The long wait of tourists and business travellers expecting some softening of hotel room rates and hoping to find accommodation more easily in the country’s top cities, is far from over. With supply lagging behind demand, room rentals and occupancy levels continue to rise across the country. According to the latest figures from hospitality research and consultancy firm HVS Hospitality Services, the average room rate across all star-category hotels in the country rose by 30 per cent over the previous year, touching Rs 7,075 in 2006-07. Average occupancy for all star-category hotels was 72 per cent in 2006-07, up 0.7 per cent over the previous year.

The growth in room rates and occupancy is driven by high demand from both business and leisure travellers. While demand has grown rapidly, supply has not been able to keep pace. Hotel rooms in India’s leading cities today are among the most expensive in the world.

According to Manav Thadani, MD, HVS Hospitality Services, “If rates continue to grow at this pace, they will become a deterrent to business and tourist travel. In the long term, inflated room rates will also have a severe negative effect on potential demand. The effects are already noticeable in most markets. For the first time in four years, markets such as Bangalore, Chennai, Delhi, and Hyderabad have seen a decline in occupancy rates.” In Bangalore, where room rates are among the highest in the country, occupancy level has declined for the second consecutive year.

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