Hotel investment trading volume in India declined by 84 per cent in 2020 as compared to the peak witnessed in 2019, according to global real estate consultant JLL. The decline in global hotel investment volume was lesser at 60% in 2020 as compared to 2019, the report said. The country-wide performance of hotels saw a dip in RevPAR (revenue per available room) by about 55 per cent over the previous year, closing at a RevPAR of Rs 1,675, JLL said in the statement.
Whilst performance of business hotels has yet to fully recover, leisure markets led by domestic travellers showcased some resilience in the last quarter of 2020. Previous years had seen promising and consistent growth in occupancy and average daily rate (ADR) levels across key cities world over. India was no different.
As a result of the pandemic, hotels were compelled to reset their business plans. Standard operating procedures were drastically transformed with adaptation of available technology to encourage social distancing and increased focus on health safety and hygiene practices. New hotel developments slowed down, and most hotel openings were deferred by at least six months, according to JLL.
According to the STR data, Delhi’s hotel market witnessed a 32% PP* decline in occupancy and a 24.1% decline in Average Daily Rate (ADR), resulting in a 57.3% decline in RevPAR, in 2020 over 2019. Additionally, Bangalore’s hospitality market witnessed a 39-pp decline in occupancy and a 23.1% decline in ADR, resulting in a 67.7% decline in RevPAR, as compared to 2019. Brand signings in the country decreased by 38% over last year with 125 hotels and over 12,000 keys. The year saw a revival of demand firstly in the leisure destinations, with the maximum volume of signings in Tier-III cities
India has a strong market for robust domestic tourism. The tourism industry appears to have taken the hardest hit across the globe of all the affected industries in the Covid-19 pandemic. In wealthy economies and in certain countries with tourism-reliant economies, it was observed that strong direct government support that aided hotel and restaurant industry and workforce.
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“The post-pandemic world is bound to see more changes. Realignment of source markets, guest preferences, physical space planning will all be more dynamic and will be discussed more often in board rooms and team meetings. Capital assistance has emerged as the focal point and will remain the need of the hour to help hotels sustain till demand picks up.” says Jaideep Dang, Managing Director, Hotels & Hospitality Group, JLL India.
In India, hotel conversions had seen a consistent increase, nearly doubling from 33 conversions in 2016 to 65 in 2019. However, the conversions plummeted to just 29 hotels in 2020 under the impact of the COVID-19 pandemic. International hotel chains came at par with domestic chains in terms of converted hotel rooms, stacking at 50:50, showing increased flexibility to sign smaller sized hotels. There were no portfolio conversion deals concluded in the year. The erratic uncertainty in the market made the existing or committed hotel owners to adopt a further cautious approach than take any conclusive investment decisions in the year. With the gradual return in demand over the year or so, the hotel signings are expected to bounce back with some portfolio conversion deals as well.
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