The year 2021 has been nothing short of a roller coaster ride for the Indian hotel sector. All through the year, the sector has shown resilience by navigating through uncertainty, adapting to an ever-changing environment, and persevering through the ups and downs on the rocky path to recovery. The silver lining being that the leisure segment, which was ignored in the past, is now being awarded its due focus.
Business and city hotels in India have long overlooked the leisure segment, focusing on corporate clients and groups as their bread and butter. However, domestic leisure travelers came to the rescue of these properties when revenue from traditional business models based on corporate travel vanished suddenly owing to the pandemic. Hoteliers soon adopted the saying that “amidst every crisis, lies a great opportunity,” and quickly adapted to capitalize on the demand.
The Indian government has placed greater emphasis on road development in the country in recent years to promote economic growth and progress. The government has planned massive investments to bring the country’s 6 million kilometers (km) long road network – the world’s second-largest – at par with that of the US and European countries in the coming years.
Corporate travel has been gathering up steam globally, albeit slowly, as after several months of virtual meetings and video conferencing, in-person meetings are finally making a comeback. According to a recent report by World Travel & Tourism Council, global business travel spending is expected to rise 26% in 2021 and 34% in 2022, bringing it to two-thirds of pre-pandemic levels by the end of 2022. This rebound is likely to be led by the Middle East and Asia-Pacific regions.
With the surge in travel demand, the Indian hotel sector has been regaining ground faster than expected, with occupancy climbing significantly in recent months, strengthening the sector's hope for a stronger rebound. Domestic leisure travel growth, significant pent-up demand, and the resumption of business travel in the country are all contributing to the strong revival. Weddings and social events are also driving demand in certain markets.
Rapid growth in Chinese outbound travel demand from 2003 onwards was a key driver for tourism and leisure hospitality in many parts of the world. Can this momentum be regained post-COVID to drive more hotel development?
Extreme weather, rising sea levels, melting glaciers, storms, and cyclones across the world are undeniable proof of climate change's pervasive influence, which has resulted in massive social and economic losses in recent years. India has not been immune, with devastating floods, cloudbursts, and landslides wreaking havoc in numerous states this year alone. International organizations and governments from all over the world have recognized the crisis and are working together to reduce the impact and safeguard the environment for future generations. At the recently concluded COP 26 UN Climate Change Conference, India, too, vowed to become carbon-neutral by 2070, a target that will necessitate unprecedented collaboration between stakeholders across industries, including tourism and hospitality.
The Indian hotel sector is finally breathing a sigh of relief as demand has recovered dramatically in recent months, even helping push occupancy and average rates closer to pre-pandemic levels in a few markets. However, the hotel sector, like most others, is reeling under the pressures of rising prices, affecting not only operations but also hotel development plans in the country.
About 18 years back I was visiting a very dear friend in Perth, Australia - Joyce P. Westrip. She is an acclaimed author, a Year 2000 Order of Australia Medal (OAM) awardee, a veritable Indophile and an unofficial ambassador for diverse arts and cultures, including being a patron and benefactor of several significant cultural bodies.
Goa’s tourism growth story is gradually getting back on track as it has become the go-to holiday destination for domestic tourists since the state reopened post the second wave. Due to the limits on overseas travel, several outbound Indians are also choosing to vacation in Goa. From resorts, hotels, and private villas to dorm rooms and beach huts, Goa has something for everyone. As a result, occupancy has been steadily improving month after month, with September 2021 occupancy approaching pre-pandemic levels for the month and average rates surpassing pre-pandemic levels. With the government taking steps to welcome foreign tourists back, Goa, which is known as one of India’s top beach and nightlife destinations, may soon see a surge in demand from international tourists, allowing it to recover faster than most leisure destinations.
The first nine months of 2021 have been a mixed bag for the Indian hotel sector, which is currently on the path to recovery thanks to the growing domestic leisure travel. During the nine-month period ending September 2021 (9M2021), the sector witnessed a 3-5% increase in RevPAR across India compared to the same period in 2020. In 9M2021, nationwide occupancy was in the region of 41-44%, an increase of more than 9 percentage points over the previous year. While occupancy is rising because of the pent-up demand in the market, average rates are struggling as hotels try to shore up occupancy. Average rates declined by more than 19% in 9M2021 compared to the same period in the previous year. Growing demand for domestic leisure travel amidst international travel restrictions helped Goa record the highest RevPAR in the country during the period, while Chandigarh had the highest RevPAR growth.
