Fancy 5-star hotels losing out to their leaner cousins

05 October 2006

According to a report by hospitality consultant HVS International, occupancies in budget hotels rose significantly in the last financial year, while 5-star numbers dipped, reports CNBC-TV18.

Checking into a 5-star hotel may be slipping out of reach for many as average room rates have risen over 26 per cent and crossed Rs5,000 a night. So travellers are opting for 3- and 4- star accommodation, which comes for Rs2,000 to Rs4,000, even after tariffs rose 23 per cent.

It's hardly surprising then, that budget hotels posted the highest occupancy growth of 8.3 per cent, against the traditionally faster growing five-star segment, which dipped 1.1 per cent.

Experts say that's probably because the highest rate rises also came in that segment. There are about 7,500 five-star rooms in India and about 5500 three star rooms.

With 32,500 rooms in India, it is grossly under served. Experts say high prices and a short supply of rooms make India an expensive hotel market and dampen the growth of tourism.