Delhi hotel sector revenue performance declined 44.3% in January to July 2020 (Y-o-Y): JLL
Delhi: Delhi has seen significant decline in Revenue Per Available Room (RevPAR) YTD July 2020, declining 44.3% over the same period in the previous year. However, this decline is the most modest decline as compared to all major cities in India, reeling under the impact of COVID-19 pandemic. The city’s RevPAR is slowly rising as the Central and State Governments have gradually eased lockdown restrictions, with international repatriation flights and some domestic travel leading the way for recovery of the hospitality sector in the nation’s capital, says JLL India Hotels and Hospitality Group’s latest note released today.
During the lockdown months between April and June, many hotels in Delhi served as quarantine and medical staff housing facilities. Most hotels at Aerocity catered to quarantine business driven by the “Vande Bharat Mission” repatriation flights.
The city is amongst the first key markets to bring the COVID-19 situation under control with a high recovery rate. Delhi has gradually opened its borders to facilitate business travel movement from the neighboring cities of Gurugram and Noida. In a recent announcement in late August, Delhi hotels in non-containment zones have been allowed to open. However, bars will continue to remain closed.
“Delhi’s hotel demand is driven by corporate business travel, Government and judiciary linked travel and leisure segment travel. Out of these, Government, Judiciary and Administration linked travel will likely come back sooner followed by business-critical travel. Leisure travel is not going to come back in next couple of years.” says Jaideep Dang, Managing Director, Hotels & Hospitality Group (India), JLL.
Hotels are also receiving several inquiries for weddings and social events with limited gatherings, within the allowed limit of 50 people per function. Many hotel venues have been pre-booked for all auspicious wedding dates in November. Food and beverage (F&B) service is being revamped across most hotels with the removal of buffets and introduction of pre-plated meals, online delivery listings as well as delivery of do-it-yourself (DIY) meal kits.
Many hotels are trying to find alternative sources of income such as converting meeting rooms into co-working spaces or leasing business centers to corporates for short-term contracts.
Delhi has always been a strong hospitality market and hotel owners expect a faster recovery in comparison to other major cities. There are very few high-ticket hotel assets on sale in the city. But we do not expect distress sales in the market yet, since most owners are having strong balance sheets and are optimistic about the sector’s recovery.
Delhi being the heart of all political and economic activity has always been a strong market in terms of commercial demand. This demand has grown further with the development of commercial hubs in the satellite cities such as Gurugram and Noida. The Aerocity in Delhi has also emerged as the new epicenter for business and transit travel. In the post COVID-19 world, Delhi’s hotel market is expected to recover at a faster pace as compared to other key markets. The hotels in and around the airport are expected to see a faster recovery as compared to the inner-city hotels with large banqueting and meeting spaces, since MICE demand will take more time to recover and come back to its pre-COVID times.