Tough times for India’s hotel market due to a variety of factors including a dysfunctional airline industry. The latest report from STR Global for January to October reveals that Indian hotel occupancy fell 0.8 percent to 57.7%, average daily rate dropped 4% while revenue per available room decreased 4.8%.

India’s airline industry is in disarray. So far this year key carrier Kingfisher has collapsed, struggling Air India has been given a U$1bn government lifeline, and airfares have increased across the board with major airlines such as Jet Airways also lifting booking fees and charges in an acutely price sensitive market.

“The global economic slowdown and a substantial increase in inventory across cities continues to impact the hotel sector”, said Vijay Thacker, director of Horwath HTL India.

“The third quarter is typically slow for hoteliers, and this year it was no different. The declining demand and rate conditions throughout the year have proved to be worrisome for hoteliers as we enter into the final quarter of the year”.

This follows news that India’s leading online travel agent, MakeMyTrip, is trying to diversify away from the “difficult” Indian market.

MakeMyTrip’s third quarter profit fell 25% to US$1.2m, a result CEO Deep Kalra blamed on “increasingly difficult operating conditions as the health of our domestic airline industry remain uncertain.”

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