An employee prepares for the reopening of the Taj in Mumbai on Sunday. (PTI)

Mumbai, Dec. 21: Hoteliers continue to fret over earnings as the Trident and the Taj opened their doors again.

Observers fear the industry may continue to feel the impact of the terror strikes over the next few months in the form of lower occupancy and a fall in average room rates.

On Saturday, R. Keswani, president of Trident Hotels, said cancellation rates had been heavy at 30-35 per cent after the attacks, while occupancy rates at five-star hotels could fall 30 per cent.

The Trident, which contributes nearly 25 per cent to the revenues of East India Hotels, usually sees 80 per cent occupancy between January and March.

Rashesh Shah, who tracks the hospitality sector at ICICI Direct, said the terror strikes would not only hurt the industry in Mumbai but also in other parts the country. Besides, the negative impact would continue to linger. “This, along with the global financial crisis, are expected to drive down tourist arrival growth to negative trajectory by the end of fiscal 2008-09,” he said.

According to Shah, average occupancy levels across the major cities are set to decline to 57-58 per cent from the current average of 65-66 per cent. Leisure travel will be hit more than business tourism.

Shah said with a 7-8 per cent increase in room supply over the last year and a subdued demand outlook, average room rates were expected to decline 15-20 per cent over the next six to eight months.

The brokerage estimates that East India Hotel can see a revenue loss of Rs 14 crore from the Trident and Rs 58 crore for the Oberoi chain.

However, there is a silver lining — the delay in the reopening of the heritage wing of the Taj Mahal Palace and Tower and the Oberoi will result in a shortage of rooms in Mumbai. This is expected to benefit hotels located in the north and central parts of the city such as the Hotel Leela and the ITC Grand Central.