09 January,2009 09:04 AM IST | | Chandran Iyer
Kavita Amarmani,
Even with tariffs nearly halved, hotels in Pune are struggling for survival.The global economic crisis, the Mumbai terror attack and travel advisories issued by the US and a few European nations are the main culprits.
Hotel Studio Estique
A few months ago, Amit Shankaran, a Bangalore-based IT professional, would rent a room in a three-star hotel at Hinjewadi for Rs 7,000 per day. Today, the same room, at the same hotel is being offered at half the price, but Shakaran feels it's too expensive.
Such has been the impact of economic slowdown. People like Shankaran, who visit the city for their projects look for cheaper hotels rooms.
The economic meltdown, stock market crash and collapse of several IT companies and manufacturing sector has hit the once thriving hospitality sector in the city.
Orritel Group of Hotels, located at Hinjewadi, the hub of Pune's IT industries, used to charge Rs 7,000 for a suite, now the same is available for as low as Rs 3,500.
Amit Dholakia, the director of the hotel admitted that they had to drastically cut costs for survival. "Things are pretty grim for the hotel industry which is reeling under credit crunch.
The situation is likely to become worse and only those who are smart enough to manage cash flow will survive.
It is going to be the survival of the smartest," he said. Luxury hotels, which mushroomed in the vicinity of IT companies in Hinjewadi area are the worst affected.
This trend is not confined to Hinjewadi alone. Almost all hotels in Pune are facing cash crunch and gasping for life.
The industry, which is rattled by global recession and Mumbai terror attacks, is in a tailspin and it could get worse. More business hotels are coming up in the city, which is already saturated and is doing everything it can to woo the business travelers.
Travel advisory issued by the US and some North European countries after the Mumbai terror attacks warning their citizens against traveling to India has aggravated the situation.
"The implications of the travel advisory is that if they do travel at this point of time, then they would be doing so at their own risk. Should something untoward happen, then the insurance companies can deny their claims," said Gopan Krishnan, director sales and marketing Hotel Le Meridian.
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"They would prefer to travel only if it is absolutely necessary," Krishnan added.
Besides brining down the tariff and offering value added services to woo customers, there has been drastic reduction in staff salaries.
Orrietel has reduced salaries by 20 per cent for those who get more than Rs 15,000 a month.
Kavita Amarmani, vice president of Hotel Studio Estique said the occupancy percentage has considerably dropped because of the slowdown.
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"We offer considerable discounts and we have totally stopped recruitment. We have not resorted to salary cuts for the staff," she added.
On shaky grounds
According to a report in the Hotel Market Review Booklet, the IT/ITES, real estate and the financial sectors, which in the past have been the drivers of economic growth are the worst hit with substantial reduction in business activities and high lay offs.
Given the current economic scenario, as well as the uncertainty brought about by terror attacks in Mumbai, the Indian hotel industry appears to be on a shaky ground.
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