THIRUVANANTHAPURAM: Market forces could decimate the perception that the state is a pricey destination. An excess supply of hotel rooms and the consequent drop in occupancy are expected to force the hotels and resorts in the state to reduce their high room tariffs.
A survey conducted by the Tourism Department recently has found that the number of rooms in the state had increased from 40,000 in 2010 to 75,000 in 2014. “The label of high-end destination has been affecting Kerala’s competitive advantage,” tourism minister A. P. Anil Kumar had said when he launched Visit Kerala 2015. He rejected the argument that fall in arrivals had led to poor occupancy. “It is excess capacity that is precipitating poor occupancy (rate). I hope the spurt in rooms will trigger a rate correction,” the minister said.
This year, for instance, 1,500 more rooms are coming up in Kumarakom and Munnar alone. “Earlier, there were just two to three high-end properties in Munnar to choose from for foreigners,” said Sejoe of Marvel Tours. He said the market would play out its logic until hotels temper their rates.
The industry seems to be adapting to market forces. Websites reveal that certain five star hotels have reduced their off-season rates by at least 50 per cent. “It is normal for properties to bring their tariffs down during the off-season but they never go beyond a 20-25 per cent cut,” said Jacob Thomas, a former Thomas Cook employee.
Online booking trends also reveal a preference for lower-end rooms. “More than 80 per cent of people using the online route opt for Rs 3,000-3,500 rooms,” said Sejoe.
However, the hotel industry feels further tariff cuts would be suicidal. “A 25-room hotel will cost upwards of Rs 5 crore and 90 per cent of this will be on high-interest loan. The loan component alone will gobble up Rs 50 lakh monthly. Add to this, the power bills, wage bills and routine maintenance. To bring down tariffs below Rs 2,000-2,500 will be suicidal,” said Sudhiesh Kumar of Kerala Hotel and Restaurants Association.
