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Hotel companies to increase room tariffs

Sep 22, 2000

Hotel companies are planning an increase in room tariffs in October’2000. Though most of them have yet to decide the quantum of increase they are looking at raising the tariffs at select cities like Mumbai, Delhi, Calcutta and Bangalore. Considering that the industry has not raised tariffs for the last two to three years, this spells good news for hoteliers. This move has been triggered off by better occupancy rates in the metro city hotels in the first half of the current financial year.

This increase in tariffs would add to their bottomlines, and most hotel companies are expecting atleast a 20%-25% increase in operating profits in the current year. The improved economic scenario is finally having its manifest effect on the hotel sector.

The news about better occupancy rates in the current year has got reflected in the share price performance of some of the hotel companies like Indian Hotels Co. Ltd (IHCL) and EIH Ltd in recent months. Besides this the rupee depreciation too has added to higher revenues for the industry as over 60% of its earnings are in foreign exchange.

On the current price of Rs 237, IHCL is trading at 9.4x FY00 earnings and on the current price of Rs 185, EIH is trading at 13.4x FY00 earnings.

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