Africa. The comparison ranks India third from the bottom in terms of both room yields and IBFC. Even in occupancy India ranks third from the bottom after Kuwait at 42.7% and Kenya at 47.5%.

This survey is another pointer to the difficult times that the Indian hotel industry is going through. Unless the government makes efforts to promote India as a tourist destination by improving on the existing infrastructure bottlenecks and tries to reduce the high expenditure and luxury taxes which act as a deterrent to foreign tourists, the Indian hotel industry will continue to suffer from these drawbacks.

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