Vinod Sethi, promoter of a boutique private equity firm, Matterhorn Advisory Singapore, was lucky

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not to have been present at his office at the Taj Mahal Palace when terrorists struck. Sethi, who is also one of the key shareholders of Mount Everest Mineral Water, may have escaped with his life, but today, his office lies in ruins.

“We will take a call on what to do in the next 10-15 days. Meanwhile, I continue to operate out of my residence,” says Sethi. Businesses such as his and others that operated out of the Oberoi and the Taj are now scurrying to find ready-to-occupy office space in commercial complexes. And, naturally, five star hotels are not on this list of alternative set-ups.

Hotels in the city, which were hoping to get adequate business because of the closure of the Taj and Oberoi-Trident, are instead staring at a harsh winter ahead. "The short-term impact (of the travel advisories and terrorist attacks) would be that corporate travel to the city would come down," says a Cox and Kings spokesperson.

“The discounts being offered by luxury hotels over their published rack rates have gone up from 10 per cent in September to 20-25 per cent,” says Amol Rao, research analyst at brokerage firm PINC. Significantly, the winter season is a time when premium hotels in India do their best business, because visitors from overseas flock to India during this period. But, today hotels are struggling for business. A recent study by hospitality consultancy, HVS International, shows that while the average all-India room rates rose to Rs 8,469 in 08-09 from Rs 7,915 in the previous fiscal, the average occupancy rate for hotels actually fell, as corporates cringed while paying high hotel tariffs. Add to it the economic slowdown, cost-cutting by corporates and fear psychosis amongst the citizenry and you have the recipe for a perfect hospitality sector storm.

“Overall, because of the negative travel advisories and belt-tightening by companies, the hospitality industry will experience a slowdown as companies seek to extract greater efficiencies from their spends. New hotels could be delayed or even derailed,” says Balaji Rao, managing director, Starwood Capital group.