The Indian hospitality sector faced a revenue loss of about Rs 90,000 cr in 2020. Hotel occupancy improved from 10 per cent in April, 2020, to almost 26 per cent in September, 2020. Before the COVID-19 outbreak, over 11,500 rooms were to be added in both 2020 and 2021. However, now, only 15 per cent to 20 per cent of the anticipated 2020 supply is expected.
Consulting and advisory services firm HVS ANAROCK, in its report, said that the hospitality sector is now seeing a degree of uneven recovery after the prolonged lockdown. The main driver behind this partial recovery is the domestic leisure traveller, seeking to shake off the cobwebs and cabin fever of several months of lockdown and work-from-home routine. It expects leisure travel to motorable destinations to show a steady increase going forward.
There will be only 15 per cent to 20 per cent of the anticipated 2020 supply to come into the market, with the rest being postponed to 2021 and beyond. Some properties are likely to be repurposed to other asset classes, such as hospitals, student housing and co-living, said the report. Over 26,340 rooms were added in the organised or branded hotels segment during 2017-2019, at a CAGR of 3 per cent. As of May, 2020, supply was forecast to increase at an average of 2.8 per cent (adding approximately 44,000 rooms) during the 2020-2024 period.
The outbound Indian luxury traveller will also be on the lookout for exclusive domestic vacations within the country as uncertainties about international travel continue to loom large. To tap this demand, most domestic hotels have curated special staycation, ‘work-from-hotel’ and F&B packages, which have sparked some recovery in the sector. However, there has been no relief for the commercial segment of hotels, which continues to witness record low occupancy in the absence of any significant commercial travel.
HVS ANAROCK president (South Asia) Mandeep Lamba said, “We anticipate the overall Indian hospitality sector (including organised, unorganised and semi-organised operators) to incur an estimated total revenue loss of approximately Rs 90,000 cr in 2020. Occupancy and average daily rate (ADR) are expected to reach pre-COVID-19 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.
According to the report, the current crisis has forced the hospitality sector to focus more on ancillary revenue, mixed use developments, branded supply, repurpose certain areas for boutique corporate offices and venturing into end-to-end facility management of boutique and corporate offices. These steps are considered to utilise their assets to stay afloat, thereby opening newer revenue streams.