``Occupancy levels have come down by half of what it was last year,'' said an industry spokesman. The first quarter results announced by most of the listed hotel companies are corroborating the view that guests have jettisoned hotels. Indian Hotels, operators of Taj group of hotels and East India Hotels, the umbrella company of the Oberoi group, have reported a decline in net profit. The outlook for the industry for the rest of the fiscal continues to haunt managers.

Indian Hotels, part of the Tata group, has reported a 7.7 per cent drop in net profit in the first quarter at Rs 22.20 crore as against Rs 24.06 crore due to downtrend in the tourism sector. Net sales for the quarter was at Rs 120.07 crore, down from Rs 131.53 crore in the sameperiod last year.

Similarly, East India Hotels has reported a 15 per cent decline in its net profit in the last 12 months.

``Most of the hotels have tied up with airlines and other consumer goods companies to offer discounted stay. The Taj has even cut down its prices by over 50 per cent of all its properties to boost domestic traffic,'' analysts said. As most of the five-star hotels were patronised by the international business travellers, absence of traffic - due to elections - is further stiffing growth.

While hotels in Mumbai wear a deserted look, outstation properties of most of the companies are lucky if they achieve 25 per cent occupancy. ``Even the tourist traffic has fallen to a record low... Taj is offering hotels at even Rs 1,500 per day on South India properties as it competes even with local hotels,'' hotel analysts said.

The rest of the fiscal 2000 would depend on the investment atmosphere after the elections. ``If business travellers begin to come back to India, the hotel industry canmake up for the losses in the last quarter of the current fiscal or the entire industry will dip into the red,'' industry sources said.Recently while speaking to shareholders, vice chairman and managing director of Oberoi Hotels, PRS Oberoi warned that the future of the company will depend on the tourist and business guests inflow which has been slowed down due to Kargil conflict and elections.

Most of the hotels are now cutting costs and hiring management consultants to suggest ways to reduce losses. The measures include freeze in recruitment, launch of new properties and renovations.

The companies have even cut advertising and marketing budget in a bid to rein in losses. Small hotels are on the verge of a closure.