IndiGo flight mess disrupts travel plans—but hotels find an unexpected lifeline

Many hotel chains reported as much as 10% cancellations in bookings following the mass flight cancellations that affected business, weddings, and holiday plans. The October-December quarter is a critical travel season in the country, with weddings and family holidays typically scheduled during the winter months.

“We saw a lot of cancellations and are still facing some, but numbers have gone down drastically. What began as about 10% cancellations is now down to 1-2%, with an overall disruption of 3-4% for the month," said Ajay K. Bakaya, managing director at Sarovar Hotels. The homegrown hotel chain operates around 140 properties across India, Nepal, and Africa.

The company, which generates about 30% of its business from leisure, experienced disruptions across both the leisure and business travel segments. Bakaya said the company is “happily rescheduling as people are looking and relooking at their trips at the moment and don’t want to cancel".

Ironically, most of the vacancies caused by cancellations were absorbed by travellers stranded due to those very cancellations.

Roseate Hotels & Resorts, which operates properties in the National Capital Region as well as abroad, experienced a few cancellations from incoming guests since the event occurred over the weekend, said its chief executive, Kush Kapoor.

“The overall impact on us was minimal. In fact, our occupancy levels increased as many passengers were unable to fly out due to flight cancellations, and NCR-Delhi guests who had planned to travel chose to stay back in the city, further boosting our occupancy percentage (for Roseate House New Delhi Aerocity and The Roseate New Delhi)," he said.

"We also went out of our way to support guests by allowing penalty-free cancellations and offering late check-outs wherever possible at no additional charge," he added.

Others pointed to a “marginal impact" in business.

“We have seen a marginal impact from the IndiGo situation. At Brij Hotels, non-drivable destinations such as Varanasi and Goa experienced around 10% cancellations. Interestingly, our drivable destinations have seen a 10-15% uptick in bookings as travellers are opting for locations accessible by road," said Anant Apurv Kumar, co-founder of the 10-property hotel chain.

"Overall, the shift has been manageable, and guests are simply recalibrating their travel plans rather than cancelling holidays entirely," he added.

Surprisingly, IndiGo absorbed some of the available room supply to accommodate its own crew. The airline booked around 20,000 rooms per day in the first couple of days of the disruption to accommodate its crew and approximately 10% of the stranded passengers, thereby mitigating some of the hotel losses, according to industry estimates.

Temporary blip

“This was a temporary blip, and the impact isn’t as profound for those who were stuck on the ground. For hotels, the impact won’t be significant because cancellations also meant some extensions happened. Now the airline network is mostly back, so the disruptions have levelled out. The overall impact would be a small, insignificant number for the quarter," said Vikramjit Singh, founder of Ananta Capital-backed Alivaa Hotels.

Alivaa properties in Noida, Bengaluru, and Gurugram were impacted. “To some extent, extensions made up for cancellations," Singh said.

What mitigated the impact was that the issue unfolded over a weekend when business travel is typically minimal.

“We waved off the cancellation charges, as it is in hotels, cancellation is 24-48 hours. Travellers had the choice to change their plans or postpone them," Monisha Dewan, vice president, sales and distribution, South Asia, Marriott International, told Mint.

She added that because it was a weekend, the dip in travel was noticeable but not significant. A proactive cap on airline fares later also helped, allowing people to switch carriers easily. In the broader travel landscape, she said, the recovery is now typically quick, and travel as a whole has become far more resilient, and the bounce back was quicker.

Industry associations, meanwhile, informed their hotel partners to prioritize customer comfort. “While we don’t monitor the day-to-day operations of our partner hotels, we sent out communication to member partners two days ago explaining the concerns of travellers. We have encouraged our hotel partners to provide support to guests," said Madan Prasad Bezbaruah, secretary general of the Hotel Association of India.

Several large hotel chains, such as Indian Hotels Co. Ltd, ITC Hotels Ltd, Wyndham Hotels and Radisson Hotels declined to comment.

India’s organized hotel industry has about 200,000 rooms and is set to add more than 100,000 more, surpassing the 300,000 mark by 2029, according to estimates by industry consulting firm Horwath HTL.

Indigo fiasco

IndiGo, which commands over 60% of India’s domestic air-travel market, cancelled thousands of flights in the first week of December, citing “unforeseen operational challenges", largely attributed to crew shortages after the introduction of new flight-duty time limitation (FDTL) regulations meant to prevent pilot fatigue.

On Tuesday, IndiGo's CEO Pieter Elbers issued a formal video apology, saying the airline is now “back on its feet" and that aircraft operations are now “stable".

The company has also processed full refunds for several of those impacted by the cancellations. “We are fully committed to getting this done," he added.

The airline operated around 700 flights on 5 December, 1,800 flights on 8 December, and more than 1,800 on 9 December. Services have now resumed to all 138 destinations in its network. “As of 9 December, our operations are fully stabilized, which means flights reflected on our website are scheduled to operate with an adjusted network," he added.