Principles of Hotel Management

partnership and private limited companies the average size
works out to 55 and 68 rooms respectively.
The average size of hotels, all hotels approved and
unapproved taken together, given in the last column reveals that
the hotels owned by the public limited companies are the biggest
with an average of 174 rooms per hotel. This figure is roughly
3 times, 4 times and 5 times the average size of hotels owned
by private limited companies, partnership and soletradership.
Fixing the hotel tariff is just like pricing any product or
service. It is beset with many problems. The price should be
affordable to the public and remunerative to the owners. In the
case of hotel industry, the problem of price fixation is more
pronounced because of the highly perishable nature of its ser-
vice, seasonal spurt and slag in the demand and unadjustability
of supply to demand in the short run. Further, the cost of
construction, operating cost, locational factors, the degree of
competition, etc., are also to be considered.

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Salient Features of Management
129
It is said that room tariff normally is not determined by
market forces of supply and demand. It is true that tariff quoted
by the hotels concerned has to be approved by the Department
of Tourism. “But practically every year early in September hoteliers
represent to the Department of Tourism for a 10 to 15% increase
in their room tariff. Their applications are rubber stamped by the
Department and hotel charges go up annually in early October.”
Why should this be approved? The Department cannot act
otherwise. The hoteliers have a better bargaining power because
of sellers market prevailing in this industry due to the heavy
shortage in hotel capacity.
But, if the market conditions change the pricing mechanism
also would change. What has been happening in New Delhi
since the Asiad is an example in question. To meet the antici-
pated short-term increase in demand on account of the Asiad,
as many as 12 new and large hotels were constructed. But the
anticipated increase in demand did not materialise. The sudden
increase in the hotel capacity has changed the market condition
from sellers market to buyers market. Many hotels are now
selling rooms at cut rates. “Some of them like Samrat of the
ITDC Chain have officially announced off-season discounts of
30% but others are doing so under the counter. Two of Delhi’s
posh hotels are selling rooms to single occupants for as little
as Rs. 300 against the listed tariff of Rs. 750 or Rs. 775.” This
may be an isolated instance but it certainly proves the point that
market forces have a definite say in price fixation, apart from
regulatory measures by the Government .
The room tariff quoted by the different hotels are normally
for a day. Some hotels take 24 hours’ stay as a day while in
others there is a particular check-out time, usually 12.00 noon.
The latter practice is certainly against the interests of the inmates.
The hoteliers may have their own good reasons. However, it
may be suggested that the Government would do well if it tries
to maintain uniform and standardised procedure in all hotels.
Incidentally this would create a better goodwill among the tourists.

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130
Principles of Hotel Management
It may be added that the hoteliers are seized of this matter and
have made a beginning in this direction.
The room tariff are of three types, namely, the American,
plan, Modified American plan and European plan. “American
plan includes three full meals and room. Modified American plan
includes the price of the room, breakfast and dinner. No meals
are included in room rates under the European plan.” The
European plan is adopted in most of the unapproved hotels in
India. In the case of a sample of 50 approved hotels, 20 offer
all the three plans, 15 offer European plan only and the rest
either the American plan and/or the Modified American plan.
These different plans are good as far as they go but in
passing it may be mentioned that it would be better if the tourists
are given the freedom to eat anywhere they like. The American
plan and the Modified American plan give the impression that
there is an element of compulsion attached to them. This should
be avoided. However, in practice almost all the tourists eat from
where they stay unless they are on the move.
It is important to give the freedom to the tourists because
invariably most of them will be on the move on sightseeing
during day time and it would be too much to expect them to
come back for their noon-meal and sometimes even for the
supper. Perhaps there would be some valid reasons from
the point of view of the hoteliers, because they should have
an assured demand to justify their investment in the
restaurant section of the hotel which is not usually frequented
by the general public as much as in the case of economy class
hotels.
A comparison of room rates in India with those in other
countries shall help in assessing the competitiveness of Indian
hotels. In the case of deluxe hotels, Indian rates are the lowest.
In the case of 1st class hotels Indian rates are the second
lowest, the lowest being that of Colombo. Again ours are the
lowest in respect of standard hotel rates and of the economy

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