The Indian aviation sector is finally flying high following a burst of encouraging news in recent weeks. Air passenger traffic is rising steadily, especially with the onset of the festive season and resumption of corporate travel, prompting the government to allow airlines to operate at full capacity. Air traffic is expected to recover further after the country reopens its borders to international tourists in the coming weeks. Meanwhile, with Jet Airways resuming operations and a new ultra-low-cost airline, Akasa Air, launching flights next year, as well as the privatization of the national carrier, Air India, through a sale to Tata Sons, competition in the aviation market is set to heat up.
India’s vast coastline is peppered with some of the world’s most stunning, untouched, and unexplored islands. The Andaman and Nicobar Islands, as well as Lakshadweep, are home to the majority of these. Both islands have become popular tourist destinations in recent years because of their beautiful landscape, rich biodiversity, and unique experiences ranging from historical landmarks to water sports and adventure activities. Pre-COVID in 2019, Lakshadweep hosted over 7,000 tourists, whereas the Andaman & Nicobar Islands welcomed over 500,000 tourists. While the foreign tourist arrivals in Andaman & Nicobar have stayed relatively stable, domestic tourist arrivals doubled during 2012-2019. Despite these outstanding growth figures, tourism on these islands remains mostly undeveloped and undiscovered.
India has prolonged the suspension of scheduled international commercial passenger flights till the end of October 2021 due to the ongoing pandemic. Only flights under bilateral air bubbles, special flights, and cargo flights are permitted to operate. However, the central government is planning to welcome international travelers back to the country soon, albeit with several strict guidelines and protocols in place as the prospect of a third wave still looms large. The Indian government also recently announced its plans to provide free visas to the first 500,000 tourists once scheduled international commercial travel resumes in the country.
If ‘virtual’ was the key trend in the meetings, incentives, conferences, and events (MICE) industry in 2020, ‘hybrid’ has been the buzzword in 2021, as in-person attendance made a comeback at large-scale events in various countries. All popular international MICE locations are taking measures to resurrect the segment, with Singapore and the UAE leading the way, having hosted multiple hybrid events successfully in the past year, with even international delegates in attendance.
At the start of the pandemic, I implemented, when considered in retrospect, was an uncharacteristic experiment. For an entire day, I tried not to touch anything in a public space. After a few hours of what seemed like a long game of playground tag, I realised that it was impossible to shun much of our physical contact outside the home effectively.
The luxury hotel segment, which currently accounts for around 11% of India’s total quality hotel supply, has regained developer interest in recent years due to its tremendous potential on account of limited supply. Domestic hotel brands such as IHCL, Oberoi, and ITC traditionally dominated the luxury segment in India. However, in recent years, several international hotel chains, including Marriott, Accor, Hilton, and Hyatt, have entered the luxury and ultra-luxury hotel categories in the country, making the segment more competitive. As a result, luxury properties contributed 11% of overall brand signings by key in 2020, up from 9% in 2018.
Traveler confidence is improving post the second wave, renewing hopes of a recovery for the travel and hospitality sectors. Domestic aviation traffic has been steadily increasing month after month, growing by 47% in June 2021 (compared to May 2021) and 61% in July 2021. The surge in demand has even prompted the ministry of civil aviation to increase domestic airline seat capacity to 72.5% of pre-COVID levels from 65% earlier.
Travel demand – both leisure and business – is gradually improving in the country, bringing in a newfound enthusiasm and euphoria in the Indian travel & hospitality sectors. The declining cases, easing of restrictions across states, and increasing momentum of the vaccination drive, coupled with people’s inherent need to travel, are key factors driving this revival. A uniform national travel guideline is also expected to be implemented soon, which will further ease travel within the country.
The Republic of Maldives is located in the Indian Ocean, southwest of Sri Lanka and India. The country comprises 1,192 coral islands, which are divided into 26 major island rings, known as atolls. For administrative purposes, these 26 atolls are organised into nineteen administrative districts across an area of 90,000 square kilometres in the Indian Ocean.