estimating collateral damage!

Mandeep S. Lamba, President – South Asia,

HVS ANAROCK, reveals estimate loss the

industr y will bear.

COVID-19 has stressed the hospitality industry globally. Mandeep S. Lamba, President – South Asia, HVS ANAROCK, reveals estimate loss the industry will bear and if the damage is irreversible

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India like most other countries is on a lockdown, the ramifications of which are unprecedented. Travel and hospitality sectors have been hit hard. The current situation is extremely grim, as inbound foreign tourism has come to a grinding halt and domestic flights have also been suspended from March 25, 2020. All other demand segments such as M!CE, business, social and sporting events have been cancelled or deferred indefinitely for the foreseeable future.

We expect the second quarter of the calendar year to be the worst hit. Hotels will be unable to drive rates and may even seek to attract business at deep discounts. While the veracity of the impact on the sector may only be fully known much after the cessation of the pandemic, we estimate the overall occupancy in the branded hotels segment in 2020 to decline by 16.7 – 20.5 percentage points over 2019, while ADRs are estimated to decline by 7 per cent to 8 per cent for the year.

As a result, RevPAR will witness a significant decline of 31 per cent to 36.2 per cent in 2020. The branded segment is expected to witness revenue loss of US$ 3.55 billion to US$ 4.1 billion in 2020.

The overall revenue of the Indian hotel sector, including both organised and unorganised segments, is set to decline by anywhere between US$ 8.85 billion to US$ 10 billion, reflecting an erosion of 39 per cent to 45 per cent compared to the previous year.

Overall revenue of the

Indian hotel sector, including both organised

and unorganised segments, is set to decline by anywhere between US$

8.85 bn to US$ 10 bn”

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Our industry has proactively taken several steps to mitigate the immediate impact. However, this will be an ongoing process that needs to adapt quickly to the rapidly changing business environment.

In the wake of multiple directives being issued by various government authorities nationwide, hotels should use the opportunity to devise and implement a ‘Stop Gap’ Plan* (details available in our latest report ‘COVID-19: Impact on The Indian Hotels Sector’) to ensure that when demand bounces back, the hotels are well prepared to benefit from the upswing.

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While the current situation is grim and the Indian hotels sector is undoubtedly one of the biggest casualties of the pandemic, we believe the industry will be in recovery mode sooner rather than later. Hotels should prepare a ‘Reopening’ Plan* similar to the pre-opening plan that was devised for the hotel, prior to its initial opening. The only critical difference is that the opening of the hotel this time, will be post a horrific event that would fundamentally alter the foundation of the hospitality sector globally. Hotels should look to implement the Reopening Plan* in the shortest possible time available, as when demand returns the customer will become a bigger and more demanding ‘King’.

*(Connect with HVS experts to learn more about the StopGapPlanandReopeningPlan.)