Tariffs to fall another 5-10% post terror attacks

Estimated revenue losses for hotels are as follows:



Taj Mahal Hotel:

South Mumbai average room rate, or ARR, is at Rs 12,349

Suite rate at USD 600-800 per day

Occupancy rate is at 60%

Capacity: 292 rooms + 20 executive suites

Therefore, the minimum revenue loss is seen at Rs 85-90 crore over one-year



Oberoi Trident:

South Mumbai ARR at Rs 13,900

Suite rate at USD 900-1000 per day

Occupancy rate at 63%

Capacity: 333 rooms + 22 executive suites

Therefore, the minimum revenue loss seen at Rs 120-130 crore over one-year



Asset destruction is likely to be higher in Taj as the hotel was a heritage structure. Both the hotels are understood to have taken terrorism cover, fire insurance, and loss of profit as add-on policies. Taj is insured jointly by Tata AIG (65%), ICICI Lombard (30%), and Iffco Tokio (5%). While Trident is insured by United India.



Hotel outlook going forward:

The terror attacks are likely to have long-term implications. Occupancies already fell by 2% in Q2. Sources expect tariffs to fall by at least another 5-10% almost immediately. Capacity utilization will be high during winter. Post the terror attacks, the industry feels occupancy rates could fall to 70-80%. Mumbai and Delhi together offer about 30,000 rooms and nearly 60-65% hotels rooms are occupied by business travelers in Mumbai and Delhi.