India’s hotel industry pins its recovery hopes on ‘the next best thing’

Domestic travel is likely to see a surge well before international travel

According to a study, occupancy levels in India’s hotels in April plummeted 81.8 per cent compared to the previous year | Reuters According to a study, occupancy levels in India’s hotels in April plummeted 81.8 per cent compared to the previous year | Reuters

India’s hospitality and travel industry has been on the frontline bearing the brunt of the COVID-19 pandemic’s economic impact. As India looks at easing lockdown restrictions, the nation’s hospitality sector is picking itself up and looking for ways to survive in ‘the new normal’.

Staring at the loss of their most lucrative (and preferred) revenue earner, the international business traveller, hotels are slowly settling in on ‘the next best thing.’

“The hospitality industry will take 6-8 months to mitigate the impact and business losses,” Vijay Dewan, managing director of Apeejay Surrendra Park Hotels and deputy chairman of CII (Eastern Region) told THE WEEK. An overview by HVS and Anarock showed that occupancy levels in India’s hotels in April plummeted 81.8 per cent compared to the previous year. 

Even during the darker moments of the economic slowdown that had gripped India’s economy through 2018-19, there was hope that recovery was round the corner in 2020. The coronavirus, of course, bludgeoned all such forecasts out of reckoning. In fact, hotels had faced the first wave of the pandemic, as reduction in flights, local administration restrictions on restaurants and sudden cutting down of events. According to an assessment by Hotelivate on the eve of the lockdown, the loss of India’s organised hotel industry due to COVID-19 this year would be nearly 12,000 crore rupees. In hindsight, this estimate now appears pretty conservative.

Once regulations are reworked and hotels start functioning again, don’t expect things to be ‘business as usual’ just yet, though. The highly infectious nature of the virus and the increasing tally everyday would mean it will still take time for guests to patronise their favourite haunts yet again. “Travel is not going to be the same. There is obviously fear and anxiety in the society, which will change the way travel will take place now,” muses Dewan.

ICRA in its latest report pointed out how credits and liabilities in an asset-heavy business like hospitality could push many hotels to even permanently shut down in the coming days. Arguing that a recovery is at least three to four quarters away, the rating agency said the six-month loan moratorium lifeline given by Finance Minister Nirmala Sitharaman as part of her COVID-19 relief package was ‘inadequate.’

Traditionally, business travellers, and till recently international travellers, make up the bulk of guests at major hotels. That is a category hoteliers will have to kiss goodbye at least into the foreseeable future. 

So comes the ‘next best thing’—the domestic traveller. 

Traditionally looked down upon by snootier chains, the desi tourist could well be the factor that could spell life or death for Indian hospitality. “We estimate that domestic travel will pick up comparatively faster than international travel. Simultaneously, tourism for leisure will rebound faster than business travel,” says Dewan.

While logically one could assume that Indians will also hesitate from travelling due to the fear of infection, the news coming in from China earlier this month could be illuminative. After months of stringent lockdowns, as the Communist state eased restrictions in time for the May Day extended holidays, hordes of Chinese thronged tourist places, travelling across the country and checking into hotels. According to Chinese state media, despite caps on how many people can travel and visit any particular place, five crore Chinese were reported to have travelled in just the first two days of the five-day holiday.

For Indian hoteliers, that news is like manna from heaven after a drought. “I see two clear trends emerging- first is a boom in domestic tourism as people will choose destinations within India as opposed to international holidays,” says Kapil Chopra, founder of The Postcard Hotel, which runs boutique properties in Goa and Bhutan. “And the second will be a move away from large, chain hotels to a preference for smaller, intimate hotels that can more successfully guarantee high levels of safety and sanitisation.”

Despite hotels preferring the business traveller, the fact remains that India’s domestic travel market is big — according to estimates, Indians make 180 crore trips locally every year. Calculates Chopra, “It may only be the limited supply of options in India that has prevented them from holidaying in the country (and instead) travel abroad. And now with the current pandemic (and local hotels focussing on domestic tourists), this segment will grow.”

Adds Dewan, “The central and state governments must plan to promote state tourism, as domestic travel will see a surge well before international travel.”