The impact of COVID-19 has severely impacted the domestic hotel and hospitality sector in Q1 2020, according to JLL’s Hotel Momentum India (HMI) Q1 2020, a quarterly hospitality sector monitor, which was released recently. All major 11 markets of India – Ahmedabad, Bengaluru, Chennai, Delhi, Goa, Gurugram, Hyderabad, Jaipur, Kolkata, Mumbai, and Pune – witnessed a decline in the Revenue Per Available Room (RevPAR) in the first quarter of 2020, over the same period last year, says the report.
Mumbai continues to be the RevPAR leader in absolute terms, despite the decline of RevPAR by 20% in Q1 2020 compared to Q1 2019. However, Bengaluru saw the sharpest decline with a 28.5% of RevPAR, compared to the same period in the previous year. Furthermore, Hyderabad witnessed a RevPAR decline of 13.6%, Ahmedabad and Pune witnessed a drop in RevPAR by 13.2% and 13.4% respectively in this quarter.
“Glimpses of travel decline started in late February, and by March, the writing was on the wall that hotels would be facing their toughest test since Global Financial Crisis. The high performance of hotel industry in 2019 was followed by a positive start in January of 2020, but the script would change diametrically within last two months. On back of halted travel, pressure on hotel occupancies will be felt through the year,” says Jaideep Dang, Managing Director, Hotels & Hospitality Group (India), JLL.
Coming off a high-performance base in 2019, the COVID-19 outbreak and the containment measures introduced by the Government of India have resulted in a severe drop in foreign and domestic travel, across both business and leisure travel segments.
“Domestic hotel operators dominated signings over international operators with the ratio of 59:41. In terms of inventory volume. Most of these signings took place in January and February 2020 and many of them were fall through from 2019. It is also important to note that 23% of these new signings are conversions of old hotels,” says the report.
Moving further, growth and development will be impacted with new hotel signings getting deferred or cancelled for the time being. However, for developers and investors who have cash reserves, the next couple of years will be an opportunist time to invest and build projects on back of reduced construction and finishing costs.
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