Hotels biz in Chennai yet to hit peak as growth dips by 10-15% this year
While the F&B business has improved considerably, thanks to “revenge tourism,” it is the 10 to 15 per cent decline in growth against last year that has become a point of concern.
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CHENNAI: With occupancy levels hovering around the 65 to 75 per cent mark, the hospitality industry in Chennai has seen a dip in growth compared to last year, per veteran hoteliers.
While the F&B business has improved considerably, thanks to “revenge tourism,” it is the 10 to 15 per cent decline in growth against last year that has become a point of concern. “The growth has not been as good as last year, given that travellers are preferring cheaper destinations instead of foreign locations. This is reflected in the downward trend but the F&B business is going strong,” says T Nataraajan, secretary, South India Hotels and Restaurants Association (SIHRA).
The good news is the average room rate (ARR) has not dropped and weekend destinations are still showing traction. “The occupancy levels during weekdays are also good at about 50 per cent with average figures going up to even 80 per cent,” he adds.
That being the case, it is the demand-supply mismatch in Chennai, compared to other cities such as Mumbai, Delhi and Bengaluru, that has emerged as a problem. Delhi being the political capital is the hotspot for state visits. The presence of aero city, a robust hospitality hub, marquee hospitality brands and commercial spaces, have led to premium pricing. Mumbai, the nerve centre for finance, also continues to thrive on the pricing front.
An industry veteran said ARR of the top hotels in Chennai is still hovering in the Rs 7,000 to Rs 10,000 region, while in other metros, it is upwards of Rs 10,000 and even going up to Rs 15,000. Domestic tourism is yet to pick up the pace expected, the source went on to add, though post-pandemic, there has been a definite uptick in culture tourism.
Despite sufficient supply, the scene seems tepid in Chennai. The bright spot for southern players is the boom in small towns like Madurai, Coimbatore, Tiruchy, Mysore, Thiruvananthapuram. Pandiyan Hotel’s director R Rangachari concurs as he says the current dispensation of the TN government is to relax regulations to boost cultural tourism, thereby giving an impetus to the hospitality industry. “On September 16, we have the SIHRA meeting,” he says, and adds that identifying favourite spots in TN, creating specialised transit tracks and facilitating MICE tourism (meetings, incentives, conferences and exhibitions) is on the agenda to improve the hospitality business.
In fact, by emerging as the gateway to Kerala, TN has played a major role in making its neighbour a popular tourist hotspot. Relief in taxation in the form of uniform rates is a matter that the industry has been pressing for, says Rangachari, noting that measures in this direction would determine the expansion activities of the hospitality players.