Economy

Hospitality sector unlikely to recover quickly

Abhishek Law Kolkata | Updated on July 02, 2021

Major tourist spots remain closed due to lockdowns

The hotels and hospitality sector is unlikely to see a quick recovery in numbers, as consumer sentiments on travel remain low; while room tariffs are expected to remain soft – at almost 70 per cent of pre-Covid levels – for at least major part of this fiscal, says Ajay K Bakaya, Managing Director, Sarovar Hotels and Resorts.

To top it all, some of the major tourist spots like Kerala, Goa and beach destinations remain closed due to regional lockdowns and restrictions; while the majority of the value-added services like spas or pools are off-limits for residents.

For the Gurugram-based Sarovar Hotels & Resorts, the break-up between room tariffs and food & beverages is to the tune of 60-40.

On the other hand, a major marriage season – around the June-July period – also seems to have been a washout as restrictions remain on the number of invitees at such gatherings, he said.

Of the 95-odd hotels and resorts that Sarovar manages and owns across its own brands (under ‘Sarovar’), the Golden Tulip brands and some Radisson ones – like Radisson Blu, Park Plaza, Park Inn, among others – 85 are open and occupancies are at 40 per cent; lower than the 60-odd per cent it reported for the same period last fiscal and the 75 per cent occupancies of 2019 (pre-Covid period).

“Tariffs are expected to remain soft at 70 per cent of pre-Covid levels across major brands including Sarovar. At the moment, there is some hesitancy on travel as economic and personal losses due to the second wave have been much higher than the first. Many big ticket destinations remain closed too,” Bakaya told BusinessLine.

Outlook

“Moreover, international travel is not expected to pick-up anytime before the second half of 2022. So at least till November this year, we are expecting softer tariffs and slower than last year recoveries,” he added.

Month-on-month numbers improved between January and March in 2021 due to low Covid numbers, until the second wave led to closures.

A similar growth is expected “August-onwards” and may be closer to November. Opening-up of key markets needs to be watched too. But unlike last fiscal, “recoveries will be slower” – as tariffs remain low - and “stretched-out”.

“We are hopeful that as places like Kerala or Goa open up, there will be traction. Vaccination is happening at a steady pace. Metro markets like Delhi and Mumbai will recover on the back of business travel, followed by leisure and drivable destinations as they open up,” Bakaya said.

Five properties are expected to be made operational in India by the end of this year.

Positive Indication

Interestingly, initial signs of re-opening across drivable locations and hill stations like Shimla, Palampur, Srinagar and Bhimtal are witnessing some traction over the last one-week. Occupancy rates are now varying between 80 and 100 per cent.

On the other hand, business travel is back “to some extent” as mid-level executives have resumed business meets, seller meetings and so on.

For instance, Mumbai is witnessing close to 60 per cent occupancies; while numbers are improving in the Tier-II towns too, like Ranchi, Kakinanda and so on.

Staycation is a prominent trend in Hyderabad because of low tariffs there, Bakaya says.

Published on July 02, 2021

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