Tour Cos Up In Arms Against Hotels

Steep Room Rates Likely To Kill Boom

Charmaine Fernz - Mumbai

While hotels rake in the monies on account of the demand-supply conundrum, tour operators are crying foul, as a disproportionate rise in accommodation tariffs coupled with scarcity of rooms are making a dent in the future tourism prospects of the country.

Tour operators concur that the hotel rates in the Indian metros cities are 40 percent higher in comparison to other key cities in the South Asian markets like Hong Kong, Kuala Lumpur, Bangkok and Singapore. This steep rise in room rates is likely to kill the boom-time most hotels are witnessing as tourists are opting for cheaper destinations.

Even though tourist arrivals to the country during the first six months of 2005 increased by 18.6% over the previous year, it is much lower than most South East Asian destinations. For example, visitor numbers to Hong Kong grew by 7.5 per cent in May totalling 1,821,923, while in the same month India received only 2, 23,167 tourists.

According to Himmat Anand, COO (India & South Asia) SITA Incoming, "Hotel prices have been unreasonably hiked up. There is a big difference between product perception and its pricing. Hoteliers need to understand the market dynamics instead of suddenly increasing the hotel rates and making decisions in a haste.

Hotel pricing in a tour package is a relative situation. One needs to understand the profile of the destination and then decide the price. But although India has a lot to offer, it is not an up-market destination. ."

Most tour operators also feel that this short-term approach is not a sound business strategy since India, as a tourist destination, stands to lose out to its competitors who have more to offer at lower costs. Rohit Kohli, director (Operations) of Creative Travels, New Delhi feels that India has out-priced itself and has lost its competitive edge. He says, "The inbound industry is witnessing an increase in the hotel prices without a proportionate improvement in quality. One needs to realise that accommodation forms a major portion of a travel or tour package and considering the fact that these hotel prices fluctuate at about 100 to 150 per cent, it certainly leaves the market in a very awkward position."