Impact of Covid-19: Hospitality sector will not experience full recovery until FY25

India’s hospitality industry could be looking at a lull for at least the next two budgets. According to Hotelivate’s “ Indian Hospitality-The Stats and Pulse Report ”, the hotel occupancy rate will not exceed the 65% threshold until FY24, while the average daily rate (ADR) pre-Covid could be reached by FY25.

Hotelivate forecast that FY22 will see an increase of just 18.9% occupancy nationwide from FY21, which closed the books on March 31, 2021 with just 33.8% of hotel rooms occupied. This, according to the data in the report, is a decrease of at least five years in hotel occupancy rates.

“The EX22 can be tough, again! It will definitely be a better year than FY21. With Covid cases increasing in large numbers again, the first (and possibly second) trimester of FY22 will likely remain under severe pressure. Forecasting in these uncertain times remains extremely difficult, ”said Achin Khanna, Managing Partner of MRICS, Strategic Advisory and Kush Anand Analyst, Strategic Advisory, co-author of the report.

FY22 is expected to register around 52.7 percent occupancy at an ADR of Rs 5,016, while those figures for FY23 are likely to be 64.9 percent occupancy at Rs 5,618.

“These estimates, especially for FY22, may require a downward correction if the recent surge in Covid cases seen over the past 10 days continues into the first quarter of this new fiscal year,” the consulting firm warned. of the hospitality industry.

The report added that it was relevant to note the fact that while the FY 23 occupancy rate may appear lower than the pre-Covid occupancy of 65.4% (FY 20), the absolute amount of overnight stays sold will be higher, given the new supply likely to open by the end of fiscal 23.

However, “occupancy is not expected to exceed the 65 percent threshold until FY24, whereas we believe pre-Covid ADRs can be reached by FY25”, a added the duo.

Regarding the organized inventory, the report indicates that there were only minor changes in the distribution of the supply over a period of 10 years, both in terms of the number of rooms and the number of hotels.

However, when viewed as percentage growth in supply over 5-year periods, paint a different picture. Like the aviation industry – which is dominated by low-cost carriers – the hotel industry also seems to be turning to economic and mid-range spaces.

The fact that if the growth in the offer seen in the total number of open rooms seems to have a similar quantum across positioning, the growth, considered as the number of open hotels, is clearly more in the economic and middle space. range. The reduction in stocks in this positioning (mainly in secondary and tertiary towns) is what has fueled (and will be) further growth in supply.


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