The hotel industry is expected to clock at least 45-50 per cent of pre-Covid revenues in this financial year as demand has recovered sharply post the second wave of the pandemic aided by easing of restrictions during the July-September period, according to a report.
"The hotel industry is expected to clock at least 45-50 per cent of pre-Covid revenues in FY22. Further operating profits in the current fiscal will be aided by improved operating leverage and sustenance of some of the cost-optimisation measures undertaken last fiscal," Icra Assistant Vice President and Sector Head Vinutaa S said.
However, she said, pre-Covid revenues and profits are likely only by the financial year 2023- 24, as a result of sustenance of some cost-saving measures, the breakeven is expected to reduce and hotels are likely to report pre-Covid margins of 85-90 per cent of revenues going forward.
The situation is still evolving and remains contingent on the efficacy of vaccines and a potential third Covid-19 wave, the Icra report added.
Further, the report said occupancy has picked up, with the August-21 pan-India premium hotel occupancy at 44-46 percent.
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For the first five months of the financial year 2021-22, the same is estimated to be 32-34 per cent as against 46-48 per cent in the fourth quarter of the financial year 2020-21, it said.
The Pan-India ARRs are estimated at Rs 3,850-3,950 during first five months of the financial year 2021-22 and still remain at a 25-30 per cent discount to pre-Covid levels, although some high-end hotels and leisure destinations have even seen average room rates (ARRs) return to pre-Covid levels in August-September, the Icra report said.
Travel during the festive season will act as a key demand booster for the industry in the third quarter of the financial year 2021-22, it noted.
While the first few months were impacted, the industry witnessed faster-than-expected ramp up in second quarter FY21, because of lower restrictions, high vaccination pace and pent-up demand, which resulted in revenge travel. Demand in the last few months has come from staycations, weddings and travel to driveable leisure destinations, and from special purpose groups," Vinutaa said.
There is the new trend of biscations, which is working from a resort, that is picking up, she noted.
"Business travel pickup has been mainly to project sites or manufacturing locations from specific sectors. The Covid-related demand which was prevalent April mid to June mid, waned from July and we are seeing real demand pick up. The situation is evolving, and sustenance of demand will depend on the efficacy of vaccines and a potential third Covid wave. The industry is currently cautiously optimistic, she added.
Icra continues to have a negative outlook on the Indian hotel industry, as the sustenance of the demand pickup in the recent months remains to be seen.
A potential third wave and its impact on travel and hotel occupancies cannot be ruled out, it added.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)