Market Report
India Hotel Market Review 2020
The Indian hotel market faced unprecedented challenges in 2020 due to the COVID-19 pandemic. This year-end report, a collaboration between STR and Horwath HTL India, provides an in-depth analysis of market performance, opportunities, and challenges for hotel owners, investors, developers, and operators.
Market Performance Overview
2020 was a difficult year for the hotel industry, characterized by prolonged lockdowns and travel restrictions. Key performance metrics indicate significant declines:
- Occupancy: All India occupancy (Occ) was 34.5% for the full year, dropping to 27.8% from March to December. Q4-20 saw a hopeful recovery with occupancy at 37.9%.
- ADR (Average Daily Rate): The ADR fell to Rs. 4,858 for the full year and Rs. 4,095 during the pandemic period (March-December).
- RevPAR (Revenue per Available Room): RevPAR was significantly impacted, recording Rs. 1,675 for the full year and Rs. 1,137 during the pandemic period.
Regional Performance
- Goa: A star performer, Goa achieved a market-wide ADR of Rs. 7,243 and RevPAR just shy of Rs. 3,000. The region saw robust recovery due to high domestic tourism demand.
- Udaipur: Notably, Udaipur maintained high luxury and upper-upscale ADRs, with an impressive Rs. 11,711 market-wide ADR and Rs. 16,000 in the luxury-upper upscale segment.
- Major Cities: Business-centric cities like Bengaluru and Pune faced significant struggles due to the reliance on corporate travel. Bengaluru recorded one of the lowest RevPARs at Rs. 729 for the pandemic period, while Ahmedabad reported the lowest at Rs. 672.
Market Segmentation
Luxury & Upper Upscale: This segment saw a dramatic decrease in occupancy and ADR, with ADR dropping to Rs. 7,442 and RevPAR falling by one-third. Udaipur stood out with relatively healthy performance in this segment.
Upscale & Upper Midscale: This segment performed better relative to others, benefiting from quarantine, BCP (Business Continuity Planning), and healthcare demand. Delhi led occupancy in this segment at 45.7%.
Midscale & Economy: The most affected segment, with occupancy at 33.5% and RevPAR at Rs. 843 for the full year.
Supply and Demand Dynamics
The overall supply growth was modest, with a net addition of 2,800 rooms in 2020. Notably, the pipeline for future supply has thinned, with significant projects delayed due to the pandemic.
Key Insights and Future Prospects:
- Resilient Leisure Destinations: Leisure destinations such as Goa, Udaipur, and parts of Rajasthan showed stronger recovery and higher ADRs compared to business-centric cities.
- Domestic Tourism Surge: Limited international travel options drove domestic tourism, benefiting leisure markets and resorts.
- Corporate and MICE Recovery: While business and MICE travel showed signs of recovery towards the end of 2020, a full rebound is expected to be gradual.
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