As India’s travel sector starts picking up, the hostels’ segment is also seeing an up-tick ahead of the festive season owing to the reduced number of Covid-19 cases and a higher number of double-vaccinated travellers. Hostels are recording 50–60 per cent month-on-month growth in occupancies and a 10–20 per cent growth on a year-on-year basis. Forward booking trends too have seen an up-tick.
As Covid-19 cases saw a rise in India in 2020, hostels were amongst the worst to be hit. However, it looks like Indian hostels as slowly crawling out of the woods.
Rising demand
MakeMyTrip, an online travel platform, has seen a significant up-tick in the number of bookings for villas, homestays, vacation rentals, and hostels. “These trends will continue to dominate consumers behaviour in the near future and will stay for long even when the pandemic will be behind us,” it said.
Hostel company goSTOPS is seeing a rising demand for backpacker hostels with bookings going up by 50–60 per cent.
Zostel has 200 per cent up-tick in the length of stay it is hostel. On the other hand, Moustache Escape Hostels has already surpassed its previous year’s booking trends and The Hive Hostels is targeting a 100 per cent occupancy as compared to 30 per cent last year.
Festive season
As India has tiptoed into the festive season, hostels are expecting better occupancies than the previous fiscal. For goSTOPS, the festive season is proving to be a blessing in disguise. It has had a significant surge in inquiries and bookings from metros and mini-metros for nearby, drivable destinations with close to a 1,000 per cent increase in demand.
“From September to October, there was almost a 60 per cent gain on a month-on-month basis vis-a-vis 48 per cent from August to September. This upward trend is consistent and we expect it to continue growing, as the industry normalizes and getaways continue to increase,” Pallavi Agarwal, Founder, goSTOPS, said.
For India’s largest hostel chain Zostel, Q3FY21 was very similar to the upcoming Q3FY22 in terms of the Covid situation. On a YoY basis, it is looking at a normal growth rate of 15 per cent on a chain level on comparing individual destinations.
Surprising rise in ARR
The festive season is also bringing cheer for the hostels in terms of average room rate (ARR) corrections.
According to a recent report by Hotelivate, the Indian hospitality industry had recorded a revenue per available room (RevPAR) of ₹1,582 during FY21, the lowest in the last 22 years. This, according to the hospitality industry consulting firm, is a 60.8 per cent decline over the last year.
A 10–15 per cent fall in the average ARR has been experienced in the post-pandemic era owing to the decrease in bookings.
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“A surprising turn of events happened when many hostels had to close shop due to the pandemic leaving only a handful of quality hostels operational in major cities which gave Moustache an upper hand,” a Moustache Escape spokesperson said.
However, that seems far off in the past now. goSTOPS has seen a six-fold increase in our ARR compared to last year. The company took the Covid-19 lull to grow from 700 beds in 2019 to 2,000 beds in October 2021, recording a three-fold increase in size, having leveraged the availability of good-quality hotels to its advantage.
“While demand has been growing proportionally, we are certain that the RevPAB (revenue per available bed) will soon surpass pre-Covid times,” Agarwal said.
Zostel expects a 10 per cent increase.