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Omicron hits hotel businesses, but fails to dent expansion plans

Abhishek Law | Updated on: Jan 21, 2022

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Loss due to booking cancellations and slowdowns are anticipated to run into ₹200 crore, if not more, for the industry, as per various analyst estimates

Hotels and hospitality majors are keeping their fingers crossed as they prepare for the “sharp V-shaped recovery towards the latter half of Q4-FY22” (and into FY23) once Omicron-led disruptions settle. A plunge in occupancies — to 10-30 per cent — has however, not deterred companies from going ahead with scheduled expansion plans.

Loss due to booking cancellations and slowdowns are anticipated to run into ₹200 crore, if not more, for the industry, as per various analyst estimates.

A top official at one of India’s major hotel chains said Omicron-driven dip in consumer sentiments saw businesses come down to 50–60 per cent levels over what it witnessed during the October–December quarter.

According to Jagdeep Thakral, General Manager, The Grand New Delhi, there were “some cancellations and slowdown” and the hotel was offering alternate booking dates to guests. “However, rising apprehensions have certainly clouded fresh bookings and, demand is comparatively slower,” he told BusinessLine.

Fall in ADR

With consumer sentiments falling, average daily rates (ADR) – average rental revenue earned for an occupied room per day – across hotels, too, are down nearly 50 per cent of what they were commanding a month-back.

Sonica Malhotra Kandhari, Joint Managing Director, MBD Group – which owns and manages the Radisson Blu MBD Hotel Noida, the Radisson Blu MBD Hotel Ludhiana, among others –ADRs have dropped to 60 per cent of pre-Covid levels; while it was around 70-80 per cent in the November-December months when recoveries were at the highest.

Espire Group, which owns and operates luxury resort Six Senses Fort Barwara in Rajasthan’s Ranthambore where actors Vicky Kaushal and Katrina Kaif got married, has seen occupancies come down 10-odd per cent (across properties), from a peak of 70 per cent till around a month-back.

Expansion Plans on Track

But expansion plans have not been held back or delayed, says Akhil Arora, Chief Operating Officer, Espire Group – Hospitality Division. The Group will look to add 12-odd other locations in 2022 including places like Goa, Mussoorie, Varanasi and Vrindavan. The most recent introduction to the portfolio was Country Inn Tarika Riverside Resort, Jim Corbett, brand’s second resort in the location.

“Expansion plans or capex cycles are on track. If Omicron-induced restrictions prolong there could be pressure on Jan – Mar quarter. But we anticipate demand to peak April onwards and we should be ready for that phase,” he said.

Leisure Hotels – which operates in prime tourist destinations in North India that includes places like Nainital, Corbett National Park, Ramgarh, Kausani, Naukuchiatal, Rishikesh, Haridwar, Dharamshala & Kasauli, apart from Goa – saw occupancies dip to 20 per cent, post Omicron, but that has not stopped expansion plans. The company is exploring a foray in Rajasthan while renovation work is going on at Nainital. “We have plans to bring on stream six properties by next fiscal,” said Vibhas Prasad, Director, Leisure Hotels Group.

K-Hospitality – which owns several QSR brands and restaurant brands like Copper Chimney, Bombay Brasserie, Irish House and Serafine – has lined up close to 50 signings this year while it plans to double presence (across brands) over the next five years.

Other brands like MDB Group and Sarovar, too, said there were no delays on expansion plans and construction work across properties remain on-track. Sarovar has 14 launches lined up in 2022 which include places like Bengaluru, Puducherry, Sonepat, Jamnagar, Orai, Dwarka and in the neighboring country of Nepal.

In the October-December period, most hotel major had announced major signings, launched new brands and made operational new properties as the segment witnessed a sharp uptick.

Current booking trends suggest an increase in queries for hill stations. “Travel inquiries related to the hills and other locations have gone up by 40 per cent. Due to safety concerns, we are also expecting a rise in demand for unique, unexplored destinations, short weekend getaways and road trips to nearby tourist destinations ,” Rikant Pittie, Co-founder, Ease My Trip, said.

Published on January 21, 2022
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