News: Indian 5-star hotels mull dollar tariff hike

(DNA 10/05/2007) Kolkata - Five star hotels, where 65% of revenues accrue in foreign currency, are already mulling a September dollar tariff hike, to tide over lower earnings from an appreciating rupee.

As of now, the currency has not yet stabilised to warrant a definite direction from the hotel industry. But, in about three months time, when the players discuss revision of tariffs — which will come into effect from September - the weakening dollar will definitely become a topic of discussion and influence the way the dollar rate card moves.

Tariffs, in general, are hiked by 15-25% annually.

“The dollar rates have remained unaffected but whenever customers have come to the desk for currency exchange, obviously they have been given the benefits,” Manbeer Choudhary, president, Federation of Hotels & Restaurants Association of India (FHRAI), told DNA Money.

Underlying the volatility in the dollar versus the rupee, Choudhary added: “The industry reacts only when the currency stabilises at a level - high or low - for three months.”

ITC Hotels, which follows dual currency, is adopting a policy of wait-and-watch for the next couple of months, said Deepak Haksar, vice-president, ITC Hotels.

For the Leela Group, “revenues will take a hit, though by how much it is difficult to tell at this juncture,” said Sanjoy Pasricha, vice-president, sales and marketing, Leela Palaces & Resorts. “We cannot keep the rates very high and outprice ourselves from the market,” he said.

However, hotels can be upbeat on one aspect. Imports of liquor and wines by five star hotel restaurants have got cheaper. Choudhary of FHRAI said: “Liquor imports have got cheaper by as much as 27% from April 20 onwards, due to a lowering of excise and customs duties.”

Deepak Haksar, vice-president, ITC Hotels, said: “Our duty free stocks will get cheaper, but it is too early to say by how much because we have already taken our stocks about three months in advance.”