He felt a slight nip in the air as he watched the amber light fade outside his office window in the bucolic Goan landscape.
They were already in the first week of December, the festive season of Goa was not too far, but their revenue management software was throwing up hotel-room booking figures that were giving him the heebie-jeebies.
Last year, during the same period, guests were briskly booking rooms at the same rate, infusing festive vigour into everything.
His information technology (IT) system had already once revised the room tariff downward – from Rs 60,000 per night to Rs 50,000 per night – but had failed to significantly move the needle.
The software kept tinkering with the room prices to achieve healthy occupancy but, by now, it was clear something was amiss.
Last year, during the same period, guests were briskly booking rooms at the same rate, infusing festive vigour into everything.
Then, around Christmas, there was a spurt in room demand, pushing prices up to Rs 60,000 per night, but they began tumbling soon after – from Rs 40,000 per night, they fell to Rs 30,000 per night, and closer to December 31, his hotel was desperately selling rooms at Rs 28,000 per night.
This was somewhat the story at most luxury hotels in Goa, with a few exceptions. Is the romance of tourists with Goa waning?
At first glance, it seems tourists are no longer ready to shell out the kind of prices they were paying a few years ago for a Goan experience, which many believe has deteriorated due to mismanagement of tourism in the State.
There are fewer takers at higher prices. Only a price correction could goad visitors to consider the coastal State for ringing in the New Year.
There are fewer takers at higher prices. Only a price correction could goad visitors to consider the coastal State for ringing in the New Year.
How ever much the State government may not want to accept the reality on the ground or try to cover it up or deflect the issue by hurling accusations at those highlighting them, the tourism elephant in the room is not likely to vanish.
The tourism pachyderm has entered the Goan house. It needs to be acknowledged and addressed or it will mar the tiny State’s tourism story, which had thrilling chapters in 2022 and 2023.
It came out in a casual chat with the Travel and Tourism Association of Goa (TTAG) president, Jack Sukhija, that tourist inflows into Goa had grown “exceptionally” in the two years preceding 2024 due to revenge tourism.
The lobby body chief views this year’s tourist arrival number of Goa as “decent, with a slight uptick”.
Industry insiders revealed some pockets of Goa even experienced degrowth. One of the reasons for the drop in the occupancy rates at some of the three-starred-and-above hotels could be overcapacity.
One of the reasons for the drop in the occupancy rates at some of the three-starred-and-above hotels could be overcapacity.
As per Statista, the online German data collecting firm, the total number of rooms in Goa grew by around 47 percent between 2019 and 2023 as it increased from 5,980 rooms to 8,810 rooms.
And thus, even though demand for Goa, as a tourism destination, has grown, it has not kept pace with the supply. This demand-supply mismatch has seen the business projections of many investors go awry, forcing them to compromise on the quality of services.
The buzz in the hospitality industry is some investors, disappointed with the dismal returns on their investments, are even shutting shop and leaving Goa for greener pastures outside the State.
On the government front too, only a handful of Goa Tourism Development Corporation Limited (GTDC) commercial ventures – including Aguad Jail complex, whitewater rafting and bungee jumping – have taken off successfully.
This demand-supply mismatch has seen the business projections of many investors go awry, forcing them to compromise on the quality of services.
Such economic disillusionments could be slowing the pace of tourism growth in the State. Instead of shrugging off investor and tourist sentiments, there is a need to assuage them with constructive efforts to reinstate optimism about Goa.
Further, Goa has traditionally been a holiday destination for budget- or mid-segment travellers, especially the northern beach belt. Till the turn of the century (2000), it was largely the European charter tourists and backpackers who flocked to the tropical State.
Even today, Sukhija informed that of the over 7,500 hotel rooms (as per the data of the State’s tourism department) in Goa, less than 10 per cent are in the premium or luxury segment. The remaining 90 per cent are in the budget or the mid segments.
Tourists in this segment are very price-sensitive. Therefore, any surge in room tariffs will only boomerang, and their effect felt instantly – like what happened during last year’s peak tourist season.
Tourists in this segment are very price-sensitive. Therefore, any surge in room tariffs will only boomerang, and their effect felt instantly – like what happened during last year’s peak tourist season.
Though Goa now has its fair share of luxury or high-end travellers with practically most major hospitality brands having set up their property here, many of its visitors have now built a second home or prefer to stay in independent and luxurious homestays.
This explains why eateries are doing well in Goa despite lower occupancy rates of hotels. TTAG estimated the average occupancy rate at hotels and resorts was around 5 per cent in 2024 compared to 25-30 percent in 2022 and 2023.
Besides, the tiny State is also saddled with the legacy issue of alleged taxi mafia that extort exorbitant cab fares from travellers, which at times overshoots airfares. Soaring airfares during Goa’s peak seasons also adds to its tourism woes.
To sum it up; huge private investment has been pumped into the State’s tourism sector, and as investors try to get robust returns on their investments, it is making Goa pricey. The ballooning travel cost to Goa, in turn, is driving away tourists. All this could be bursting the tourism bubble.
It’s time for the State government to sit up and take timely intervention before it swells into a bigger economic calamity.
