Hotel And Hospitality Sector Outlook In India

The hotel and hospitality sector has started to experience a sharp recovery, this year, as the Covid pandemic contamination eases across the nation. Additionally, employees' salaries, increments, and new recruitments are also increasing in line with the growth of the sector. However, till January 2022, the situation was under huge pressure due to the rising Omicron cases and the government had to impose restrictions.

Mentioning this, a recent report titled, 'HVS-ANAROCK Hotels And Hospitality Update - Feb 2022 Edition' stated, "The rising Omicron cases and the reintroduction of travel restrictions across states threw the Indian hospitality sector into an upheaval once again. Except for critical and urgent travel, other leisure and business travel, plans were put on hold in Jan 2022 as people exercised caution. As a result, domestic air traffic declined by 43% in Jan 2022 as compared to Dec 2021."

Additionally, the report added, "The hotel sector also reported lower performance, with occupancy falling to its lowest level since June 2021. On the other hand, room rates continued to improve on a year-on-year basis. Unlike the previous Covid waves, this downturn has been short, given that travel demand has been returning at a significantly faster rate."

However, the hospitality gained some improvement in the last quarter. According to the available report, in Q3 results of a few players in the hospitality segment-Indian Hotels, Lemon Tree Hotels, Chalet Hotels, and EIH's aggregate revenue- were up 101% YoY and 51% QoQ. With easing the restriction norms, the hospitality sector has the potential to grow this quarter.

A recent Motilal report stated, the Covid pandemic will pose some threats to near-term sector earnings. However, an intensified vaccination drive will help the hospitality sector to rebound positively than the second wave. Additionally, it is anticipated that with further ARR improvement, the normalization of economic activities and development in occupancies are going to be driven by business travel and leisure travels.