Occupancy fall among steepest for Indian hotels

New Delhi: Ravaged by the Covid-19 pandemic and the lockdown, and currently awaiting clearances from various state governments to resume operations, India's hotels have fared among the worst in the world in terms of declining occupancies and cancellations, industry estimates show.
As per hospitality consultancy HVS Anarock’s Hotels & Hospitality Overview, occupancies in India declined 81% in April from a year earlier. HVS is estimating a similar decline for May as well.

In the US, occupancies during April shrank almost 64% while for the UK, the decline was 71.3% as per HVS and STR data. For China and Singapore, occupancies during the same period declined by 48.7% and 29.2% respectively.

The central government had prohibited operations of hotels and other hospitality services since the beginning of the lockdown in late March, except for those meant for housing police and government officials, healthcare workers and people stranded due to travel restrictions. Hotels offering quarantine facilities were also allowed to operate.

On Saturday, the home ministry allowed hotels to open in a phased manner outside containment zones starting June 8. But, the guidelines also said states could, based on their assessment, prohibit certain activities outside containment zones or impose restrictions as deemed necessary.

Through new orders on Sunday and Monday, the Maharashtra government and the National Capital Territory of Delhi prohibited hotels and restaurants from resuming operations till June 30.

Jaideep Dang, the managing director of the hotels and hospitality group at consultancy firm JLL, said room revenues declined by over 90% in April in premium hotels in cities like Delhi and Bengaluru, and by 87% in Mumbai.

As per JLL data shared with ET, the revenue decline for Mumbai’s upscale and luxury segments alone was estimated at $21 million for April.

“With over 80% of hotels having been shut for close to three months, the sector has welcomed the central government’s decision to allow hotels and restaurants to open. However, demand is expected to remain muted over the next few months as businesses settle down to the new normal of operating in a Covid environment,” said Mandeep Lamba, the South Asia president at HVS Anarock.

Kerrie Hannaford, the vice-president (commercial) for India and South Asia at French multinational hospitality chain Accor, said the lockdown in India was a lot stricter compared with many other parts of the world. “Our losses were steep as the lockdown for the nation was quite steep. The repatriation business and rooms for the frontline staff at hotels also started a lot later compared to other countries,” she added.

Bhanu Chopra, the chairman of RateGain that provides software services to companies like Marriott, Hyatt, Hilton, Oyo and MakeMyTrip on room rates and revenue management, said compared with other markets, India’s hospitality industry was hit harder as the outbreak in Europe and Asia occurred during India’s high demand season. “That impacted arrivals drastically, with hotels witnessing around 70% of cancellations by February, even though the nationwide lockdown began in the end of March.”

In a note on May 27, investment information and credit rating agency ICRA said demand had declined to the lowest levels the industry had ever witnessed in India during the extended lockdown, and that it was clear that it was the biggest crisis faced by the sector.

“ICRA notes that like the US and China, the Indian hospitality industry is largely domestic with 77% of guests coming from inside the country. India’s share of business travel is fairly high at 59%. With this context set, it remains to be seen how an Indian recovery could look like,” it said in a statement.