Indian hospitality industry posts lowest revenue per available room in 22 years

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The Indian hotel industry recorded a revenue per available room (RevPAR) of 1,582 in FY21, the lowest in 22 years, according to a report from Hotelivate. According to the hotel consulting firm, this is a drop of 60.8% compared to last year.

The report analyzed data from 1,200 branded and unbranded Indian hotels. According to the report, this performance was bought by the hotels in this survey with an overall weighted occupancy rate of 34.4% and a weighted average rate of 4,598.

Variable declines

According to the report, each star category mimicked the national downward trend in occupancy, average rate and RevPAR. Two-star hotels saw the smallest drop in RevPAR of 54.6%, while luxury five-star hotels saw a 63.7% decline.

Although five-star luxury hotels experienced the largest drop in RevPAR in terms of percentage points, it is important to note that previously the category in question was the market leader with a RevPAR of over 7,000.

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Also, it should be noted that compared to the five-star luxury category, the other categories saw a slightly smaller drop in RevPAR due to domestic travelers taking advantage of bundled rates provided by two, three and four star hotels. to attract customers. Lower category hotels have been able to offer attractive bundled rates due to their relatively lower operating costs than five star luxury hotels.

The sector affected by the Covid

Talk to Activity areaMP Bezbaruah, secretary general of the Hotel Association of India, said the domestic hospitality sector has been one of the sectors most affected by the Covid-19 pandemic and the accompanying closures.

“We expect the domestic leisure travel and wedding segments to continue to grow in occupancy in the short to medium term. With office openings, the holiday season ahead and the growing rollout of immunization, business and leisure travel is expected to gain momentum towards the end of this year. However, the path to recovery will depend on containing the pandemic and the success of vaccination efforts, ”he said.

Two-phase recovery

Hotelivate believes that the Indian hotel industry will rebound in two phases – the first, on the backs of short and medium term leisure travel, due to the feeling of being “locked” in a confined space for a period of time. majority of the previous financial year for national travelers; the second, once companies resume business travel, thus generating hotel overnight stays in the medium and long term.

Historically, the majority of overnight stays generated by business travel have been accounted for by two-star, three-star and four-star hotels and in the future these categories are expected to rebound at a relatively faster rate than the other two categories. .

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“Overall, pent-up demand and the shift from overseas leisure travel to domestic tourism have been positive for the hospitality industry. Therefore, domestic tourism will recover faster than international travel. Nevertheless, the sequential improvement in the occupancy rate during the year 2021-2022 will only put the industry on the road to recovery and it is estimated that it may take at least 2 to 3 years to that the industry reaches pre-Covid cumulative profit levels, ”Bezbaruah said.

To support this, he added that the government should take into account the basic demands of the industry – namely liquidity support, incentives and the status of the industry for the hospitality and tourism sector in order to save jobs, businesses and industry livelihoods.

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