Majority of hotel operators expect up to 2 years for revenue recovery: JLL

Majority of hotel operators expect that it will take 13 to 24 months for their hotels to return to revenue per available room (RevPAR) levels of last year, according to a survey conducted by global property consultant JLL.

The survey was conducted on 15 leading hotel operators in India.

The COVID-19 pandemic has brought the world to a standstill, with the hospitality, travel and tourism sector being the most affected due to travel restrictions across the world and within India, it noted.

According to the survey, only 20 per cent of the operators believe that their hotels could bounce back to 2019 RevPAR levels within 6 to 12 months.

"Whilst 60 per cent believe that their portfolio should be back on 2019 levels between 13 and 24 months from now," it added.

Luxury hotel operators are expected to ramp up much slower with some expecting that their portfolio may take more than 2 years to reach 2019 performance levels, the survey said.

It also indicated that business travel is expected to reduce in the post COVID-19 world as companies will rationalise spending on travel, which could benefit branded economy and midscale hotels.

"The standard operating procedures will be significantly transformed to promote enhanced hygiene standards and to adopt technology to support social distancing policies," JLL Hotels & Hospitality Group (India) MD Jaideep Dang said.

However, with the slowdown of hotel developments, capital assistance is needed to help hotels sustain until demand returns, he added.

As per the survey, 47 per cent of the operators expect to reopen their hotels within 2 weeks of lifting of lockdown and travel restrictions by the respective state governments, and 33 per cent of the operators expect to open within a week.

"...almost all operators believe that most hotels in their portfolio would need working capital infusion to continue or re-start their operations because the reserves have almost dried," a white paper, 'Impact of COVID-19 on Indian Hospitality Industry' based on the survey said.

The survey showed that 67 per cent of the operators confirmed they are being approached by the hotel owners for financial assistance or relief, for example, deferring management fees, fixed system charges etc, it added.

As per the survey, hotel developments have slowed down, and most hotel openings are likely to be deferred by at least 6 months.

JLL is a leading professional services firm that specializes in real estate and investment management. It operates in over 80 countries and has a global workforce of more than 94,000 as of March 31, 2020.