Bouncing Off: Past Tense, Future Perfect

Anindita Chattopadhyay - New Delhi

A group of foreign tourists is waiting in the lobby of a five-star hotel. Although tired and sleepy after a long journey, they cannot check-in. The hotel, where the tour operator has booked their rooms, is full. The operator is frantically trying for alternate accommodation. He gets it finally but not before shelling out a hefty sum.

Call it violation of ethics or a classic example of demand-supply-price rise equation. Just when Indian tourism appears to be shining, the tourism industry is rife with incidents of bouncing off - making India Incredible for all the wrong reasons. Talks of joining hands and mutual cooperation went for a toss as make quick bucks is the mantra for hotels now. The tour operators grouse is that they find themselves in a Catch 22 situation as some hotels, particularly in gateway cities, are reneging on their agreed special rates with demand for rooms surging. Naturally, the operators are incurring losses in terms of shifting compensation towards difference in cost, not to mention the damage to their image.

The general experience of tour operators shows that size holds no advantage when being bounced off. From big players like SITA Inbound to small fries, all have been slapped with bouncing off at one time or the other. Forget stand alone properties, even hotels that are part of renowned chains play foul. Elucidating the predicament of operators, Major Murlidhar, VP, IATO, says, "Normally, tour operators approach hotels months in advance and ask for quotations for standard rooms. The hotels and tour operators have an agreement on special rates, which are much lower than rack rates, for the season. However, this year with a sudden increase in demand, some hotels are refusing rooms at promised rates stating a 'sold out' position."

Himmat Anand, COO, SITA Inbound relates an awkward situation when dealing with a Delhi hotel. "In three weeks, eight of my groups met this fate at a renowned hotel in Delhi with whom we had confirmed bookings for the groups. We confirmed the arrival of the group the day before and re-confirmed again in the morning of the date of arrival. All the while, we were told that rooms are available. But on arrival, guests were denied accommodation. We requested the hotel to get us alternate accommodation in any other hotel of the same standard, but they washed their hands off. At last, we arranged higher category rooms at US$ 250 in another hotel, when the standard rooms cost us between US$ 80-100."

It is understandable that hotels are trying to cover losses incurred last year by increasing their yield. Although, there is no denying that five-star hotels were selling rooms at rock bottom prices for groups - sometimes as low as US$ 60 - when the going was tough, but compelling operators to cough up higher price than the rate agreed upon, or denying rooms after confirming booking goes against all set business norms. As Shashank P Warty, senior vice-president - corporate affairs, Taj Group of Hotels says, "Under any circumstances, hotels should not breach the code of conduct. In Taj hotels, we follow the rule and stick to the commissionable rates agreed upon."

The problem, however, is more deep-rooted than what meets the eye. In reality, such incidents occur because hotels do overbooking to cover up losses against no show and cancellations, which are quite rampant. A tour operator, for instance, often simultaneously books rooms with two hotels if his guests are on the wait list of the first hotel. When the first hotel confirms the room 24 hours before the group's arrival, the booking with the second hotel is cancelled. However, the tour operator is not obligated to pay retention charges for last minute cancellation or no show.

"On an average, Delhi's five, four and three-star hotels lose around US$ 50,000 annually due to no show. Hotels are forced to do filler business to fill up empty rooms. Hence, hotels overbook to safeguard their interest as rooms are perishable products," informed O P Mendiratta, secretary, Unit Hotels Forum, Delhi and managing committee member, HRANI.

While Sita Inbound has made written complaints about bouncing off to FHRAI and IATO, others raked up the issue at an open session organised by the Indian Association of Tour Operators. Significantly, IATO moved fast to nip the problem in the bud by enabling operators to give vent to their grievances in front of Jagmohan, minister of Tourism and Culture, Lalit Suri, president HAI, Shyam Suri, secretary general, FHRAI and OP Mendiratta. There is no denying that only a mutual commitment can enforce adherence to business ethics. If hotels are required to honour commitments, operators should also be required to pay retention charges to compensate in case of no show. Consequently, the decision to form a coordination committee by FHRAI, TAAI and IATO members and come up with a grievance redressal cell is expected to go a long way in creating a better business environment by bringing in some professionalism.

As industry captain Subhash Goyal puts it, "Reasonable pricing is what works in sustaining volume. Let's not be pennywise, pound-foolish and turn the boom to doom. The government has done its bit, now the onus is on us to sustain business inflow for the industry's interest."

Goyal finds support from Balbir Mayal, president, TAAI. "It is in the benefit of both parties to maintain business ethics. After all, increase in demand doesn't necessarily have to mean an increase in price too. We should rather aim to increase the capacity when there's an increase in demand."

One thing is certain - we can't deny that the Incredible India image thus imprinted in the minds of tourists would keep them at bay from visiting India again. Since the success of any destination lies in its ability to retain repeat visitors, a permanent solution to the demand-supply equation is a must to prevent recurrence of such incidents. Auction of more hotel plots keeping the increasing demand in mind can be the best answer. Delhi, for instance, is currently short of 2500 hotel rooms. However, since hotels can't be built overnight, increasing the number of entry points needs to be considered as that would ease the pressure on gateway cities. For instance, if tourists are allowed to land in Jaipur, Delhi can automatically breathe easy as a chunk of leisure tourists would prefer to start their India tour from the Pink City.