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Hotel industry escapes the demonetisation impact

business Updated: Jan 05, 2017 13:37 IST
Rozelle Laha
Hotel industry

Hotels are among the least affected sectors post-demonetisation. In fact, the economy hotels have reported a rise in bookings and revenue per available room (RevPAR) this year compared to last year. (representative image)(AFP)

Hotels are among the least affected sectors post-demonetisation. In fact, the economy hotels have reported a rise in bookings and revenue per available room (RevPAR) this year compared to last year.

At Tata Group’s budget hotel chain Ginger, for instance, the occupancy rate this December has gone up by more than 10%, compared to last year, registering over 3% overall growth to clock an aggregate of 70%.

Similarly, Arif Patel, VP - sales, marketing, distribution and loyalty of AccorHotels said “the month of November, the revenue per available room (RevPAR) increased by 33% across all hotels, while those operational for two years and more have seen 25% growth.”

With the December data awaited, Patel confirmed that the last month of the year has also been buoyant, which is a testimony that there has been little or no impact of demonetisation on the business.

“Business demand has been largely agnostic to demonetisation. Leisure travel demand from metros has seen a 10% reduction and 15% from non-metro and Tier-2 cities. Metro leisure demand should pick up in a quarter while non-metro would take another 2 quarters to come back full steam,” said Rahul Pandit, MD and CEO Ginger Hotels.

Ginger Hotels currently operate 37 properties in 30 cities. The average retail rates range from Rs. 3,000 to Rs. 4,000, depending on the location. AccorHotels, currently has 45 operational hotels in 10 brands.

This year, the number of last minute bookings too has gone up significantly. According to budget hotel aggregators OYO, 61% of all the bookings made on their platform were made within 24 hours prior to check-in. As per 2016 data at AccorHotels, for midscale and economy brands, 40 to 50% of the business got booked three days prior resulting in shorter booking window.

Experts view booking windows as a function of demand and supply.

“Renewed digital booking tools and better flight connectivity have reduced the booking window pattern,” Patel said.

ICRA research says that premium room inventory database (12 key cities) across the country indicates nearly 8% compounded annual growth in supply during the period during financial year 2017-2020… ICRA research expects narrow active supply pipeline amidst robust demand to drive modest average room rate recovery in 2017.

“The last few years saw increase in supply outpacing a demand growth, in a subdued economy. This ensured that hotels had inventory available last minute at low rates and customers were assured of accommodation, even if they booked late – leading to a shortening of the booking window,” said Pandit, who was earlier working with Lemon Tree Hotels.

The fulcrum is now shifting. “This year has seen an aggregate 16% demand increase across the country with new supply addition petering down to less than 10%,” Pandit added.