Hotel chains remain unconcerned about a decline in occupancy rates, directing their attention towards bolstering revenue through market absorption of increased rates.
According to a recent report from consultancy HVS Anarock, hotels across India experienced an occupancy range of 60-62% in September. This reflects a decrease of 3-5 percentage points compared to 2019 and 1-3 percentage points compared to 2022. The report indicates a drop in demand for hotels in Pune, Bengaluru, Chennai, Delhi, and Hyderabad, while Chandigarh, Goa, Kochi, Kolkata, and Mumbai witnessed an increase in occupancy.
In September, Revenue Per Available Room (RevPAR) experienced growth compared to the corresponding periods in both 2019 and 2022. Consequently, hotels are relatively unperturbed by the decline in occupancy, attributing it to local festivities and the G-20 summit in Delhi.
“We are in a high demand, low supply environment. Hoteliers are ready to risk losing low paying segments in favour of higher paying ones. However, market seems to be absorbing the rate increase strategy with no material impact on occupancies except for seasonal variations and impact of holiday cycles. One must remember that Delhi and Mumbai have amongst the lowest hotel rates for global gateway cities,” said Sanjay Sethi, Managing Director and CEO of Chalet Hotels.
Patanjali Keswani, Chairman of Lemon Tree Hotels added, “The focus for us is on RevPAR growth. While there was some moderation in demand in September, the overall outlook is positive as we continue to open new properties.”
As per the HVS Anarock report, hotels achieved a RevPar ranging from INR 4200-4464 in September. This marked a 19-21% increase compared to 2019 and a 15-17% increase compared to 2022.
RevPAR serves as an industry metric utilized by hotels for room pricing. Additionally, hotels reported increased RevPAR on a quarterly basis. According to JLL India, there was a year-on-year growth of 15.1% in RevPAR for the July-September quarter.
“While occupancy rates can fluctuate due to seasonal trends and global events, the underlying momentum for travel and hospitality remains strong,” said Satyen Jain, CEO, Pride Hotels Group.
JB Singh, President and CEO of InterGlobe Hotels, notes that the hospitality sector in India typically experiences subdued performance in August and September. This is attributed to the onset of various occasions and local festivals during this period.
“Moreover the market witnessed a decline in September due to movement restrictions due to G20 summit in New Delhi. Weeklong festivities during Ganesh Chaturthi in Maharashtra and Karnataka, led to a drop in public and corporate movement to and from these States,” Singh said. He added the InterGlobe hotels however witnessed a robust demand in September and he foresees further improvement in the coming months.
Kamat Hotels India Ltd observed increased average daily rates and occupancies in their Mumbai and Goa properties in September. Although Orchid Hotel in Pune experienced a slight decline in occupancy, the company’s Vice President (Sales and Marketing), Sanjeev Advani, mentioned that revenue increased due to a rise in the average daily rate.