Branded hotels front-runners to capture the first tranche of demand

The outbreak of COVID-19 resulted in one of the biggest setbacks for the global economy. Though every sector was impacted tourism and hospitality were impacted the most. The imposed lockdown resulted in restricted travel and ended in the majority of hotels shutting down for more than 180 days.

During the first half of fiscal 2021 (April 20- Sept 20), pan India hotels operated at an average occupancy of 9% at an average room rate of INR 2,500 per room per night. However, during the same period, branded hotels witnessed an occupancy of 23% with an average room rate of INR 3,910 per room per night.

Staycations and weekend getaways picking up pace post the travel restrictions have eased coupled with the confidence travellers have in branded hotels in terms of health and hygiene facilities have fueled the demand revival for branded hotels.

“With the easing travel restrictions and confidence on branded hotel chains, the next two quarters which are termed as peak quarters for hotels, leisure demand in the country is expected to soar at a faster rate compared to business destinations,” says Nandivardhan Jain, CEO, Noesis Capital Advisors.

Within the NCR region, Gurugram and Delhi clocked an occupancy rate of 27% and 24% respectively with a room rate of INR 4,190 for Delhi and INR 3,530 for Gurugram.

During the first quarter of the fiscal (April 20- June 20), the majority of hotel demand across the operational hotels was coming from Vande Bharat Mission, medical staff, and people opting for a hotel quarantine when tested positive.

However, post the easing of travel restrictions, Indians have started traveling again with the majority of them looking for staycations to step out of their homes and use these facilities as their workstations. The second form of travel is coming from weekend getaways which are fueling demand for leisure destinations and/or urban tourism destinations surrounding the top metro and tier-I destinations.

MMR, Ahmedabad, and NCR have witnessed a sharp growth in occupancy primarily due to the reopening of business activities as well. Bengaluru, Chennai, Hyderabad, and Pune which are primarily driven by IT/ITeS have witnessed low occupancy in the range of 14-22% during the first half of fiscal 2021.

Leisure destinations during the same time have witnessed a better occupancy rate. Especially Kochi which witnessed strong inbound travellers from middle-east during the last two quarters and a mandatory quarantine at the facility kept the occupancy and room rates high for the city.

Leisure destinations across North India witnessed high occupancy as all the destinations enjoy the perfect driving distance from neighboring cities as well as states which allows people to explore these cities for weekend getaways. These destinations also have been one of the most preferred destinations for weddings.

The revival of the Indian Hotels sector is expected to come at a much faster rate than anticipated and leisure destinations across the country are expected to outperform the major cities in India in terms of occupancy and room rate growth.

City-wise performance of Branded Hotels

Note: The study also includes hotels that are still not operational across these destinations.
Source: Noesis Capital Advisor