Economic sentiment, current hotel business on the books and market share going forward are all under analysis and debate in India — far more than they were before the pandemic — but India’s hotel industry has been recovering with great alacrity over the past year, hoteliers say.
The return of business travel is evident, as hotel companies are reporting meeting revenue and financial targets not only during the high season between October and March, but also during the summer, which is traditionally India's lean season for hotels.
“Traditionally, India used to see a dip in occupancy and average daily rate until the end of summer," said Samir MC, managing director of Fortune Hotels. "However, this year is all about making up for the lost time. Despite the increase in room rates, consumer views regarding tourism remain positive.”
Fortune-branded hotels cater to business travelers across India, and the brand is part of India's ITC Hotels
Abhijeet Umathe, CEO of net-zero carbon footprint brand Eco Hotels, said he has seen a general uptick across the board.
“Occupancies since April 2022 are almost on par with pre-pandemic occupancies," he said. "Rates are a factor of occupancy and tend to lag occupancies by a couple of months presently. Occupancies have risen faster than rates."
Basant Sabu, general manager, development and feasibility at The Fern Hotels & Resorts, said over the past six months, India has experienced a continuous upward trajectory.
“This was not just a one-off performance by one particular player but an industry-wide phenomena," Sabu said. "This is also evident by the quarterly numbers that listed players like [Indian Hotels Co. Ltd.], Chalet Hotels and Lemon Tree have clocked in the April-June 2022 quarter, [in which] some of these companies had achieved their best-ever quarterly performance figures.
“For example, IHCL clocked 22% [year-on-year] growth in revenues and 92% growth in [earnings before interest, taxes, depreciation and amortization] when compared to pre-COVID-19."
Fern Hotels & Resorts, which operates more than 90 environmentally friendly hotels across India, saw improved occupancy and improved ADR in the same period, Sabu said, with revenue also increasing by more than 20% at the group level.
What is heartening to hoteliers in India is that growth is appearing across all categories of market segment.
“A majority will always be drawn to the budget and midmarket segments owing to our inherently Indian sensibilities," MC said. "The midmarket segment experiences the greatest reservations among hotel categories."
Back to Business
While leisure is driving the hotel industry in India and most other major markets, business travelers are on the rise, and international travel is contributing to business upticks as well.
“There is a consistency, and [business travel] occupancy levels now have a strong base to grow further from," Umathe said. "Travel is back, the free flow of international tourists will only add to the party. The strong recovery in demand is steadily increasing average room rates."
Sabu said that conference and event travel also is making a comeback, and travel around festivals further supports business.
"Commercial markets are also gradually improving as corporate travel and large-ticket conferences and events return. A bumper festive season is expected by the industry at large."
He added the luxury segment has been very healthy.
“Our luxury-and-mid-market portfolio has performed better, [which is] where we have maximum presence as of now," he said. "Leisure was aided by the school vacations and the start of leisure season for most of North India beginning in April. Business travel has certainly made strong recovery, and we have seen movement across India, barring Kolkata where occupancies are healthy and at pre-pandemic levels, but rates are way below them."
Now is the time to get busy and expand operations, Umathe said, who added his firm’s most recent rollout of hotels had to be delayed due to the pandemic and the drop in business.
“We are bullish on the short-term as well as the long-term prospects of the Indian hotel industry,” he said.
The parent company of Eco Hotels is raising 10 million pounds sterling ($11.4 million) to initiate the rollout of its two brands, midscale The Eco and economy Ecolodge, across India. Its partner in the endeavor is United Kingdom investment firm Red Ribbon Asset Management.
“Eco Hotels intends to roll out the two brands with a target of operating 5,000 rooms in five years,” Umathe said.
International Inbound Encouraging
Sabu said he is encouraged by seeing bookings for October and onward deriving from inbound travelers.
“For our properties in Agra and Rajasthan, we have already started getting a few bookings from source markets like Spain, France, Colombia, Brazil and Africa. For a place like Sarnath [Varanasi], we have started getting queries from Thailand and Vietnam,” he said, adding that business from China and South Korea has disappeared.
“This is completely stopped as of now, and no queries as such from these markets. My team believes that for inbound, pre-COVID momentum might not be possible this year, but from next year we are more positive on that segment of the business,” he added.
Umathe said he expects that between October and March 2023, all segments should perform equally well.
“There are some concerns because of global volatility and inflation, which might impact international travel. However, our domestic market has proven its depth and width, and we should all do well by remaining conservative on the expenses,” he said.
Invention is the mother of necessity, MC said.
“We have evolved with the changing environment and will continue to do so by exploring new ways to grow and move forward," he said. "Staycations and bleisure will continue to be popular for a long time, as well as customization and personalization, contactless communication, safety and hygiene.
“There is a positivity amongst demand drivers. Large events are also coming back. With that said, the coming winters will surely bring in an increased number of social gatherings and events. The industry will witness a strong demand and see a positive reflection in rates and occupancy in the coming season as well,” he added.