Exclusive: Hotel Sentiment Survey 2020 (Part 1)

Horwath HTL India conducted sentiment survey with the Indian hotel industry. Here, is the Part 1 of it wherein depth of the pandemic is analysed.

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Horwath HTL India has conducted a sentiment survey of the Indian hotel industry leaders and hotel managers to understand the depth of the impact of Covid-19 crisis, mitigating measures applied to limit the fallout and the areas requiring supportive measures. The assessment is provided in this sentiment survey. Here, are its highlights.

India - Historical international visitor arrivals

The pace of growth of Foreign Tourist Arrivals has slackened in the last two years. Numbers will decline substantially through 2020 as cross border travel will remain severely monitored over the next quarter, and maybe longer.

Assessing the influence of COVID-19

How long will it affect the hotel’s operating performance?

32% of the respondents feel that impact will last for more than six months; while it is heartening to see that 33% feel the impact will last only for 3 months. Almost three-fourth of respondents think that impact is ‘much worse’ than any other major crisis.

How long will it affect the hotel market performance?

The current crisis is significantly more severe due to sheer global sweep. 74% of the respondents think the impact will be much worse than previous unforeseen situations (SARS, global financial crisis of 2008, and Mumbai terror attacks). 7% respondents have said they have not experienced this before. However, interestingly, 2% of respondents see the influence as being Better – clearly something to learn here.

Performance Expectations

Percentage growth/decline in occupancy in H1-20 (Jan-Jun) vs H1-19

87% believe that the occupancy impact for H1-20 will be greater than 30% decline, compared to H1-19; 37% respondents see the impact as being over 50%. It is    believed that the material assessment of impact being over 50% is tied to uncertainty over the timing and pace of removal of lockdown – and the likely hesitation of people to travel.

Percentage growth/decline in ADR in H1-20 (Jan-Jun) vs H1-19

56% respondents expect ADR decline between 10-30%; 25% expect ADR decline to extend to 40%. 8% believe the impact will be rather limited, while another 10% believe that the impact will be very severe, wiping out more than 40% of ADR.

Percentage growth/decline in Total Revenue in H1-20 (Jan-Jun) vs H1-19

32% respondents foresee over 50% decline in Total Revenue; this grows to 57% for Total Revenue drop exceeding 40% and it further grows to 85% respondents expecting Total Revenue to drop by over 30%. The weighted average drop in Total Revenue, among these three categories alone, is placed at about 37%. This will pretty much wipe up any GOP, and likely cause Gross Operating Loss.

Percentage growth/decline in Total F&B Revenue in H1-20 (Jan-Jun) vs H1-19

Restaurants closed, banqueting closed; no crowds allowed, no ‘Big-fat weddings’ in the upcoming wedding season – the expectation of F&B Revenue drop is to be expected.

While the fact of pain from this crisis is a certainty, so too is the fact that there will be a recovery. (..To be continued in Part 2..)

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