With the emergence of recovery indicators, the hospitality sector has also witnessed a revival in space evening demand in the final quarter of 2020, as compared to the earlier quarters of the year, worldwide qualified services firm JLL has mentioned in a report.
According to JLL, occupancy levels have grown month-on-month given that September 20 to cross 35 per cent sector-wide in November 2020 (as per STR or Smith Travel Research information), which is the highest given that the starting of the nationwide Covid-19 lockdown in March 2020.
The revival of the sector has mainly been driven by leisure ‘revenge travel’ through weekends and the festival season, weddings and meals and beverage demand, the report mentioned.
Goa, India’s most sought-following leisure market place, witnessed considerable development in current months attaining a market place-wide occupancy level of practically 55 per cent in November 20. Luxury and upper upscale hotels in Goa performed effectively in November 20, attaining wholesome occupancy levels ranging in between 60 and 70 per cent as compared to occupancy levels in November 2019 that ranged in between 65 and 75 per cent.
“Domestic business travel is expected to pick-up pace from March-April 2021 onwards, as employees return to workplaces and travel advisories by companies are softened. Additionally, domestic leisure will continue to drive occupancies across the country. F&B demand will continue to grow as eating out will increase albeit cautiously,” mentioned Jaideep Dang, Managing Director, Hotels and Hospitality Group, South Asia, JLL.
With regards to investments in the sector, 2020 began on a excellent note with two significant transactions totalling Rs 547 crore. Despite investment activity getting paused given that March 20, there are emerging indicators of re-valuations and a slow demand revival, improvised price structures and decreased profit levels in the subsequent two years. Serious investors are providing prominence to debt service ratios, operating charges and suppressed demand from corporate travel, conventions, conferences and exhibition business enterprise, JLL mentioned.
Furthermore, travel restrictions stopping web-site inspections and poor visibility of future income streams have added on to timelines of investment sales. Investors are mainly inclined to evaluate operational assets in essential markets rather than greenfield developments. This trend is witnessed across India, according to the report.
Investors will most likely firm up investment choices as overall performance cycle picks up and worry of missing excellent bargains might drive the investment activity, JLL mentioned adding that in 2021 expectations are that domestic travel will choose up pace from March-April and onwards.
Large restaurants in hotels with all important well being and hygiene protocols could start out seeing the advantages from this demand and wedding ceremonies will most likely take centre stage once again offering seasonal impetus to the hospitality sector. Furthermore, repurposing of brownfield hotel assets for alternate utilizes such as co-living, senior living and student housing facilities might start out taking place, topic to demand in certain markets.