Uncertainty on Amaravati drives hotel sector into crisis

Vijayawada: The uncertainty over the fate of capital Amaravati hit the hotel industry in Vijayawada city. The occupancy rate has gone down from 90 per cent to 40 per cent during the last four months while several reputed chain of brand hotels are downsizing the staff.

For instance, nearly 170 rooms have been vacant on an average in the 200 rooms in a newly constructed star hotel in the city. The hotel industry owners observed that the hospitality sector never witnessed such worst slump during the last 30 years.

The situation may not improve in near future, they said. There are one five-star, two four-star, 20 three-star, 100 two-star and 200 below two star-rated hotels in Vijayawada city. Nearly 5,000 rooms are available in all types of hotels.

Several international branded hotels and online service chain hotels also started their servces in the city long ago based on the development of Amaravati capital city. The hotel business is recognised as one of the fast growing sectors in the city. Several apartments are also being converted into hotels at various locations under the purview of the city on the basis of demand.

Especially, construction of Amaravati capital city boosted the hotel industry in the last five years. The occupancy rate of city hotels increased from 40 per cent to 95 per cent. People of various regions frequently visited the city on various purposes, including commercial and government work.

The customers including foreign delegates, industrialists, contractors, and political leaders used to visit the city. The trend tempted several industrialists to construct new hotels. But the present situation has completely reversed the fortune of hotel owners and workers during the last four months, according to the hotel industry sources.

Recently a five-star hotel of noted brand downsized its staff by 20 due to accumulating losses. It has reportedly suffered loss of Rs 5 crore during the first half of this financial year. Similarly, a star hotel, which was launched recently with pomp and high expectations, has been witnessing only 15 per cent occupancy rate losing Rs 20 lakh every month. Nearly 20,000 workers are depending upon the hotel industry in the city. If this gloom continues, around 20 per cent employees may lose jobs.

AP Hotel Owners Association president M Srinivasa Babu admitted that the hotel industry was in crisis. Speaking to The Hans India, he said that the hotel industry received a fillip with the new capital city development.

High expectations on capital brought new crop of people from various sectors. Now the tide seems to turning as the flow has come down, he said while adding that whatever profits they got in the last few years were sustaining them now despite the bleak situation.