Airline crew biz shrinks 35% for hotels

Airlines’ woes have translated into bad times for the hospitality sector as well. The hotel industry has seen a decline in business from its most secured customer segment — airlines personnel.

Hoteliers across New Delhi and Mumbai said most airlines have rationalised flights to minimise hotel stay by crew. Clubbing of seat capacity has further reduced the number of airline crew travelling on half-filled flights and staying out of home base to return another day.

On the condition of anonymity, a senior official at a leading Indian hospitality chain in north Mumbai said, “Business has fallen by 20% in terms of the number of airline crew staying with the hotel. The average room realisation for this segment has also declined by 40-45%. Combining both the aspects, I estimate the overall shrinkage to be around 35%.”

Hotels across key markets generally set aside 10-25% of room inventory for airline personnel. The rooms bring them regular business throughout the year even though the rates are highly discounted. Now with airlines cutting costs, this business has declined substantially for hotels.

Anil Paranjpe, vice president (operations), Orchid — An Ecotel Hotel, said, “Though discounted, Mumbai hotels charged airline crew rates of Rs 8,500-9,000 till about last year. This was when average room rates were as high as Rs 12,000-14,000. But now with slowdown hitting the industry, the crew rates are believed to be well under Rs 5,000.”

Paranjpe said his hotel had stopped targeting crew business 3 years ago because demand from corporate sector was high and left few rooms for airline personnel.

The situation in New Delhi isn’t any different. While the room allocation for airline crew is more or less the same, the impact on rates has been slightly lower. Rasika Singh, director (marketing) at Shangri-la Hotel in New Delhi, said the hotel has been fortunate as none of the 3 airlines it caters to has reduced frequency or cancelled operations. “But I agree that the crew business for hotels in Delhi has declined. The impact is around 15% in terms of usage of rooms while rates have corrected to the extent of 30-35%,” said Singh. On an average, in Delhi room rates for aviation personnel were pegged around Rs 10,000 earlier, which is currently down to Rs 6,500-7,000.

While the fall in business from domestic airlines isn’t much, hotels are feeling the pinch when it comes to foreign carriers. Hoteliers peg the decline in business from domestic carriers at 15% and the international ones at over 25%.

Amrita Sachdev, director (sales and marketing) at Le Royal Meridien near Sahar Airport in Mumbai, said, “A lot many international carriers have packed up from various routes and business has been affected.”

“Being a small hotel, 10% of our room inventory is marked for airline crew. Fortunately, all the 17 rooms (10% of 171 rooms) are used by Saudia Airlines. So the situation isn’t alarming for us yet,” said Sachdev.

Other hotels in the vicinity haven’t been so lucky. A senior official from a leading hospitality chain at Sahar airport said hotels with larger room inventory have been hit harder. “The allocations there are slightly higher. So is the number of rooms to be filled. And some of the carriers using their services have cancelled operations from Mumbai, which is putting pressure on the rooms business,” said the official.