secretary’s message
Chronicling the Hotel Industry’s dynamism FHRAI Indian Hotel Industry Survey
Vivek Nair Hony. Secretary
Dear fellow members, As the pre-eminent national voice of the Indian hospitality industry, FHRAI steadfastly strives to be the leading source of credible current data, groundbreaking research and contemporary thought leadership on all aspects related to our vibrant industry. As a profound manifestation of this resolve, for the last 16 years, FHRAI in cooperation with HVS Hospitality Services, has published the widely acclaimed Indian Hotel Industry Survey. This unique and innovative annual publication chronicles the financial and operating performance of hotels in all major Indian cities across star categories and market positioning. It is a source of immense satisfaction for us that by virtue of serving as a dynamic barometer of the hotel industry’s performance and elucidating the myriad strategic and competitive trends which are shaping the sector, this publication has come to be regarded as an indispensable reference for hospitality professionals, Government officials, investors, media persons and other stakeholders.
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The Government should provide subsidies and tax rebates to hotels for incentivising investment in energy management systems and efficient green technologies
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14
February 2014 I www.fhrai.com I
The latest edition of the Survey, underscores that even in the face of adverse macroeconomic headwinds and a difficult operating environment, the Indian hotel industry has resiliently stayed on course with its commitment to deliver exceptional value to our patrons and globally benchmark our product and service standards. Through a focus on re-aligning cost structures, leveraging modern technology, pursuing customer-centric innovation and adopting agile business models, hotel companies are seeking to deftly navigate the challenges and capitalise on new opportunities which a rapidly evolving market offers. In the past year, India witnessed a distinct deceleration across sectors, as reflected in GDP growth falling to a mere 5 per cent, the lowest in a decade. Despite this slowdown, 2012-13 saw hotels maintain steady occupancy levels of 60.4 per cent. The average increase in hotel room supply was estimated at 11 per cent, whereas aggregate demand grew by 9.2 per cent during this period. Inevitably, this temporary mismatch in the demand-supply scenario led to pressure on the ARRs. The survey reveals a heartening trend
that even though business travel was subdued on account of the economic downturn, demand from domestic and foreign leisure travellers remained robust. Another encouraging development is the gradual diversification in the international source markets for the Indian hospitality sector. Thus, while the USA and UK are still our dominant source markets for FTAs, the contribution of Middle-East, Russia, CIS and SAARC nations has been increasing at a healthy pace. With the Government now signalling its clear intent to move towards a more liberal visa regime, I expect this positive trend to gain further momentum. To compensate for the somewhat static room revenue, hotels have been actively seeking to tap other demand drivers such as F&B and banquets & conferences. In fact, the share of non-room sources in gross revenue now stands at a high of 47.8 per cent. We anticipate that a burgeoning middle class and its propensity to spend, will continue to augment demand in these segments. The survey also points to some areas of urgent concern, which we must collectively address. For instance, over the last year there has been a sharp rise of 13 per cent in energy costs for the hotel industry. In an already high inflationary environment, absorbing this additional impact is simply not feasible. The Government must intervene to ameliorate the debilitating burden by ensuring that hotels are entitled to avail power and water at lower industrial rates and not be compelled to pay heavy commercial tariff. The Government should also provide subsidies and tax rebates to hotels for incentivising investment in energy management systems and efficient green technologies. I am confident that all of you will find the FHRAI Indian Hotel Industry Survey to be an edifying resource and we look forward to your feedback and suggestions on making future editions even better! With warm regards, Vivek Nair Honorary Secretary, FHRAI