The economic downturn is helping serviced apartments and budget hotels gain business as companies try to reduce travel expenses and cut down on expensiveluxury hotel stays.
Several global and domestic budget hotels and corporate residences, including Alila Hotels and Resorts, Formule1, Siesta Hospitality Services, Olive Apartments,Sarovar Hotels and Resorts, Seven Serviced Apartments, Oritel Service Apartments and the Ginger hotel chain, have seen business rise 30% over the last six months as companies seek short-term rental solutions, downgrading to lower-cost accommodation.
“Hotels cost a lot. Serviced apartments are flexible at slashing their prices as compared to hotel chains and we have realized that tapping options of cheaper stays has benefited the company hugely,” said Vinay Negi, assistant manager, administration and facilities, at Capgemini. When the economy was booming, top company managers always stayed at five-star hotels.
Most are now opting for branded budget hotels and serviced apartments. Hemant Mahajan, senior administrator at HSBC, said the company had cut spending considerably by shifting to serviced apartments and bed and breakfast (B&B) services.
“The current economic situation has pushed corporates across sectors to downtrade on hotels. Companies can save at least 40-50% cost per employee by opting for budget accommodation,” said Satyapal Unnikrishnan, chief marketing officer at Siesta Hospitality Services, which manages more than 1,500 rooms at corporate residences.
French hotel company Accor group’s budget brand Formule1 that recently launched its fourth property in the country in Whitefield, Bangalore, has tied up with 50 companies from sectors such as IT, defence and pharmaceuticals.
“Companies are cutting discretionary spends and low cost is no longer looked as cheap. Some companies are also looking at bundling portfolio of hotels,” said Philip Logan, vice president of Formule1 in India.
Budget hotels allow companies to save on travel costs while also benefiting in terms of locations close to the local office, bigger rooms and facilities similar to the ones offered at five-star hotels along with rate flexibility.
“Even allied services like tea, coffee, laundry and wi-fi in a budget hotel costs less than that of luxury hotels,” said Ajay Bakaya, executive director, Sarovar Hotels and Resorts.
Some hotels also throw in a few frills to help make the stay more comfortable. “Twelve percent of our inventory is booked by corporates for as long as one year. We are also adding a kitchen to 12 suites as there is a huge demand for it,” said Doris Goh, global vice president, sales and marketing, Alila Hotels & Resorts. With the Indian economy showing little sign of a revival from last year’s 10-year growth low, the shift to budget accommodation is getting more pronounced.
“Some of our clients who were earlier choosing luxury hotels have come back to us,” said Anand Surjekar, chief executive officer, Seven Serviced Apartments, Mumbai.
According to hospitality consultancy HVS, the Indian hospitality industry has seen a major shift in the last decade, with the budget segment forming a larger percentage of the total inventory, accounting for nearly half of all hotel rooms in the country.
India almost quadrupled its room inventory to more than 93,000 at the end of fiscal year in March in the organised sector compared with 25,000 hotel roomsin 2000.
Source: http://economictimes.indiatimes.com
HT Editor
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