Sheltered from the storm

Sheltered from the storm

New Delhi: Bed and breakfast is one segment of the hospitality sector that is not likely to be affected much by either the economic downturn or the threat of terror, says a report prepared for FICCI. Travel journalist and the author of the report, Inder Raj Ahluwalia, says, “Downturns are a part and parcel of life. Downturns can be an epidemic or the airport lockdown in Bangkok. So factoring all that in, I do believe that the smaller units will be able to weather all this."

Hospitality consulting firm HVS forecasts that in 3, 4 and 5 star categories, occupancy rates will dip 5% and average room rates by 10-12% next year.

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/Content/Videos/2008-12-12/Mint TV/1112_Bread & Breakfast_2_MINT_TV.flv3c04e560-c79b-11dd-9cc3-000b5dabf636.flvAhluwalia says large hotels are most impacted by downturns because much of their business comes from bulk bookings through tour operators, often up to a year in advance. When tragedy strikes, like it did in Mumbai, these bookings get canceled resulting in significant lost business, he adds.

Smaller establishments are less likely to be hurt because people book rooms just a couple of days or weeks in advance. Also, after an event like the terror strikes in Mumbai, people feel more comfortable staying in a home, or in a place less conspicuous or crowded.

The report also gives detailed information on how to set up a bed and breakfast facility anywhere in the country, including what to expect in terms of ROI (return on investments) how to market the property, and things to watch out for.

However, for the hospitality industry, the outlook is not very encouraging. The impact of foreign markets in recession is already visible, with growth in tourist arrivals slowing down to 9.3% in the April to October period this year as compared with the 14% growth seen in the corresponding period last year.