Kerala - Kochi   

Prices eat into hotel profits

KOCHI: Next time you step into a hotel and order a dish, you will come to know which all commodities are cheaper in the market.

Hoteliers in the city are facing a tough time fighting price rise. While the increasing competition in the service industry forces them to offer attractive menu, a hike in the price of food offered may have a negative impact.

S. George, a hotelier in the city, says, “A sudden hike in food price is not possible for us. The increase in prices is being borne by us because the menu is fixed and cannot be changed overnight.”

In the last three months, the price of chicken has gone up by 25 per cent and fish by 200 per cent. Profit has eroded and food items are being sold at the cost price. “This cannot go forever,” says Mr. George. The profitability of the hotel industry has taken a serious hit. G. Mohan Rao, owner of a vegetarian restaurant on M.G. Road, says, “This industry is highly competitive. Though the prices of vegetables and other ingredients have gone up, the menu cannot absorb the hike. We hope that the price is a temporary phenomenon.” Mr. Rao clearly remembers how the previous State government had provided maida, atta, sugar and rice at lower rates to the hotel industry during the price rise.

There has been an increase of 30 per cent in prices of vegetables and dalda. The labour cost has also gone up. Musthaffa, a hotelier, says, “Since the requirement of a hotel varies from day to day, commodities cannot be procured in bulk. This increases the burden of price rise on the hoteliers.” Some hotels in the city continue to earn margins because the commodities supplied to them are as per advance quotations. But Biju, a chef at a hotel in Fort Kochi, has dished out a way to contain the damage to his margins. “The recipe can be changed my making use of alternatives. Instead of costlier variety of fish like seer and cutla, the cheaper ones like tuna could be bought,” he says. Good idea, but for how long? That is the moot question.

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