The scare among foreign tourists following the terrorist strikes at Mumbai’s Taj and Oberoi-Trident hotels is likely to erode profits of hotel majors by as much as 20 per cent, industry experts said.
Among these will be the Indian Hotels Company, the Tata-controlled entity that controls the Taj group, whose prestigious property near the Gateway of India is at the heart of this week's terrorist attack that has paralysed the financial capital. The Taj Hotel management has resolved to rebuild the hotel at the heart of the terrorist attack to its full glory, but the ghost of the incident may continue to haunt it for a while.
Five-star hotels are often patronised by business and high spending leisure travelers. While business travel is already hit by a worldwide mood of slowdown and recession, leisure travellers are likely to prefer safer destinations, experts said.
“Inbound traffic is down by 20 per cent in this peak season,” said Subhash Goyal, chairman of Delhi based STIC Travel Group. “The terrorist strikes at Taj and Oberoi have sounded a death knell for the industry,” he added.
He estimates that hotels in Mumbai would see 30 to 40 per cent drop in tourist arrivals while the rest of India could witness a 10 per cent decline.
India is estimated to earn $10 billion from 6 million tourists in 2008.