Indian hospitality sector: From resilience to resurrection

Mandeep S Lamba, President (South Asia), HVS Anarock shares current state of hotel occupancy in India

The Indian hotel sector is bullish, with new prospects for a rapid recovery thanks to improving traveler confidence over the past two months. Domestic travel has resumed due to fewer cases of Covid-19, lower state travel restrictions, and improved vaccination rates in the country. People are traveling again to escape the lockdown blues and work from home weariness. Pleasure travel is leading the rebound as weekend getaways to motorized leisure destinations and “stays” at luxury properties in cities have become popular travel options. Business travel is also regaining ground in some markets. As a result, hotel occupancy rates have been increasing month over month in all major markets since June 2021, with nationwide occupancy rate approaching 50% by the end of July 2021.

AN EPITOMA OF RESILIENCE

Much has been said and written about the unprecedented disruption caused by Covid-19 to the Indian hotel sector. However, as a silver lining, the pandemic has also accelerated some much-needed changes that will help the industry thrive in the future. Hoteliers have changed their strategies to survive these difficult times, focusing on optimizing costs, rapid adoption of technology, creating new revenue streams and expanding into new markets and customer segments. . So, after a tumultuous 2020, 2021 started on a positive note, with the Indian hotel sector starting to gradually recover.

Just as the industry began to recover, the second wave of the pandemic wreaked havoc as new restrictions and lockdowns in many states caused demand to drop between March 2021 and May 2021. Nonetheless, the Indian hospitality industry has often been resilient, navigating through crises. and turn them into opportunities.

Unlike in the previous year, when most hotels were closed or relied solely on quarantine activities, hoteliers this time proactively focused on alternative customer segments and ancillary revenue sources to weather the storm. Hotels have arranged various stays, weekends, work stays, wellness and dining packages to appeal to a variety of customer segments – frontline workers, couples, multigenerational families, couples with young children, groups of people. friends, business travelers and so on – with some even introducing pet-friendly policies to attract pet parents. The hotels also offer private dining rooms with personalized menu options to guests. Some hotels, mostly in shopping malls, have partnered with hospitals to provide isolation and quarantine facilities, which improved occupancy but influenced average room rates in the market.

Unlike the previous confinement, hoteliers have not adopted a wait-and-see policy. Instead, they continued with their expansion plans, signing smaller properties with more emphasis on Tier 3 and 4 towns, resulting in a marginal increase in brand openings and signings by properties compared to last year.

TIME TO RESURVE

The industry’s agility in operations tipped the scales in its favor, allowing it to quickly tap into pent-up demand once the second wave began to ease and restrictions were relaxed. With the holiday season looming, demand for domestic leisure travel, both to popular and off-beat destinations, is expected to increase significantly over the coming months.

Recent media reports indicate that tour operators and hotels are seeing a 50-70% increase in bookings for the next festive period compared to the previous year. Business demand is also gradually improving as most industries revert to a full or hybrid ‘work-from-the-office’ model and resume their business travel plans. As a result, we expect the sector to rebound to pre-pandemic occupancy levels by 2022 and ADR by 2023, provided the next wave, if any, is not as devastating as the previous.

OCCUPANCY WILL REACH 70 PERCENT BY 2024?

As adapting to the ever-changing situation has become the need of the hour, here are a few things that will help the industry rise and thrive in the post-Covid world.

1. Maintaining the optimism of travel and maintaining the confidence of travelers are the main steps of the renewal. The hotel sector has all the tools and practices necessary for Covid security. It’s about making sure that safety standards are met by employees and guests, even when the business is excellent. Safety, cleanliness and hygiene are here to stay and even a single case of neglect can threaten the reputation and growth of the entire industry.

2. Adopt technology to take hospitality to the next level, because technology is no longer just a catalyst. Over the past year and a half, technological innovations have become a fundamental component of hotel operations. Check-in and check-out with contactless technology, digital menus and contactless payments are just the start. In the future, hotels will be designed with IoT-enabled smart rooms to increase guest comfort and experience, with facial recognition and biometrics being widely used for authentication. Hoteliers will be able to reduce costs, improve profitability, streamline processes and increase employee productivity through technological advancements while improving guest experience and personalization.

3. Flexible design with increased efficiency is the way forward for hotels in the post-Covid era, as hoteliers invest in best practices and embrace the changes needed to bounce back stronger from the pandemic. As hoteliers elevate their cleanliness game for the post-pandemic traveler, we’re planning some fundamental changes to the rooms – simple aesthetics, use of materials and floors that are easy to clean / sanitize, and so on. Overbuilding and overspending in hotels has long been a concern in the industry, but now we expect that to change.

4. Hoteliers who are able to think outside the box and implement unconventional business ideas will stand out. For example, to get out of the current crises, some Indian hotel owners may seek long-term reuse or adaptive reuse of their hotel property, which is a growing trend globally. Hotel chains may also try to diversify into other segments such as vacation rentals and branded homestays.

5. Hoteliers should make sustainable practices a priority in the future, as environmentally friendly measures are now more vital than ever for travelers. In the long run, adopting sustainable practices will save money and increase profitability. As we gradually emerge from the current crisis, it is essential that all stakeholders work together to strengthen the industry’s focus on sustainability by introducing greener practices.

In a nutshell, Covid-19 has thrown a few curve balls at the industry while helping it reassess and transform its operations to face a new reality and shape future growth. The question now is whether we, as stakeholders, are ready to adapt and make the changes necessary to help the sector reach its full potential?

Peter M. Doran