Chennai hotels grow at 2.2% in 2017-18

The overall Chennai hotel market displayed an average rate growth of 2.2 per cent in 2017-18 for the first time in little less than a decade, according to a recent study by Hotelivate. Over the past four years, while the city had seen an year-on-year increase in occupancy (with the exception of 2017-18), average rates remained under pressure. In fact, improving average rates has been an ongoing challenge, primarily due to the nature of demand in the city and hotels preferring to take the easier route of dropping rates to fill rooms.
Moreover, several external forces such as the floods of 2015 and Cyclone Vardah in 2016 also hindered hotel performance, especially average rates, since these tragedies hit during peak season and hotels were forced to adopt a volume strategy to fill rooms. Looking at five years of historical data, occupancy across the city has grown at a CAGR of 3.7 per cent, while average rates depicted a negative CAGR of 1.8 per cent, over the same period.