Home >News >Hotel revenue per available room declined 50% in May: report

Reeling under the impact of second-wave, hotels in most cities witnessed a month-on-month decline as leisure and business travel was limited due to the restrictions and lockdowns in various states, said a report from real estate services firm HVS Anarock.

For the month of May, while occupancy declined by 11-13 percentage points (pp), average daily rate (ADR) plunged by 16-18% and RevPAR (revenue per available room) by 49-51%.

Domestic air traffic dropped by 63% in May 2021 in the aftermath of the second wave of the pandemic in India. Mumbai, Ahmedabad and Chennai observed the highest occupancy in the country (31-35%) during the month.

However, the report highlighted there has been a year-on-year increase from March to May since a majority of hotels remained shut owing to strict restrictions in 2020.

In March 2021, occupancy went up by 17-19pp when compared to 2020 and RevPAR increased by 21-23%. In April, occupancy was up by 18-20pp when compared to 2020 while RevPAR increased by 149-151%. In May 2021, RevPAR increased by 22-24% and occupancy went up by 3-5 pp. The average daily rate (ADR)witnessed a steady decline year-on-year.

The year-on-year increase in occupancy and revenue per available room can be attributed to the fact that hotels have been focusing on alternative customer segments to survive these difficult times, with some tying-up with hospitals to provide isolation and quarantine facilities, which has impacted the average rates in the market.

Between January and May 2021, the report stated that 14 new branded hotels with a total 1,498 keys were opened while 38 new properties with 2,980 keys were signed.

Mandeep S. Lamba, president (South Asia), HVS ANAROCK said that fresh restrictions and lockdowns in various states due to the second wave in the country resulted in subdued demand in May 2021, negatively impacting hotel occupancy in most cities.

"However, unlike the previous year, when most hotels were completely shut or relied only on quarantine business, this time hotels have been proactively focusing on alternative customer segments and ancillary revenue streams to survive these difficult times," he added.

Lamba noted that some hotels, largely in commercial cities, tied up with hospitals to provide isolation and quarantine facilities, which has impacted the average rates in the market.

"Declining cases and the increasing pace of the vaccination drive will help the sector revive from the demand shock in the near to medium term, provided the third wave is not as disruptive as the previous one," he added.

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