The operating performance of Hotels In India, the luxury, upscale, medium and business categories are expected to remain depressed for over two years and will hardly reach the level of fiscal year 19 in the near future, according to the latest Indian hospitality – status and pulse report by consultancy Hotelivate. This is the case even if India is grappling with a rapid spike in the total number of active Covid-19 cases and large parts of the country remain locally locked. As a result, the second quarter of fiscal year 22 should continue to be under heavy pressure.
While the economic segment probably ended the Covid year with the relatively lowest occupancy, it is relatively medium-sized Hotels Achin Khanna, Managing Partner, Strategic Advisory, and Kush Anand, Analyst-Strategic Advisory at Hotelivate, wrote the least amount of erosion.
“The confirmation of the proposed offer across positioning and the likely recovery in demand in FY22 and FY23 are part of our performance forecast. The recovery is likely to take just over two years and the pace across positioning appears to be broadly similar, ”they wrote.
The rating company Icra is also bearish in its forecasts. The most recent second wave / localized lockdown is expected to have an impact on discretionary travel and occupancy in the next 1-2 months. While the widespread adoption of vaccination could make things easier to some extent, the situation continues to evolve and remains to be monitored in a recent report. Pan-India ARRs (Average Revenue Rate) would still show a discount in FY2022 from fiscal 2009 levels. “The extent of the RevPAR improvement in FY2022 depends on the deadlines associated with the pandemic and can therefore be revised downwards in the coming months. The restoration to pre-Covid values will take about 2-3 years, “it says.
Interestingly, the decline is for Hotels at both ends of the spectrum – business and luxury were the steepest, according to Hotelivates research. You are also likely to get the sharpest improvements. The first signs of this were already evident in the fourth quarter of fiscal year 21, when the demand for business travel initially resumed in budget / economy hotels and discretionary temporary leisure activities in luxury hotels and resorts picked up speed.
Most of the upscale and mid-sized hotels are located in urban India and rely on temporary corporate and business travel from MICE (Meetings, Incentives, Conference and Entertainment segments) to rise again. The lack of meaningful inbound travel (which again is largely business) adds to their suffering. Much of the nation’s organized inventory is in the mid-range and upscale ranges and will see a recovery slightly slower than the hotels at the top and bottom of the pyramid.
The report also highlights the strong correlation between air travel and hotel inventory. The two moved together. Keep this in mind: The nationwide hotel inventory is projected to increase to 1.63,656 by 2023. This will be the highest figure in seven years since fiscal year 16. Passenger traffic is expected to rise to a 7-year high of 346 million by 2023. Similarly, nationwide inventory levels are estimated to have fallen to a five-year low of 102.39 in FY21. Air passenger traffic is also likely to have fallen to a five-year low of 67.37 million in the same period.
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