Cricket World Cup boost missing for hotels – an industry veteran explains why
- Hotel room rents have fallen slightly across major markets in the month of October.
- Analysts had been expecting a premium from the ongoing ICC World Cup.
- In Q2, the revenue per available room has come down for top hotels on a QoQ basis.
- Hotels however are confident that the upcoming wedding season will help them close the fiscal year with double digit growth.
AdvertisementThe hotel industry has been gaining from India’s wanderlust. However, hotel room rents which have been skyrocketing for the last few months on account of large events like G20 and more — might have hit their peak.
While the domestic demand has been holding up, the push that most people expected to see from the ongoing Cricket World Cup 2023, has not come in. The event started on October 5 and will end on November 19.
Sanjay Sethi, MD and CEO of Chalet Hotels said that unless a World Cup is staying with a property no block booking can be expected on account of the event.
“There is no specific team or anything staying with our hotels. So, whatever we get is potential visitors who are coming for the World Cup events and matches. I don't expect that to be a very large number for any hotel in the city. To begin with, it's a one day or one-and-a-half-day sort of a stay. Number two, most of the visitors for the matches are locals of the city,” he said in a Q2 earnings conference call.
The revenue per available room or RevPAR, which has been growing significantly in the last one year, did not see any uptick on account of the event where 48 matches will be played across 10 locations.
“Unlike expected earlier, the ICC World Cup has turned out to be a non-event as it failed to have a meaningful impact on the RevPAR for the hotels where the matches are being played. Nonetheless, domestic leisure demand has been encouraging along with improving corporate travel, which led to impressive Q2FY24 earnings in a seasonally weak quarter,” said IDBI Capital.
Have hotel room rents peaked?
In the month of October, the average room rates (ARR) have come down as compared to the month before, as per a report by IDBI Capital. It analyzed pricing of 171 hotels with around 33,000 keys across key eight cities over the last 24 months.
“Our analysis suggests that barring Jaipur and Hyderabad, major markets witnessed decline in average pricing in the month of October, 23 on MoM basis,” said IDBI Capital.
On a quarter-on-quarter basis too, September quarter’s revenue per room or RevPAR of major players has come down, though their year on year growth is very strong, along with occupancies.
However, it’s also to be mentioned that the second quarter is seasonally weak for travel and hospitality due to monsoons and festivals.
Q2 REVpar growth in major hotels
Source: Press releases, research reports
Weddings not World Cup
Hotels have their best season yet to come — the great Indian wedding season that’s expected to start by the end of this month. There is another season that’s to come in late January and early February.
This thrust, coupled with Indians’ undying love to travel, government’s efforts to boost local tourism is all set to keep the fires burning.
Advertisement“The hospitality industry dynamics remain buoyant in the medium term (5 years), with demand growth in FY23-28 growing at a CAGR of 8-10% outpacing the supply growth of 5-6%,” said a report by BP Equities.
Most companies and their analysts are confident that they will close the financial year with a double digit revenue growth. They also hope in-bound tourism will also improve in the second half of the current financial year.
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