Expect India-wide occupancies to improve to 56-59% in 2021: HVS Anarock

Following the onslaught of the Covid-19 pandemic, brand signings by keys witnessed a year on year decline of 40% in 2020 and the hospitality sector, including organised, semi organised, and unorganised segments incurred a total revenue loss of around Rs 900 billion last year, according to estimates provided by consultancy HVS Anarock in its Indian Hospitality Overview report 2020.

During the year, 100 new hotels entered the branded hotels market, while an additional 35 hotels were rebranded. Management contracts continued to be the preferred form of brand signings, however, franchising is steadily strengthening its position. In the year marred with uncertainty, hotel operators preferred to sign projects that are less risky and have a higher chance of completion compared to greenfield projects. As a result, brownfield projects grabbed the pole position in 2020.

Hotel transactions declined by 50% compared to 2019. HVS Anarock said the gradual rollout of the Covid-19 vaccine across the globe and in India is expected to help restore consumer confidence and help ease restrictions during the year ahead.

The report further stated that 2021 will be a crucial year for the hospitality sector as it emerges from the disruptions and embarks on the path to gradual recovery. “We expect demand to improve considerably in 2021, driven by strong economic growth, corporate performance, and people making-up for the lost time by giving in to their pent-up desire to travel. However, hygiene, cleanliness and safety will continue to remain top priorities in the post-Covid world,” HVS Anarock stated.

As per the report, domestic leisure travel, particularly to motorable destinations will continue to show a steady increase in 2021. But, corporate demand will remain subdued at least in the short term as virtual meetings will overshadow travel. HVS Anarock expects India wide occupancies to improve to 56-59% in 2021 which will push RevPAR to Rs 2500-3000 during the year. Rate pick up for luxury business hotels is likely to be the slowest and for luxury leisure hotels to be the fastest. It expects mergers and acquisitions activity in the industry to accelerate in the second half of the year with hotel transaction volumes exceeding $ 1 billion in 2021, as several asset owners come under financial stress and look for exit.

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