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Domestic Travel to Aid Hotels Recovery in 2021
Jaideep Dang, Managing Director, Hotels and Hospitality Group, South Asia, JLL. How did hospitality sector fare in 2020? India’s hospitality industry witnessed a decline of 54.9% in Revenue Per Available Room (RevPAR) during January to December (CY
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Realty Plus
Published - Thursday, 18 Feb, 2021
Jaideep Dang, Managing Director, Hotels and Hospitality Group, South Asia, JLL.
How did hospitality sector fare in 2020?
India’s hospitality industry witnessed a decline of 54.9% in Revenue Per Available Room (RevPAR) during January to December (CY 2020) as compared to CY 2019, according to JLL’s Hotel Momentum India (HMI) Q4 2020, a quarterly hospitality sector monitor. With the revival of domestic travel, emergence of recovery indicators has come to the rescue of the sector.
Total number of signings in Q4 2020 stood at 45 hotels comprising of 4,326 keys, recording a decline of 43.6%, compared to the same period last year. International operators dominated signings over domestic operators with the ratio of 57:43 in terms of inventory volume.
What is the outlook for the sector in 2021?
The recovery of the sector has been primarily driven by leisure ‘revenge travel’ during weekends, festival season, weddings and demand of food & beverage.
Goa grew to be the RevPAR leader in absolute terms, despite a decline of RevPAR by 33.3% in Q4 2020. Demand for domestic leisure travel amidst international travel restrictions has made Goa the fastest recovering market in absolute terms. Bengaluru saw the sharpest decline of 77% in RevPAR in Q4 2020 compared to the same period in the previous year. However the city has witnessed a month on month growth in performance during the last quarter of 2020.
We are already seeing signs of domestic business travel pick up in the New Year. We expect that occupancies in business hotels will ramp up from March/April 2021 onwards as companies gradually lift travel embargo. Furthermore, domestic leisure travel will continue to drive occupancies across the country. F&B demand will continue to grow as eating out will increase albeit cautiously. We also expect investment activity to restart with serious investors evaluating quality assets on back of performance cycle uptick.
To help revive the sector by way of various benefits such as rebates in electricity charges as well as property taxes, Government of Maharashtra recognised hospitality sector as an industry. Further, the government decreased number of permissions required to start a new hotel or a restaurant to 10 from 70. The Atmanirbhar Bharat 3.0 measures announced by the government included the launch of ECLGS 2.0-Guaranteed Credit for supporting the 26 stressed sectors identified by the Kamath Committee.
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