Credit rating firm Icra too is bearish in its forecasts. The recent second wave/localised lockdowns are expected to have an impact on discretionary travel and occupancy over the next 1-2 months. While widespread vaccination rollout could ease things to an extent, the situation is evolving and remains a monitorable it said in a recent report. Pan-India ARRs (average revenue rate) would still be at a discount to the FY2019 levels in FY2022. “The extent of RevPAR improvement in FY2022 is contingent on timelines tied to the pandemic, and hence can witness downward revision in the coming months. Recovery to pre-Covid levels will take about 2-3 years,” it said.
Interestingly, the decline for hotels
on both ends of the spectrum-- economy and luxury was the steepest, according to Hotelivate’s research. They are also likely to attain the sharpest improvements. Early signs of this already became visible in Q4 FY 21, as business travel related demand resumed first in the budget/economy hotels on the one end and discretionary transient leisure picked up pace across luxury hotels and resorts.
Most upscale and midscale hotels are present in urban India and are dependent on corporate transient as well as business MICE (meetings, incentives, conference and entertainment segment) travel to resurge. The absence of meaningful inbound travel (which is largely corporate again) adds to their woes. A majority of the nation's organized inventory sits in the mid and upscale space and shall witness a recovery that is marginally slower than the hotels at the top and bottom of the pyramid.
The report also underscores the strong correlation between air travel and hotel inventory. The two have been moving in tandem. Consider this: The nationwide inventory for hotels is expected to increase to 1,63,656 by 2023, this will be the highest in seven years since FY16. Air passenger traffic is also expected to rise to a 7-year high of 346 million by 2023. On a similar note, nationwide inventory is estimated to have fallen to a five year low of 102.39 in FY21. Air passenger traffic too is expected to have dropped to the five-year low of 67.37 million in the same period.
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