The Hindu : Karnataka / Bangalore News : Hoteliers shutting shop as prices go up

Online edition of India's National Newspaper
Monday, Jan 25, 2010
ePaper | Mobile/PDA Version

Karnataka

Karnataka - Bangalore

Hoteliers shutting shop as prices go up

Anil Kumar Sastry

Bangalore: Even as consumers are feeling the pinch of price rise with coffee, tea, idlis, dosas and other eatables becoming costlier, hoteliers are resorting to distress sale of their businesses, unable to run them profitably.

Madhukar Bhat (name changed) had borrowed over Rs. 20 lakh from different sources to set up a Darshini four years ago in the Basavanagudi area. “I had to eventually sell my business for Rs. 15 lakh some days ago as my profit margin drastically came down from 20 per cent to just five per cent because of price rise and the increase in labour cost,” he said.

Another hotelier, who used to run Guru Darshan, also a Darshini, suffered losses after the National College Flyover came up. Similarly, a number of hotels on R.V. Road have lost business on account of the on-going Metro work. Hotels such as Modern Hotel, Paapdiwala and Kadamba in Basavanagudi and Amba Bhavan and Uttar Dakshin have downed shutters because of lack of business. Another prominent hotel in BTM Layout is up for sale.

“Every month, we get reports of at least five hotels closing down business — in the form of change of management,” K.N. Vasudeva Adiga, president of the Bruhat Bangalore Hoteliers Association told The Hindu. “While dues to our suppliers are piling up, we are unable to repay loans on time because of the price rise,” he said.

Though the average price rise of inputs has been over 50 per cent over the last two years, hoteliers have increased food prices by hardly 10 per cent, he said. Thus profit margins have drastically come down, Mr. Adiga said. “We have placed several demands before the Government, including reduction in sales tax, service and luxury taxes, strengthening the infrastructure to boost the tourism industry, controlling commodity prices or importing food products,” Mr. Adiga said. If the Government does not act, many more small hotels will be forced to down their shutters, he said.

Cost cutting

Unable to completely pass on the burden of price rise to customers, hoteliers have resorted to cutting costs, said K. Shriram Adiga of SLV Delight.

“Besides reducing wastage, we are adopting innovative measures such as using dishwasher to reduce the costs,” he said.

Though a dishwasher involves a one-time investment, it does the work of at least four persons while ensuring complete hygiene at the same time,” Mr. Adiga said.

Parallel business

A.S. Kamat, Managing Director of the Kamat Yatrinivas chain of hotels and Vice-President of the Karnataka Pradesh Hotel and Restaurants’ Association, said the Government should first curb the sale of food on the streets.

“We have to get several licences and pay a number of taxes and duties besides having several overhead expenditures. A street vendor without any liability easily takes away a good chunk of our business,” Mr. Kamat said.

Not only is it an unfair practice but also the sale of food on streets is unhygienic, Mr. Kamat noted.

Printer friendly page
Send this article to Friends by E-Mail

Karnataka

News Update

Stories in this Section