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Hotels foresee a good business prospect in mid to long term

The Indian hospitality industry, over the last couple of years have witnessed a healthy increase in the Average Room Rate (ARRs), after a period of stagnancy. Demand outpaced supply in various major cities across India and further there were significant hospitality development happening in the Tier II and III cities. Everything came to a standstill with the Covid-19 pandemic. Every sector has been hit badly with travel and hospitality being the first one to suffer. Despite the impact, hotels managed to get a small amount of business from alternative arrangements. Hotels turned into quarantine centres, isolation wards, office cabins, and many more.

Speaking about the impact of the pandemic, Rattan Keswani, Deputy Managing Director, Lemon Tree Hotels, said, “The pandemic has had a substantial impact on the travel and hospitality industry. With a national lockdown in place for over 50 days, movement and travel has been minimal leading to a reduced demand for rooms. The need for social distancing, in order to flatten the curve, adds to the complexity of travel even for those are doing so on account of an emergency. Lemon Tree has managed to bring in business even during an extended lockdown by looking at new segments of business (e.g. quarantine) and creating a product/service mix to cater to each segment (e.g. Business continuity teams, transit; self-isolation).”

Every hotel is now looking and focusing to tap the domestic market, which is expected to revive the industry. As a head start, the organized hotel chains, especially mid-market hotels already thrive on the buoyant domestic market and enjoys brand loyalty.

“There is always light at end of the tunnel and after seeing a recovering trend from the domestic market in China, we are confident that the hospitality industry in our region will bounce back soon. On the upside, a gradual recovery in the business prospects may be anticipated ahead of July-August. Our success in Indian tourism at Accor is largely constructed upon our massive domestic demand which gives us an edge over others in the business. As the sector resumes to develop contingency plans to alleviate the fallout of the crisis, we aim to deploy marketing campaigns encouraging customers to experience India until frontiers open,” Kerrie Hannaford, Vice President Commercial, Accor – India & South Asia, said.   

Today, hygiene and safety are the utmost priority for every hotel chain and for the travellers. Hotels with visible hygiene and sanitisation will surely instill confidence in the minds of travellers. With all these arrangements in place, industry feels that the ARRs won’t be much impacted post covid-19 once demands builds up in the next few months.

Sudeep Jain, Managing Director, SWA, InterContinental Hotels Group said, “The tourism sector in the country is primarily driven by the domestic market and we expect domestic tourism to recover first. Therefore, I believe that mid to long term prospects for the sector in India are still strong and when it’s safe to travel again, guests staying at our hotels will expect the same brand experience as before and will be willing to pay for it. Our focus will continue to be on delivering a safe, healthy, and clean stay to our guests and give them the confidence to return to our hotels and visit our various properties across the country.”

Echoing similar opinion Keswani added, “Hotels will naturally go after business aggressively and the approach would be to fill rooms at price that are competitive (for the customer) and fair (for brands). As demand builds over a few months, ARR will stabilize and slowly build back to earlier levels.”

Also, post the covid-19 crisis and once there will be relaxations, mid-market hotels will be the fastest to recover considering their operational expense. Experts from the industry believed that the luxury segment will be the worst hit with a longer impact.

Sarbendra Sarkar, Founder & Managing Director, Cygnett Hotels Group, said, “This pandemic has adversely affected our entire industry at large. We believe that not only the luxury segment, but all others are brutally hit by this widespread. The mid-range hotels generally work on the business market and with the current situation, it will take time for them to revive. However, the mid-range segment will be the first one to revive as their operational expenses are lesser than the luxury segment.”

Weekend destinations, self-drive, destinations which are not majorly thronged by travellers will be the see early recovery. “Our focus initially will be to promote domestic travel, weekend getaways and staycations. Our guests will be able to see safety measures at every step- right from the time of booking till they check-out. The safety and well-being of our guests is our top priority thus during this period we have implemented new cancellation and modification policies to give our guests increased flexibility. For our ALL Members we have extended benefits of status, expiration of their earned points and advantage for Roll-over Status Nights/Points. To welcome the customers back, we at Accor have married creativity with innovation to entice them and assure a seamless experience Authentic travel has a lot of opportunities and the way people travel in the post COVID phase is likely to change,” Hannaford added.

Majority of the international as well as homegrown brands have a robust inventory pipeline in India market. The lockdown regulations have also brought construction to a standstill. This standstill topped up with lack of adequate labours in major cities, and depleting cash reserves will overall slowdown the pace of construction.

“In some cases, there could be temporary delays in construction. It will also depend on the stage of the project. Projects very early in the development cycle or very late in the cycle are expected to continue at their normal pace.  As the situation stabilises in markets across the globe and local restrictions are eased first, domestic tourism is expected to be the first to recover. This appears to be positive news for us in India as the tourism sector in the country is primarily driven by the domestic market. Therefore, we expect the demand to pick up in the mid to long term and the need for more quality hotels that have standards which will instill confidence in guests,” Jain opined.

Post lockdown, the travellers behaviour will witness a sea-change. The game-changer will be health and safety now, with price war having less or no effect on the consumer.

Speaking about the challenges in revival, Sarkar said, “The revival will be full of challenges and any company would have to put more than 100 per cent efforts to sail through these harsh waters. There will be a paradigm shift in the travel parameters and customer behaviors. Business shall try to regain the trust of their existing clientele and reinforce their brand loyalty. This could be achieved by giving them special benefits and communication. Also, it’s time to attract the local target audience as a result of international travel pandemonium. Travelers will seek to explore new destinations within the country. Most of our marketing efforts will be digital. As hoteliers, it is our responsibility to provide the best of the environment to our guests. We will leave no stone unturned to provide a paramount hygiene environment.”

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