Business travel

Business travel is back in hotels as virus threat wanes

The resumption of air travel has also improved the fortunes of the hospitality sector, with increased check-ins from business travelers and the return of conferences and exhibitions.

The hospitality industry, therefore, hopes to see a turnaround in the current fiscal year after being badly battered over the past two years due to Covid restrictions.

“There has been a strong increase in demand, which was previously limited to the leisure segment 5-6 months ago. During the April to June quarter, business travel increased significantly due to numerous business conferences and events, government delegations and the India-Africa conclave, among others. Air travel has also opened up and the IPL (Indian Premier League) has also helped boost occupancy, especially in Mumbai and Pune,” said Puneet Chhatwal, Managing Director and Chief Executive Officer. ‘Indian Hotels Company (IHCL), to FE after the company’s first quarter results.

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The Tata Group company’s financial metrics such as national revenue per available room (RevPAR) increased by 42%, occupancy increased by 9% and average room rates (ARR) increased by 31% in the quarter compared to the pre-Covid period (Q1 FY2020) .

While all of IHCL’s brands – Taj, SeleQtions, Vivanta and Ginger – recorded growth, the RevPAR of key cities such as Mumbai, New Delhi and Bangalore exceeded pre-Covid levels.

EIH, the flagship company of the Oberoi Group, also recorded growth on all its indicators compared to the pre-Covid quarter. Its RevPAR increased by 30.11% (all hotels, including managed hotels) and its ARR by 13.76%, while the occupancy rate increased by 72% (from 64%).

“Strong tailwinds are visible in the enterprise segments as well as the MICE and direct segments,” Kallol Kundu, CFO of Oberoi Group, said on a conference call with investors.

“Fiscal 23 started off on a strong note, supported by strong demand, business travel increased, leading to a recovery in our business destinations. We have seen an increase in demand for meetings, incentives, conferences and exhibitions (MICE) which has contributed to our growth. Gross ARR increased 104% year-over-year and 18% quarter-over-quarter to 4,822,” said Patanjali Keswani, President and CEO of Lemon Tree Hotels.

The same was true for the luxury hotel brand, Roseate Hotels & Resorts. Compared to pre-Covid levels, the company saw a 20-30% increase in ARR for its Rishikesh resort, The Roseate Ganges. For The Roseate New Delhi and Roseate House Aerocity, ARRs increased by 15%, weekdays and weekends. All financial metrics – RevPAR, ARR and occupancy – of its properties in Delhi have also increased “significantly”.

“Our occupancy levels in all our hotels in India have now reached and surpassed pre-Covid levels since January 2022. After being cooped up at home for two years, people now want to check into a hotel in their city over a long weekend, when they can’t fly or travel by car. We also saw growth in the meetings, incentives, conferences and exhibitions segment,” said Kush Kapoor, CEO of Roseate Hotels & Resorts.

According to an ICRA report, the hospitality industry is on the rise and is expected to return to pre-Covid levels this fiscal year. The recovery in demand was stronger than expected and was driven by leisure, transients, MICE, weddings and a gradual recovery in business travel and foreign tourist arrivals. For FY23, the occupancy rate for high-end hotels across India is expected to be 68-70% and ARR 5,600-5,800 rupees.