Bengaluru hotels worst hit by COVID-19, bearish on demand revival

The latest report by real estate consultancy firm JLL says Bengaluru has seen the sharpest decline of 59 per cent in the Revenue Per Available Room (RevPAR) compared to other major Indian cities. Even the occupancy rates have gone down 53 per cent till July compared to the same period last year. Alluding to the distress in the hospitality sector, Vineet Verma, Executive Director & CEO, Brigade Hospitality said that many hotels had to shut down to cut losses. While most have been open from June 8 with continued restrictions on travel and prohibition of certain facilities, business continues to be dismal. "Whatever little business hotels have been getting during the past few months has been mostly for repatriation and self-quarantine purposes, and room rates have been governed by the rates stipulated by the government authorities. In our case, these have been around 40 per cent or less of our usual ARRs," said Verma.

According to the India Hotel Recovery Guide- Bengaluru report,  in the last five years  (2014-2019) the overall hotel industry in India saw a 7.1 per cent compound annual growth rate (CAGR) driven by both average daily rate and occupancy rate. Even the overall supply registered a CAGR growth of 7.8 per cent largely led by luxury hotel supply. Bengaluru saw a 4 per cent year-on-year increase in the number of rooms with the total number of branded keys at the end of 2019 at 14,987.  However, with restrictions on international travel, limited travel by the IT/ ITES industry and fewer holiday goers, Bengaluru market has taken a deep cut. Manish Garg, General Manager at Hilton Bangalore Embassy Golf Links believes that pre-COVID era RevPAR may take at least 18 months if not more. "Bangalore is heavily reliant on IT industry and International in-bound travel vis-a-vis other metros which have higher domestic business mix. This is why Bangalore has seen the sharpest decline," he said.

Interestingly, the JLL report also notes that although the decline is steep the Bengaluru market would see limited distressed asset sales. "Owing to the ownership profile, a significant proportion of hotel owners in Bengaluru is long-term holders with strong balance sheets, and is better placed to weather out the pandemic when compared to other markets in India," it said. While recovery and normalcy are nowhere in picture in the near-term, Jaideep Dang, Managing Director, Hotels & Hospitality Group (India), JLL said: " The hotels which are linked to office parks could get back to business earlier as compared to the ones with huge banqueting and conferencing facilities. Leisure destinations around Bengaluru such as Coorg, Chikmaglur and Kabini will also likely witness some revenge travel from the city dwellers although this demand could be intermittent."Also Read: AGR case: Cancel license, spectrum if telcos' dues are being wiped out, SC to govt

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