Hospitality sector recovering fast
In 2021, hotels in India saw 10-13 percentage points more occupancy (Y-o-Y), which resulted in a 24-27 pc increase in RevPAR
Hotels witnessed a countrywide occupancy of 42-45 per cent in 2021. Domestic leisure travel growth, significant pent-up demand, partial resumption of business travel in the country, as well as wedding and social events have all contributed to the recovery.
The Indian hospitality sector, which was among the hardest hit sectors due to the pandemic, has been recovering faster than expected, according a study by the HVS ANAROCK. India commenced its vaccination drive on 16 January 2021, and by 31 December 2021, the country had administered 1.45 billion doses.
With the increasing momentum of the vaccination drive, travel demand – both leisure and business – gradually started improving in the country. As a result, hotel occupancy began a strong recovery in the third quarter of 2021. Domestic leisure travel growth, significant pent-up demand, the partial resumption of business travel in the country, as well as wedding and social events have all contributed to the recovery.
Small to medium-sized domestic MICE events also made a comeback, fueling demand for hotels. The sector ended the year with a countrywide occupancy of 42-45 per cent, up 10-13 percentage points over the previous year. Driven by the strong recovery in demand, average rates also began to improve after the second wave, progressively approaching preCOVID levels.
The robust growth in occupancy and average room rates (ARR) resulted in a 24-27 per cent increase in revenue per available room (RevPAR) to ₹ 1,800-₹2,100 in 2021. Leisure markets continued to drive the recovery, with even smaller leisure markets in the country such as Haridwar, Corbett, hill stations in Himachal Pradesh and Uttarakhand
We expect India-wide occupancy to improve to 66 pc in 2022, which will push RevPAR. Mandeep Singh Lamba President (South Asia), HVS ANAROCK
recording all time high occupancy and ARRs. Some leisure markets such as Goa surpassed prepandemic levels of performance by the end of the year. Luxury and upper upscale properties performed exceedingly well in these markets given that the upwardly mobile were unable to take any overseas vacations.
In 2021, hotel companies continued to grow their development pipelines, resulting in over 24 per cent rise in brand signings by keys compared to the previous year. During the year, 135 new hotels with 12,359 rooms entered the branded hotel market, while 58 hotels with 3,108 rooms were rebranded. Hoteliers continued to focus on leisure destinations, as well as Tier 3 and 4 cities, having recognised the enormous potential of domestic tourism, which has gained long overdue industry respect in the aftermath of the pandemic.
Meanwhile, 2022 has started on a challenging note, with subdued demand in the first few weeks of the year due to the pandemic.
This has been followed by the Ukraine-Russia conflict. However, strong domestic travel demand is expected to continue in the year ahead as people have embraced the “new normal” of travel in uncertain times.
Outlook for 2022
With the Union Budget considering some of the recommendations made by industry stakeholders and extending the Emergency Credit Line Guarantee Scheme (ECLGS) till March 2023, and expanding the guarantee cover by
₹ 50,000 crore to ₹ 5 lakh crore, with the additional corpus exclusively earmarked for the hospitality and related segments, will bring some short-term respite to hospitality players. Moreover, the government’s greater focus on large-scale infrastructure development, including roads, railways, airports, ports, and waterways, will aid long-term growth in the tourism and hospitality sectors. For instance, the introduction of 400 new Vande Bharat trains over the next three years, as well as the development of 25,000 km of new highways this fiscal year, will improve last-mile connectivity to several tourist destinations in the country. All this is expected to increase the hotel transaction volumes in 2022.
In conclusion, we can say that the travel industry will witness a bounce back soon.