Indian hotel Sector: From resilience to resurrection

The Indian hotel sector is upbeat, with renewed prospects of a speedy recovery thanks to the improving traveller confidence in the last couple of months. Domestic travel has picked up once again due to fewer Covid-19 cases, lesser travel-related restrictions across states, and improving immunisation rate in the country. People are travelling again to escape the lockdown blues and work-from-home weariness. Leisure travel is leading the rebound as weekend getaways to motorable leisure destinations and ‘staycations’ at luxury properties in cities have become popular travel options. Business travel is also regaining ground in some markets. As a result, hotel occupancy has been increasing month-over-month in all the major markets since June 2021, with nationwide occupancy approaching 50 per cent by end-July 2021.

AN EPITOME OF RESILIENCE  

Much has been said and written about the unprecedented disruption caused by Covid-19 on the Indian hotel sector. However, as a silver lining, the pandemic also accelerated certain much-needed changes that will help the sector to prosper in the future. Hoteliers have modified their strategies to survive these challenging times, focussing on cost optimisation, rapid technology adoption, creating new revenue streams and expanding into new markets and customer segments. As a result, following a tumultuous 2020, the year 2021 began on a positive note, with the Indian hotel sector beginning to recover gradually. 

Just as the sector was beginning to recover, the second wave of the pandemic wreaked havoc as new restrictions and lockdowns in numerous states resulted in weaker demand between March 2021 and May 2021. Nonetheless, the Indian hotel industry has often demonstrated resilience, navigating through crises and turning them into opportunities.

Unlike the previous year, when most hotels were closed or relied solely on quarantine business, the hoteliers this time proactively focussed on alternative customer segments and ancillary revenue streams to weather the storm. Hotels have been curating various staycations, weekends, workcations, wellness and F&B packages to appeal to a variety of customer segments – frontline workers, couples, multigenerational families, couples with young children, groups of friends, corporate travellers and so on – with some even introducing pet-friendly policies to appeal to pet parents. Hotels are also offering private dining areas with personalised menu options to guests. Some hotels, mostly in commercial centres, partnered with hospitals to provide isolation and quarantine facilities, which have improved occupancy but influenced the average room rates in the market. 

Unlike the previous lockdown, hoteliers did not adopt a wait-and-see policy. Instead continued with their expansion plans, signing smaller properties with increased focus on Tier 3 and 4 cities, resulting in a marginal increase in brand openings and signings by properties as compared to the last year.

TIME TO RESURRECT 

The sector’s agility in operations has shifted the scales in its favour, allowing it to quickly tap into the pent-up demand once the second wave started ebbing and restrictions were eased. With the impending festive season, domestic leisure travel demand, at both popular and offbeat destinations, is likely to rise significantly in the next few months. 

Recent media reports indicate that tour operators and hotels are witnessing a 50-70 per cent spike in bookings for the upcoming festive period as compared to the previous year. Corporate demand is also improving gradually as most industries return to a full or hybrid ‘work-from-office’ model and resume their business travel plans. As a result, we expect the sector to bounce back to pre-pandemic levels on occupancy by 2022 and ADR by 2023, provided the next wave, if any, is not as devastating as the previous one.

OCCUPANCY TO HIT 70 PER CENT IN 2024?

While adapting to the constantly evolving situation has become the need of the hour, here are some elements that will help the sector rise and thrive in the post-Covid world.

1. Keeping the upbeat travel sentiment alive and maintaining traveller confidence are the primary steps in the path to revival. The hotel sector has all the required tools and practices in place for Covid safety. It is about ensuring that the safety standards are followed by the employees and guests alike, even when the business is excellent. Safety, cleanliness, and hygiene are here to stay and even one instance of neglect can threaten the entire sector’s reputation and growth. 

2. Embracing technology to elevate hospitality to the next level, since technology is no longer just an enabler. In the last year-and-a-half, technology-driven innovations have become a fundamental component of hotel operations. Check-in and check-out with contactless technology, digital menus and contactless payments are just the beginning. In future, the hotels will be designed with smart IoT-enabled guest rooms to increase guest comfort and experience, with facial recognition and biometrics being utilised extensively for authentication. Hoteliers will be able to reduce costs, improve profitability, streamline processes, and increase employee productivity through technological advancements while enhancing guest experience and personalisation. 

3. Flexible design with increased efficiency is the way forward for hotels in the post-Covid era as the hoteliers invest in best practices and adopt the necessary changes to bounce back stronger post the pandemic. As hoteliers lift their cleanliness game for the post-pandemic traveller, we foresee fundamental changes in guest rooms — simple aesthetics, use of easy-to-clean/ sanitise, anti-germ materials and floors, and so on. Overbuilding and overspending on hotels have long been a concern in the industry, but we now expect that to change. 

4. Hoteliers who can think out-of-the-box and implement unconventional business ideas will stand out. For instance, to emerge out of the current crises, some Indian hotel owners may seek long-term repurposing or adaptive reuse for their hotel property which is a growing trend globally. Hotel chains may also try diversifying into other segments such as vacation rentals and branded homestays.   

5. Hoteliers should make sustainable practices a primary focus in future since eco-friendly measures are now more vital than ever to travellers. In the long run, adopting sustainable practices will help save money and increase profitability. As we steadily emerge out from the current crisis, it is vital that all stakeholders work together to strengthen the sector’s focus on sustainability by introducing greener practices.

In a nutshell, Covid-19 has thrown the sector a few curveballs while also assisting it in reassessing and transforming its operations to face a new reality and shape future growth. The question now is whether we, as stakeholders, are willing to adapt and make the required changes to help the sector achieve its full potential?