As the economy shows signs of improvement, nearly all sectors have picked up the pace of late. Even the worst-hit sectors like aviation, which literally came to a standstill for two months, has bounced back, and the airlines are now registering capacity utilisation of nearly 60 per cent on the domestic segment.But the hospitality sector continues to reel under the impact of COVID-19 as travel, to a large extent, is no longer linked with hotel stays. In pre-Covid times, the growth in the travel sector (air, rail or road) was directly associated with the growth in hospitality. As people were travelling more for work or leisure, they would stay in hotels which kept the hotel occupancy rates in the vicinity of the number of seats sold by the airlines or the railways. With COVID-19, this equation has changed completely.
"The hotel bookings have been severely hit because leisure travel has tanked drastically. Even on the business side, the self-employed people or small entrepreneurs are planning their trips for a shorter duration which do not necessitate them to stay in hotels. The change in the perception of travellers is important to bring their confidence back. It will take hotel chains more than introducing new safety protocols to change the behaviour of the travellers that they are now getting accustomed to," says a hotelier.
As per hotel consultancy firm HVS Anarock, the hotel occupancy rates stayed at about 26 per cent across India in September 2020 - rising from just 10 per cent in April this year.
"There were expectations that the domestic demand will start to pick up during the end of 2020, but as some developed countries have re-imposed lockdowns, the travellers have held back their plans for personal (or family) trips due to renewed fear. With stringent safety protocols being implemented in major markets like Maharashtra, we might see hotel occupancy rates going down again," says the hotelier quoted above.
This also means that the losses that the sector has projected for 2020 could swell. For instance, HVS Anarock had estimated total revenue loss of around Rs 90,000 this year for the entire sector, including organised, unorganised and semi-organised operators. "Saying that COVID-19 has had an unprecedented impact on the hotel sector in India is putting it mildly....Occupancy and average daily rate (ADR) are expected to reach pre-Covid levels by 2022 and 2023 respectively - assuming that a vaccine is in place by early 2021 and becomes widely available before the end of the year," Mandeep Lamba, President (South Asia) HVS Anarock said in a November 11 note.
HVS has also projected a considerable slowdown in a fresh supply of hotel rooms through 2021. For instance, if prior to COVID, the sector had plans to add over 11,500 rooms in two years (2020 and 2021), it's expected to add just about 15-20 per cent of those rooms in 2020.
"A blip in demand is expected over the next two-three months before we can see some recovery again on the domestic segment," says a hospitality consultant.