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Room tariffs soar by up to 100%

Bengaluru, February 2015

After weathering a lean period in December-January, when room occupancy typically dips due to holidays and furloughs, hoteliers in Bengaluru are cashing in on room sales for an entire week in February.

During February the city plays host to the biennial Aero India Show 2015, at Air Force Station Yelahanka.

Cashing in on the spike in demand for rooms by companies participating in the show, hotels in the vicinity of Yelahanka have doubled room rates, while those in the central business district (CBD) have increased rates by up to 50 per cent for that period.

“We are doubling room tariffs in Royal Orchid Resort and Convention Centre, located in Yelahanka, for the entire Aero Show week, and by 25 per cent in Royal Orchid Central, located in the CBD,” CK Baljee, Chairman and Managing Director of Royal Orchid & Regenta Hotels, told BusinessLine.

While all the 50 rooms of the Yelahanka hotel are fully booked at Rs.15,000 plus taxes, 50 per cent of the 130 rooms in the chain’s CBD hotel are already booked at 25 per cent higher rates.

Abhimanyu Kayastha, General Manager of Howard Johnson, located at Hebbal, close to the Air Show venue, said 70 per cent of the hotel’s 117 rooms have been blocked for the event at Rs.12,500 plus taxes, which is double the original room tariff.

“Till now, we were offering introductory prices of Rs.4,500-5,500 for our rooms as we are very new to the market. The deals struck by companies during the Air Show run into thousands of crores of rupees; our doubled room rates will hardly make a dent in their wallets,” said Kayastha.

The Lalit Ashok, located at the CBD, is sold out at 50 per cent higher room rates for the Aero India week. “We have retained just 7 rooms for our regular guests,” said hotel manager Bhaskaran T.

Other hotels that are further away are enjoying spill-over demand. Twenty per cent of the rooms at 12{+t}{+h} Avenue, a suite hotel located close to the CBD, are booked and others such as Octave Hotel & Spa will increase rates by up to 50 per cent.

“Since Bengaluru has an oversupply of rooms, our rooms sell at discounted rates. During events such as the Air Show, when demand spikes, we stop offering discounts and revise rates based on demand,” said Siddharth Goenka, Managing Director, Octave Hotel & Spa.

Increasing rates is a common practice globally and is referred to as revenue/yield management, said Achin Khanna, Managing Director, Consulting & Valuation – South Asia of global hospitality services firm HVS.

“Increasing room tariffs appropriate to the market when demand exceeds supply is an acceptable practice globally and I am happy that Bengaluru hotels are following it. However, fleecing customers is unacceptable. For instance, hotels in Goa sell rooms that cost Rs.8,000 at Rs.15,000 during the Christmas and New Year season, which is acceptable but, if they raise it to Rs.20,000-30,000 that is unacceptable” he said.

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