Click to play videoMumbai: The hotel industry is being pushed into a corner. A Citigroup report says a sharp decline in hotel occupancy and room rates is hurting earnings.
The report says January saw average occupancy levels falling 58 per cent and a 14 percent fall in room rates.
With January being peak business season for hotels, the report is setting off alarms on the earnings front.
The report also points out that hotels in major cities like Bangalore, Mumbai and Pune have recorded occupancy levels of between 40 and 55 percent.
But hotels like Intercontinental - The Lalit say occupancy levels in January and February looked better than December, purely due to domestic business picking up.
Corporate travel volumes also looked promising. But the hotel and restaurant association says revenues have fallen from year ago levels, denting margins by 20-25 per cent.
Hotel stocks have fallen 33-55 per cent in the last six months and more main may be in store, with business and foreign tourist traffic moving slowly.
While the Citi report sees occupancy remaining muted over the next couple of years, hotels are more optimistic. They expect to see a bounce back in early 2010.
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