Drop In Occupancy Brings Discounts To India Market

<B> Drop In Occupancy Brings Discounts To India Market</B>

By Neelam Mathews

Hotel companies in India are reacting to a 30 percent drop in business travel in the region with bigger discounts and faster growth in the mid-market segment.

Prime Broking vice president Neeraj Roy said the focus of business travel is shifting from the top to the middle tier. But midrange hotels continue to be scarce.

Based on a projection of compounded growth of 11 percent in domestic tourism in the next five years, the shortage of rooms is most acute in the three-star segment, with 25,000 rooms required by 2000.

Radisson Hotel senior vice president K.B. Kachru said the government "will have to give land at reasonable prices to make the midrange hotels viable."

Corporate buyers increasingly are moving their offices to peripheral areas of major cities to save costs. Eicher Tractors chief executive Subodh Bhargava said, "Five-star hotels are pricing themselves out and there is a trend to use guest houses."

Airport hotels have found themselves gaining market share at the expense of city properties. Such properties, including The Radisson, Delhi, are planning aggressive marketing campaigns to gain visibility. Others, such as Mumbai's Ambassador group, are on a refurbishment spree. Said executive director Rahul Narang, "We are providing five-star facilities in our boutique four-star hotels, to create brand loyalty."

The conferences and meetings segment at the Ambassador property in Aurgangabad received a boost following relocation of numerous corporates from Mumbai, he noted. Rack rates start at US$35.

Meanwhile, international chains--including Four Seasons, Radisson, Mariott and Park Royal--have introduced efficient systems and standards, giving a wake-up call to homegrown chains. Already there is a growing trend in the appointment of expatriate general managers to bring their experience to the region.