Due to the second wave of COVID-19 disrupting the recovery of the travel and hospitality industry, hotels in major Indian cities witnessed a month-on-month decline as business and leisure travel remained limited, stated a report by HVS Anarock, a real estate services firm.
As per the report, in May 2021, occupancy reduced by 11-13%, ADR (average daily rate) by 16-18%, and RevPAR (revenue per available room) by 49-51%. Domestic air traffic movement dropped by 63%, in the aftermath of the second pandemic wave. The three cities observing the highest occupancy in the country, of 31-35%, were Mumbai, Chennai, and Ahmedabad.
However, the year-on-year growth was highlighted by the report for the months' March to May, as almost all hotels remained shut during these months in 2020 due to strict lockdown. Occupancy went up by 17-19%, and RevPAR by 21-23% for March 2021, as compared to the same month in 2020. In April 2021, occupancy increased by 18-20% and RevPAR by 149-151%, and in May, RevPAR increased by 22-24% and occupancy by 3-5%. However, ADR witnessed a year-on-year decline.
The year-on-year increase in occupancy and RevPAR can be attributed to hotels focusing on alternative customer segments to sustain during these testing times, with some partnering with hospitals to provide isolation and quarantine facilities, which has influenced market average rates.
14 new branded hotels, totalling 1,498 keys, opened between January to May 2021, while 2,980 keys from 38 new properties were signed.
Mandeep S. Lamba, President (South Asia), HVS Anarock, said, “Subdued demand in May 2021, is a result of fresh restrictions and lockdowns announced by various states to curtail the second wave of the pandemic in the country, negatively influencing hotel occupancy in major cities. However, unlike last year, when the industry came to a standstill or relied only on quarantine business, this year, hotels are focusing on alternative segments and ancillary revenue streams to survive these testing times.”
He further stated that several hotels, largely in commercial cities, tied up with hospitals to provide quarantine facilities, impacting the average room rates. “Declining cases and a faster vaccination drive will help the sector recover from the demand shock in the short to medium term,” he added, assuming the third wave isn't as disruptive as the previous one.