Luxury hotels take a beating as virus crimps travel plans

NARAYANAN V Chennai | Updated on March 16, 2020 Published on March 16, 2020

Widespread travel ban and lock-down by many countries have complicated the problems for the industry   -  REUTERS

India’s luxury and upscale hotels are in dire straits. The travel ban and lockdown imposed by many countries to contain the spread of coronavirus has dealt a body blow to the sector. Not only will it miss out a good part of the peak business season this year, the sector is staring at the possibility of losing out the next season as well.

“Hotel companies are more concerned about the next big season because most of the business hotels float their request for proposal (RFPs) in September for the next peak season (October to March),” said Jaideep Dang, Managing Director- Hotels & Hospitality Group, JLL. “So, If things start picking up in July or August, then you have a better chance that you hit the RFP season at a high,” Dang said.

This year, the business of luxury hotels has been dismal due to large scale cancellations since the middle of February.

Widespread travel ban and lock-down by many countries have complicated the problems for the industry which is highly dependent on foreign guests. India has also banned entry of foreign nationals till April 15.

While the Indian Hotels Company Limited (IHCL), which owns luxury and upscale brands like Taj and Vivanta, did not respond to the our e-mail query, ITC Hotels said its spokesperson is currently unavailable for comment.

Pegging the foreign guest share in upscale and luxury hotels anywhere between 25 and 40 per cent, Pavethra Ponniah, Vice-President and Sector Head - Corporate Sector Ratings at ICRA, said the trend has been changing in the last five years where the proportion of the domestic travellers is going up.

Deep discounts

Although small and mid-sized hotels have also been impacted due to risk-aversion and cancellations, the segment is able to offset the downturn, at least for now, by offering attractive discounts on hotel bookings. “Luxury hotels will be hit especially hard by cancellations and significantly reduced bookings by rich but inherently skittish foreign tourists and businesspeople who must act in accordance with advisories that have been issued,” said Anuj Puri, Chairman of Anarock Property Consultants.

But industry analysts caution that the demand from domestic tourists will be known only when the vacation season begins in May. “Summer months are a period of heightened domestic travel in India. Given the evolving conditions, forward booking for summer leisure travel is likely to be severely impacted,” ICRA’s Ponniah said.

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Published on March 16, 2020
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