After a challenging year, hospitality sector upbeat on 2017

Swathi Moorthy Chennai | Updated on January 12, 2018 Published on January 06, 2017

‘Despite demonetisation setbacks, long-term outlook stays bright’

Growing numbers of corporate travellers, ease of connectivity, low-cost carriers and rising interest in domestic leisure travel present a huge opportunity for the sector in 2017.

According to industry estimates, revenue per available room (RevPAR) was recorded at ₹3,512 in 2015-16, a growth of 6.1 per cent from previous fiscal. This will increase in coming years, thanks to the rising income levels of the middle class, infrastructural reforms, increasing foreign tourist arrivals and tourism-friendly visa policies, a report said.

But the promise at the beginning of 2016 fell short at the yearend. Demonetisation of high-value notes adversely affected the industry, at least in the short term, say industry players.

Ramesh Ramanathan, Managing Director, Sterling Holidays and Resorts, said that while the industry did well in the first three quarters of last year, post-November winter travel was affected and hotels saw a fall of up to 60 per cent in bookings because of demonetisation.

“The industry faced a slight pinch during the last two months. But I think we are seeing a recovery now and there is headroom for India travel to grow. Demonetisation had a short-term impact, but we don’t see this impacting the industry in the long term,” he added.

Vardah impact

In the case of Chennai, the situation was aggravated by Cyclone Vardah that hit the city on December 12. In addition to the drop in bookings and some cancellations, a few hotels did not see the usual crowds during the Christmas and New Year celebrations.

Aashima Sharma, General Manager, Park Hyatt, Chennai, said the city faced many challenges in 2016. “In the beginning of 2016, the city was recovering from floods, followed by elections in May and the cyclone in December. All these affected our business,” Sharma said.

But there are opportunities to grow in 2017. Ramanathan said travel has become an integral part of Indian lifestyle and it gives the necessary boost to the industry.

“People are taking more holidays than they used to and more often,” Ramanathan said. In addition to taking longer summer holidays, people are taking multiple vacations throughout the year, he added.

Foreign arrivals

Foreign tourist arrivals are growing as well. It recorded a growth of 4.2 per cent in 2015. According to Arif Patel, Vice-President – Sales, Marketing and Distribution, AccorHotels India, the country saw 9 per cent increase in foreign arrivals this year, thanks to the e-tourist visa facility extended to over 150 countries.

Patel said proliferation of low-cost carriers and increased connectivity to tier-2 and -3 cities have prompted corporate travel within the country.

The government’s initiative to make travel more affordable for the growing middle-class by capping the fare at ₹2,500 for one- hour flights will aid in the growth of the hospitality industry.

Sharma said that with foreign direct investments coming into several key industries, the hospitality sector is poised to grow.

“Lots of infrastructure and manufacturing projects are coming up and interest in medical tourism is rising as well,” she said.

Published on January 06, 2017
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