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Coronavirus derails hospitality growth

The Indian hospitality industry had witnessed a steady growth with a healthy demand in 2019. On an average, the industry also witnessed a positive growth in ARRs in 2019 and were hoping for a positive year ahead. Coronavirus pandemic has played a spoilsport in the early quarters for the industry. Despite challenges industry see a ray of hope that more Indians will now look at domestic travel.

Speaking about the impact Ajay Bakaya, MD, Sarovar Hotels and Resorts said, “For the immediate quarter, growth number in terms of occupancies and revenue will see a dip. We are looking at the positives too. Every disaster throws up fresh opportunity. Reducing outbound travel from India means more Indian will holiday within our shores. Ditto for destinations weddings. Sarovar’s significant dependence (70 per cent), on its business hotels- with an 80:20 India: foreign mix means we are somewhat shielded from the impact of any future reduced inbound travel. Importantly, we’ve gone throw a successful 19-20 winter season. We are optimistic COVID-19 would be overcome before the onset of 2020 winter season.”

The luxury segment is one of the most affected during these times, as this segment is fairly dependent on the inbound traffic.

Jaideep Dang, Managing Director- Hotels & Hospitality Group, JLL said, “Business-wise, it will likely have an impact on the hospitality sector, especially on luxury hotels. Luxury chains have about 60-65 per cent foreign travellers in their total guest composition and a large chunk of their business will potentially be impacted this season. Luxury hotel rates are also likely to decline in both quarter one and two as result. A full rebound may take time, but we could see some recovery signs in the third quarter depending on the wider situation. Mid-scale brands on the other hand, derive more business from local tourists but even for those chains two quarters are going to be challenging as domestic travel restrictions come into force. Occupancies will be hit for sure but given the fluidity of this global situation, assessing the impact is a challenging proposition.”

Most of the domestic locations has been hit severely with as high as double digit degrowth. The ground reality remains that due to temporary panic situation leisure travel has become negligible and corporates have started avoiding inessential travel.

Punish B Sharma, Vice President – Operations, The Fern Hotels & Resorts said, “COVID-19 has had an undeniable impact on the Indian hotel industry, which has so far seen a dip in occupancy levels of about 17 per cent on average. However, the industry will revive itself gradually and be back on track once the ongoing pandemic comes to an end. The announcement of an official global pandemic, cancellations of global travel marts, sporting events; now cancellation of Indian entry visas has only added the impact. The situation remains dynamic, changing almost by the hour, making it hard to quantify the actual impact on our business and industry at large.”

He further added, “Domestic tourism is also affected as people are taking precautions in travelling either domestically or internationally, avoiding crowded areas and staying close to home. The corporate segment has restricted both international as well as their domestic travel, allowing their staff to travel only on essential business, if at all. Some leisure travellers are beginning to take advantage of special deals for staycation experiences and people are still going outside for meals, so there is some domestic traffic still moving.”

Whereas some players feel that the impact is short-lived, and this temporary phase will fade out soon. The further quarters are expected to be business as usual.

Roop Pratap Choudhary, Managing Director, Noor Mahal added, “The coronavirus outbreak has certainly impacted outbound travel, but domestic tourism is slightly affected, and the impact is temporary. This impact will also fade away as travelers are gradually picking domestic travel and staycations over international travel. There is no long-term impact on the Indian luxury hospitality segment. Also, with the shift in focus towards domestic tourism, there is a huge opportunity for independent hotel brands and boutique hotels in less explored destinations to shine. As people are avoiding air travel, exceptional properties in and around key metro towns of the country are in demand. At Noor Mahal, we have witnessed no decline in wedding bookings or staycations. Although MICE segment is experiencing the heat and we expect it to gear up for the next two months.”

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