Sluggish recovery for business hotels in India
Hotels in Pune, Bengaluru and Hyderabad are the worst hit and bleeding, and rates have crashed for business hotels in all major cities, industry executives said.
As per data shared by RateGain, the contribution of key cities such as New Delhi, Mumbai, Kolkata, Chennai, Bengaluru and Hyderabad to overall weekly booked room nights has dropped by almost 12% from last year and has barely changed week-on-week when compared with the end of November up till December 21.
The travel technology company compared booked room nights of its hotel clients in these cities.
As per the data, bookings in Delhi in December have dropped to almost a fifth of the average bookings in the same period last year.
The contribution of business hotels in these cities to overall (business and leisure) total booked room nights declined from 57.20% on November 30 to 50.10% on December 21. They contributed about 62.18% to overall booked room nights in December last year.
“The recovery is very sluggish for business hotels till now. You can get a four- or five-star product in key cities at less than Rs 4,500. Mid-segment products can even be at around Rs 2,500,” said Nandivardhan Jain, CEO of hospitality advisory firm Noesis Capital Advisors. “These are not the prices where projects can be viable looking at the capital investment which goes and debt servicing is also an issue at these price points.”
Jain said, “Business hotels are struggling with occupancies even at these low price points. Till the time the large corporate movement does not pick up, the recovery is unlikely to happen in the next one or two quarters. They are the ones giving the volumes. The most affected markets are Bengaluru and Pune. Most of the corporates currently have no clarity on when they will open up offices.”
Indian Hotels Company (IHCL) said corporate travel and MICE have been negatively impacted and the recovery has been slow.
“However, one is seeing small weddings at our city hotels, which is helping drive revenues,” an IHCL spokesperson said.
The head of an international hotel chain said, “The large corporates in India are not travelling and they will abstain from doing so in the first quarter of next year as well. Big business hotels are surviving on weddings and some SME travel. The trend is reversing. Occupancies are dipping on weekdays for business hotels, and going up on weekends with hotels getting staycation guests from the cities.”