SUITE SUCCESS

The hotel industry seems to have put pandemic blues behind it and is looking at better prospects

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Years 2020 and 2021 were the most consequential for the hospitality industry owing to the impact of the coronavirus pandemic. The global catastrophe resulted in cost pressures on the sector since occupancy rates fell to around 35% in addition to a massive reduction in revenue and profitability.

Things are looking up for the hotel industry. As per available data, the hotel industry is expected to witness an increase in demand for accommodation vis-à-vis room supply.

IMPROVEMENT ON GROUND

Green shoots are already visible. Puneet Chhatwal, CEO, Indian Hotels Company recently said the second half of the ongoing fiscal year has witnessed an increase in average room rates and occupancies, led by demand from a strong leisure segment and a boost from increased business travel.

To put it in perspective, in October ’22, the average occupancy rate in India was 65%. The average room rate, the key indicator of profitability, improved from ₹4,630 per room in fiscal 2021 to ₹4,938 per room in fiscal 2022. This has only improved in the subsequent months with September and October, achieving the highest growth in room rates.

For instance, in Mumbai the rates are near their pre-pandemic levels, at around ₹6,000, and has seen a 74% to 77% increase in October ’22 compared to the corresponding period of last year.

Similarly, all India room rates averaged around ₹5,900 per room to ₹6,100 per room in September this year. This is good news for the industry because higher revenue per room and higher occupancy mean higher revenue and profitability.