‘Revenge travel’ is the only way Indian hotels can make money – but it will take over two years to even match pre-COVID levels
- Revenge Travel – the term gained popularity in China, after people having been stuck in a lockdown started travelling domestically just to get out of their homes.
- Experts believe a similar recovery is on the cards for Indian hospitality sector. And that is good for the smaller hotels more than the luxurious ones.
- But that won’t be enough as occupancy levels won’t return to pre-COVID levels until 2022.
This travel recovery in China, is what experts believe will also be seen in India. And it is more likely to benefit smaller hotels more than the luxurious ones.
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And it seems that such hopes have sparked buying in Indian hotels shares in the last week.
|Hotel||% change since August 7|
Revenge Travel is a temporary phenomenon
The Indian hospitality industry has been one of the worst hit during the coronavirus pandemic. With travel having come to a full stop due to the spread of the virus, the travel and tourism industry is looking at a slow recovery – until a vaccine is out and readily available for all.
So far, India’s experts have been relying on what DLF CEO Rajeev Talwar called ‘aas paas’ tourism, during a live chat with Business Insider. He was referring to what the likes of OYO, Mahindra are betting on – rising hotel bookings on drive-to destinations instead of vacation spots that need you to take a flight.
Revenge travel takes off
A Mckinsey report puts it simply as the end of lockdown would mean the first thing people would want to do is eat out, and the second thing is travel.
According to a report by the US-based HVS Global Hospitality Services and Indian real estate research firm ANAROCK, said that while corporate travel and travel for Meetings, incentives, conferences and exhibitions will reduce, domestic travel could take off soon. “Domestic tourists will be major demand drivers. ‘Revenge’ travel witnessed in China could foster among Indians too,” said the report.
And the upcoming festive season could be the perfect time for ‘revenge travel’. According to a report by RateGain, India is currently the worst in hotel recovery in a survey of 15 countries and over 2.5 lakh hotels. But the future looks promising as the report said that India ranks third in the list of future bookings during November-December, falling behind only Thailand and UAE.
But it won’t be enough
Even with domestic tourism seeing green shoots, it won’t be enough for the Indian hotel industry. While hoteliers are ready for a slow recovery, the report by HVS and ANAROCK says it may take years for the hospitality industry to get back to pre-COVID levels. While occupancy levels will return to normal by 2022, the ADR (average daily rate) will return to normal only by 2023.
“Occupancy and ADR will recover much quicker in this cycle due to limited supply growth subject to vaccine being in place not later than 2021,” said the report.
India’s listed hotels – Lemon Tree, EIH (which operates Oberoi and Trident chain of hotels), Chalet, have all reported dismal numbers for the first quarter of FY21, with the hotels having reopened in June.
Patanjali Keswani, Chairman & Managing Director, Lemon Tree let out a word of caution even said that while he is hopeful for a gradual recovery in the second half of the year, he is still shoring up cash for the next one year, "assuming the worst-case scenario."
And the news is worse for luxury hotels, which have over 50% of revenue coming from international business or foreign tourists visiting India , as experts at ANAROCK and HVS say that these hotels fall in the ‘more vulnerable’ section while branded budget and mid-market hotels will lead the path to recovery.
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