The hotel sector is unlikely to recover quickly
The hospitality industry is unlikely to experience a rapid recovery in numbers as consumer sentiment towards travel remains low; while room rates are expected to remain low – at nearly 70% of pre-Covid levels – for at least most of this fiscal year, said Ajay K Bakaya, managing director of Sarovar Hotels and Resorts.
To top it off, some of the major tourist spots like Kerala, Goa and beach destinations remain closed due to regional closures and restrictions; while the majority of value-added services such as spas or swimming pools are prohibited to residents.
For Sarovar Hotels & Resorts based in Gurugram, the split between room rates and food & beverage is 60-40.
On the flip side, a major wedding season – around the June-July period – also appears to have been a failure as restrictions remain on the number of guests to these gatherings, he said.
Of the 95 or so hotels and resorts that Sarovar manages and owns under its own brands (under “Sarovar”), the Golden Tulip brands and some Radisson brands – like Radisson Blu, Park Plaza, Park Inn, among others – 85 are open and occupancy rates are at 40 percent; lower than the roughly 60 percent it reported for the same period last year and the 75 percent occupancy in 2019 (pre-Covid period).
“Fares are expected to stay low at 70% of pre-Covid levels in major brands including Sarovar. At present, there is some hesitation on travel as the economic and personal losses due to the second wave have been much higher than the first. Many high-priced destinations also remain closed, ”said Bakaya Activity area.
“In addition, international travel is not expected to resume until the second half of 2022. So, at least until November of this year, we expect milder fares and slower recoveries than last year.” , he added.
Monthly figures improved between January and March in 2021 due to the low number of Covids, until the second wave resulted in closures.
Similar growth is expected “from August” and could be closer to November. The opening of key markets should also be monitored. But unlike the last fiscal year, “recoveries will be slower” – because prices remain low – and “stretched”.
“We hope that as places like Kerala or Goa open up there will be traction. The vaccination is taking place at a steady pace. Metro markets like Delhi and Mumbai will recover through business travel, followed by leisure and driving destinations as they open up, ”Bakaya said.
Five properties are expected to be operational in India by the end of this year.
Interestingly, the first signs of reopening at passable locations and hill stations like Shimla, Palampur, Srinagar and Bhimtal are seeing some traction over the past week. Occupancy rates now fluctuate between 80% and 100%.
In contrast, business travel is making a comeback “to some extent” as middle managers have resumed business meetings, salespeople meetings, and so on.
For example, Mumbai has almost 60% occupancy; while the numbers are also improving in Tier II towns like Ranchi, Kakinanda, etc.
Staycation is a big trend in Hyderabad because of the low rates there, Bakaya says.