Alternate accommodation segment registers 30-40% spike in bookings

As the travel and tourism market starts to open up post-Covid-19, the homestay segment is seeing an uptick in bookings. The alternate accommodation segment in the hospitality sector has seen an uptick of at least 30 per cent to 40 per cent, according to hospitality industry players. Experts believe this segment will see a boost in investments.

The hospitality industry, which has seen a lull for two years now has finally started picking pace post the Omicron wave in January this year. Players like SaffronStays, too, had seen a decline in January but have seen a gradual pick up since February. It has seen an uptick of 30 per cent in bookings on a month-on-month (m-o-m) basis in March and approximately 15 per cent booking trends in April so far from its 200+ homes. 

Another homestay venture, Ekostay has managed to clock a 40 per cent uptick in bookings for FY22 compared to last year. It manages more than 125 properties with 1,500 bookings monthly.

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Pandemic impact

The pandemic has changed a lot of situations in recent times. People who would normally opt for a hotel now want to stay in a luxury home where they have their privacy and are distanced from crowded cities. This had given an uptick to the homestay segment in FY21 and FY22. However, a cloud of this trend being short-lived was looming over this segment.

Nandivardhan Jain, CEO, Noesis dismissed this while adding that it was not only “during the pandemic, that a lot of homestays and luxury rentals were booked on a long-term basis varying from a week to six months, the trend continues”. In fact, this segment, which is still at its nascent stage has seen several new entrants.

Husain Khatumdi, Managing Director & Co-Founder, Ekostay said that this segment is seeing an upward trend because customers are wanting Instagram-worthy homes, experiential stays, customised packages and personalised offerings — all within their budget.

This trend is one of the major reasons why both Ekostay and SaffronStays are seeing a rise in their forward booking trends. Besides this, Devendra Parulekar, Founder, SaffronStays believes that the trend of a ‘quick-vacation’, or ‘long-weekend travel’ to drivable destinations is giving a boost to the players in this segment. 

According to Jain of Noesis, due to a rise in significant demand, revenue per available room (RevPAR) is gradually improving on an m-o-m basis, but “that is due to limited supply available in the market”. “With the increase of quality inventory, we expect more price stability within the next 36 months,” Jain said.

A double-edged sword for segment players

The rise in demand is a double-edged sword for segment players. Parulekar explained that with new players emerging in the affordable holiday homes segment, it has had to keep its pricing competitive hence, it brought down rates by 30 to 40 percent in this segment. 

On the other hand, people preferring luxury holiday homes have had to pay a premium of 20-25 per cent increase despite competition. To tap into the growing demand of this segment, online travel aggregators like MakeMyTrip, Booking.com, and Cleartrip are constantly adding villas and homestay options on their portals.

MakeMyTrip said it is aggressively focusing on bringing homestays from across the country on its platform. The company has also launched new in-app feature such as ‘Be a Host’ that will help in accelerating the momentum of first-time homestay hosts opening their doors for travellers in the future.

Vipul Prakash, Chief Operating Officer, MakeMyTrip, said, “More than 32,000 properties are currently listed on the platform. With every passing day as more hosts join the growing homestay community on the platform, we look forward to offering extra choices and homestay options as per varied stay demands and needs of discerning travellers.”

The online platform has seen a 70 per cent increase in homestay listings from tier-II and unexplored destinations over pre-pandemic levels.  

Better investment opportunities

Speaking about the investment opportunities in this segment, Noesis CEO said in a best-case scenario, these vacation homes can yield a return on investment of 12-15 per cent for an asset owner in a stabilised year, which is much higher than the conventional hospitality asset class.

This makes this asset class one of the most attractive investment opportunities in the hospitality industry, especially from the HNIs. “Within the next decade, India will witness the supply of 2.5 million rooms in the homestay segment,” he said.

Speaking about the company’s growth plans, Parulekar said that SaffronStays, which has focused on popular tourist locations in Maharashtra will continue to deep dive into these markets focusing on expansion in the hills in the North and the South by entering key markets in Uttarakhand.

Ekostay’s plans too are aggressive. “We are looking at expanding our luxe category — a new product line of luxurious palatial homes that was recently launched for clientele who desire unparalleled luxury and indulgence. We want to cross the 500-villa mark,” Khatumdi said.

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