Indore: A slowdown in corporate travel and MICE (meetings, incentives, conferences and exhibitions) activity, coupled with rising operating costs and subdued wedding demand, has pushed India’s hospitality industry into a difficult phase, with hotel operators reporting pressure on both occupancies and margins.
Industry estimates suggest that nearly 30% of hotel revenues are linked to corporate travel and MICE activities. However, companies have tightened travel and event budgets amid global uncertainties, leading to fewer conferences, exhibitions and business meetings.
“Business has been much below expectations. Corporate travel and MICE contribute significantly to hotel revenues, and the slowdown in these segments is clearly visible,” said Sumit Suri, vice-president of the Hotel and Restaurant Association of Madhya Pradesh.
The industry is also grappling with higher costs of fuel, cooking gas, food ingredients and logistics, even as room occupancy levels remain under pressure. Hoteliers said that the impact was being felt across major cities, with weekday occupancies weakening and average room rates coming under pressure.
Pradeep Shetty, vice-president of Federation of Hotel and Restaurant Associations of India (FHRAI), said that profitability has taken a hit as rising costs were not being matched by growth in occupancies. “Margins have hit the bottom line this year. Operating costs have gone up sharply, but occupancies have declined significantly. The geopolitical crisis has affected international travel and even weddings were relatively low key this season, which impacted demand for hotels and banquet businesses,” Shetty said.
Industry players said that the West Asia conflict and elevated fuel prices have dampened travel sentiment globally, while higher airfares and transportation costs have prompted both companies and families to cut discretionary spending.
The impact is being felt across major centres including Delhi, Mumbai, Bengaluru, Indore, Bhopal, Jabalpur and Gwalior. While religious tourism and weekend leisure travel have provided some support, they have not been sufficient to offset the decline in business and event-related travel.
With the marriage season over and no major festive demand, hotels are witnessing lower footfalls. Operators said that rising input costs particularly for LPG, food commodities and utilities, were making operations increasingly difficult.
Prime Minister Narendra Modi recently urged citizens to explore domestic destinations and promote tourism within the country, a move industry bodies believe could provide support to the sector at a time when foreign travel sentiment remains weak and global uncertainties continue to weigh on demand.
Industry players are pinning hopes on the upcoming festive season and a revival in corporate travel during the second half of the year to improve occupancies and restore profitability.
