Indian Hotel Business has recorded the lowest RevPAR in last 22 years

According to a Hotelivate study, the Indian Hotel Industry achieved a revenue per available room (RevPAR) of 1,582 in FY21, the lowest in the past 22 years. This is a 60.8% decline over last year according to a hotel sector consulting company.

The research analysed data from 1,200 Indian hotels, both branded and unbranded. The hotels in this survey clocking an overall weighted occupancy of 34.4% and weighted average rate of Rs.4,598.

Variable Declines

According to the study, the lowest decrease in RevPAR was reported by 2-star hotels, which fell by 54.6%, while 5-star hotels fell by 63.7%.

Although 5-star deluxe hotels had the greatest drop in RevPAR in terms of percentage points, other star categories had somewhat smaller falls due to domestic travelers taking advantage of bundled prices offered by hotels to attract customers.

 

Covid Impacted the Sector

In an interview with Business Line, MP Bezbaruah, Secretary-General of the Hotel Association of India, stated that the domestic hospitality industry has been one of the most impacted by the Covid-19 epidemic and associated lockdowns.

“We anticipate that occupancies in the leisure domestic travel and wedding sectors will continue to rise in the near to medium term, with increased vaccine coverage, business and leisure travel are likely to pick up steam by end of the year”.

 

Recovery is Divided into Two Stages

The Indian hospitality industry may recover in 2 stages: firstly with the rise of leisure travel and secondly, when corporates resume business-related travel.

Historically, 2-star to 4-star hotels have catered to the bulk of room nights produced by business travel, and these categories are projected to recover at a quicker rate than the other two.

“Overall, pent-up demand and a shift in outward leisure travel to domestic tourism have been beneficial to the hotel industry. As a result, domestic tourism will rebound faster than foreign travel. Nonetheless, the sequential increase in occupancies in 2021-22 would merely put the industry on the road to recovery, and it is estimated that it will take at least 2-3 years for the sector to return to pre-Covid levels of cumulative earnings,” Bezbaruah commented.