Indian hotels brace for tough times ahead

MUMBAI: In difficult times, most people tighten their purse strings and one of the first sectors to feel the pinch is the travel and hotel industr
y. This is exactly what Americans, troubled by the financial crisis in the US economy, are doing, and the repercussions are felt in India, too. The US is the second largest source for Indian inbound tourism. Its share stood at 15.7%, a tad below UK’s 16.5 %, according to travel industry experts.

Says The Indian Hotels Company’s executive director Abhijit Mukerji, ‘‘Unlike in the past, we would not be seeing strong growth numbers of the US tourists to our hotels.’’ ‘‘A shift from a sector to another sector or from a country to another country would happen,’’ he added. Indian Hotels runs the Taj group of hotels, the largest hospitality chain in the country.

Most Americans visit India for business purposes. The subprime crisis, followed by the collapse of many famous Wall Street firms, has hit business hotels the most. The Oberoi group of hotels is already witnessing a decline in business from the US to its city hotels. For the Oberoi group, which manages the Oberoi and Trident hotels, US accounts for 11% of its revenues to its business and leisure hotels.

The US accounts for over 20% of the Rs 589 crore revenue of Leela Palaces, Hotels & Resorts, according to its vice president Sanjoy Pasricha.

With tourist inflow from the US on a decline mode, the Indian travel and hotel industry has already put in place an alternative strategy. They are looking at Asian countries like China, South Korea and Japan with comparatively healthier economies than the West.

‘‘Certain markets and sectors may not deliver as before. However, demand from other geographies will continue,’’ said Oberoi group’s director Ketaki Narain.