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Holiday hotels see rise in occupancy levels, but industry not cheering

Many hotels renting rooms below standard rates cites as main reason. Hotels say leisure destinations, not metros, are the main revenue-earners now. In fact, hotels lobby body FHRAI says occupancies and room rates, pan-India, are still low.

February 24, 2021 / 10:20 AM IST
 
 
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Several hotels at holiday destinations reported high occupancy levels in December and January, but operators caution about a painfully slow recovery, just as the country braces for a presumed second wave of the pandemic.

Hotels and resorts were selling rooms a level below their rated standard for all of December and January -- the two best months of the year for the industry. A five-star luxury property was selling rooms at rates normally seen for four-star rooms, and it even included food and beverages.

Replying to a query from Moneycontrol, Vikramjit Singh, President, Lemon Tree Hotels, said: “Pricing is all being played at a level below the hotel segment a brand belongs to --i.e., 5-star and deluxe hotels are offering 4-star pricing; 4/3 star hotels are offering economy pricing, etc. For pricing to return to pre-COVID levels, we see a timeline of another 6-12 months.”

Leisure destinations still the revenue-earner

The industry is heavily dependent on leisure destinations to churn revenues as metro properties, which rely on corporate business, continued to be affected because of the pandemic.

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As a result, Goa, Rajasthan and Kerala recorded the best occupancies while markets like Mumbai, Delhi and Bengaluru trailed.

Noshir A Marfatia, Senior Vice President - Sales & Marketing, The Fern Hotels & Resorts, said: “Resorts still continue to do well with high occupancies, especially during weekends. Small destination weddings, social events and corporate meets have also started coming in now. Corporate business travel is still very minimal. So metro cities and business hotels are still in a bad slump. All our leisure destinations have been sold out every weekend, and, at many locations, even weekdays are seeing strong occupancies”.

According to research firm STR Global, revenue per available room (RevPAR) in December more than trebled, compared to the initial phase of ‘unlocking’ in July.

For Indian Hotels Company, one of the biggest hotel companies in India, the RevPAR jumped nearly five times to Rs 3,424 by the end of December, compared to Rs 734 recorded by the end of June. However, it was still less than half, compared to the pre-COVID period when IHCL recorded Rs 7,462 RevPAR in FY20.

Speaking to analysts, Puneet Chhatwal, managing director, Indian Hotels Company, said, “At this point of time, Q4 will definitely be stronger than Q3, if there is no new sudden wave of virus coming or lockdown. There is no reason why February should not do as well as December or March.”

Isolated cases of recovery

But these could be isolated cases of recovery as, according to the hotel lobby bodies, occupancies and room rates, pan-India, remain disappointingly low.

Gurbaxish Singh Kohli, Vice President, Federation of Hotels and Restaurant Association of India (FHRAI), said, “What we are getting right now is 15-20 percent occupancy in the cities. The holiday destination really picked up, especially at places which can be driven down to. Five-star hotels are offering staycations leading to weekend occupancy shooting up. Room rates have crashed to Rs 5,000 a night, which were earlier selling for Rs 16,000 a night.” FHRAI represents about 65,000 hotels.
Swaraj Baggonkar
first published: Feb 24, 2021 10:20 am

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