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Hospitality set to lose Rs 90k crore: Over-capacity to put pressure on price realisation

The prospects of the industry depend on vaccine supply, which is expected to cover the entire population by the end of 2021 or 2022

  • The Indian hospitality sector fears a revenue loss of nearly Rs 90,000 crore in 2020
  • Hotel occupancy improved from 10% in April to almost 26% in September.
  • Pre-COVID-19, over 11,500 rooms were to be added in 2020 and 202. At present, only 15-20% of the anticipated 2020 supply is expected
  • The hotel industry currently survives on domestic leisure travel and outbound luxury travel.

COVID-19 has left an unprecedented impact on the hotel sector in India. HVS ANAROCK anticipates the overall Indian hospitality sector, including organized, unorganized and semi-organized operators, to incur an estimated revenue loss of nearly Rs 90,000 crore in 2020. Occupancy and average daily rate (ADR) are expected to reach pre-COVID levels by 2022 and 2023 respectively, presuming that a vaccine is in place by early 2021 and becomes widely available before the year-end. 

The hospitality sector is witnessing an uneven recovery after lockdown. What drives the partial recovery is the domestic leisure traveler, seeking to shake off the cobwebs and cabin fever of several months long work-from-home. HVS anticipates leisure travel to motorable destinations to show a steady increase in the days ahead. 

 The outbound Indian luxury traveller will also be on the look-out 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. 

Apart from the mandatory sanitization protocols, many hotel chains are also investing in new cleaning technologies such as electrostatic disinfection misters and ultraviolet light interventions. 

While domestic leisure travel is picking up, corporate demand is still subdued and will remain constrained at least for the short term following cost-cutting measures adopted by most companies. 



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