2014 Challenging bu better year for Indian hotel industry

Posted On Jan 22, 2015

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2014: Challenging but better year for Indian hotel industry.
With improved occupancies, 2014 was a better year for hotel industry of the country as compared to 2013, although, the industry had to face many challenges the last year.

“The last year was a better year for the hotel industry in comparison to the past. Occupancies picked up though rates had remained stagnant. Domestic travel, both commercial and leisure, had increased.” Rattan Keswani Deputy. MD, The Lemon Tree Hotel Company & Chairman, Carnation Hotels

“2014 went down as a challenging year for the Indian Hotel Industry and consequently for us. Sarovar maintained high occupancies in majority of its hotels.” Ajay Bakaya Executive Director, Sarovar Hotels & Resorts

“In 2014, Jaypee Hotels witnessed a positive growth in guests stay across our properties. Business has been fairly good; however growth from previous year has been marginal in terms of guest room units.” Manju Sharma Director, Jaypee Hotels

“2014 was slightly better than 2013 with little to write home in terms of achievements. However, the gloom that prevailed last year has certainly vanished after the historic mandate that the people of India has given to the current government.” S N Srivastava President & Co-founder, Clarks Inn Group of Hotels

“Though this winter we have witnessed a slight increase in foreign arrivals but the growth has been limited. Domestic tourism has again been a life saver.” S M Shervani Managing Director, Shervani Hospitalities

“2014 was fairly good for the Indian Hotel Industry; we saw an increase in the tourist footfall both domestic as well as foreign. This has helped in maintaining occupancies in many cities in spite of the increase of hotel rooms across the country.” Rohit Dar GM, Jaipur Marriott Hotel

“2014 was a roller coaster ride. With the new government in power and a positive sentiment returning to the country, the sector showed double-digit demand growth that ensured occupancies for the year closing slightly higher.” Kanika Hasrat GM, Courtyard by Marriott, Gurgaon

“The hotel industry in India went through a phase of transition in 2014. With elections in the first half of the year, we saw a jump in occupancy and RevPAR in the second half of the year but challenges remained.” Gagan Deep Singh GM, Courtyard by Marriott Pune City Centre

2014 was a mix bag: first half was slow due to the political uncertainty and General Elections being held in India but the arrival of a stable government at the centre got a good cheer from the industry and raised a lot of Hopes.” Vishal Singh GM, Hyatt Pune Kalyani Nagar

“In 2014, there was an overall fall in revenue compare to last year whereas budget and economy hotels registered the highest revenue growth. Because of election season tourism and hospitality industries were not in their peak.” Amit Jain Director of Finance, Bengaluru Marriott Whitefield

“The year 2014 in general was a minor improvement for the Indian hotel industry but due to various unforeseen factors it was not able to reach optimum levels.” Abhilash K Ramesh Group Director, Kairali Ayurvedic Group

“The hospitality industry in India is showing signs of recovery with hotels reporting an improvement in room occupancy in the third quarter of the calendar year, although it's helped by discounted room rates.” Rohit Vig MD –India, Staywell Hospitality Group

Year saw a little improvement in occupancies, but RavPAR remained under pressure with improvement. “The last year was a better year for the hotel industry in comparison to the past. Occupancies picked up though rates had remained stagnant. Domestic travel, both commercial and leisure, had increased. However as a fair amount of new supply came up in Bangalore, Chennai, Jaipur and the Delhi-NCR, the year would pan out marginally higher than the last year,” said Rattan Keswani, Deputy. Managing Director, The Lemon Tree Hotel Company and Chairman, Carnation Hotels. However, Ajay Bakaya, Executive Director, Sarovar Hotels & Resorts, termed 2014 as a challenging year for the hotel industry. “2014 went down as a challenging year for the Indian Hotel Industry and consequently for us. Sarovar maintained high occupancies in majority of its hotels,” said Bakaya, “But ARRs were under pressure. In that respect 2014 was a repeat of 2010,2011,2012,2013! It has been a long wait for the great times on India shores.” He added, “Positive sentiment, Strong political dispensations and an economy promising to do some magic came together and resulted in a great 2014 November. We believe this was the turning point for Indian Hotels and better days lie ahead. We maintained high occupancies in most locations in 2014. ARRs dropped around 5 percent on the back of increased supply.” In 2014, Jaypee Hotels witnessed a positive growth in guests stay across our properties, said Manju Sharma, Director, Jaypee Hotels, adding,

“The expectations were very much met with what we had forecast. Business has been fairly good; however growth from previous year has been marginal in terms of guest room units. MICE had improved numbers all our units.” According to S N Srivastava, President & Co-founder, Clarks Inn Group of Hotels, 2014 was slightly better than the previous year with little to write home in terms of achievements. “However, the gloom that prevailed last year has certainly vanished after the historic verdict of mandate that the people of India has given to the current government,” said Srivastava, adding that they had forecasted 2014 to be only slightly better over 2013 for the hotel industry which stands vindicated now. Sharing his insights of 2014, S M Shervani, Managing Director of Shervani Hospitalities, said, “Though this winter we have witnessed a slight increase in foreign arrivals but the growth has been limited. Domestic tourism has again been a life saver. The significant difference between domestic tourists (of 1200 million) and foreign tourists (of 7 million) tell its own story. However, the key decision of the government to launch tourist visa on arrival facilities for 43 countries is definitely a tremendous boost to our industry.” Some hotels had fairy good business in 2014. Rohit Dar, GM, Jaipur Marriott Hotel, “The year 2014 has been fairly good for the Indian Hotel Industry; we have seen an increase in the tourist footfall both domestic as well as foreign. This has helped in maintaining occupancies in many cities in spite of the increase of hotel rooms across the country. The rising number of domestic travelers is aided by the increase of disposable income in households.” According to Dar, the country witnessed an upsurge of MICE and corporate events especially for companies and business travelers which again lead to the rise in demand for hotel rooms. The industry has also seen a positive trend towards eco-tourism and medical tourism. Kanika Hasrat, GM, Courtyard by Marriott, Gurgaon, said, “2014 has been a roller coaster ride for the Indian hospitality industry. With a new government coming into power and a positive sentiment returning to the country, the sector showed double-digit demand growth that ensured occupancies for the year closing slightly higher. There was a notable increase in supply as a number of hotels under development were inaugurated and started operations. 2014 also saw couple of initiatives rolled out by the government.

Visa on arrival (VoA) was one such initiative announced by the government which received a positive response. The initiative in the coming year will be fruitful for the hospitality industry as well.” Gagan Deep Singh, GM, Courtyard by Marriott Pune City Centre, “The hotel industry in India went through a phase of transition in 2014. With elections in the first half of the year, we saw a jump in occupancy and RevPAR in the second half of the year but the economic environment continues to be challenging.” Singh said that with economic pressures, hotels last year had focused on productivity improvement, optimizing costs and gaining energy efficiency while improving the top-line. “Another key achievement in 2014 was that despite the economic challenges that were prevalent, the hotel industry continued to grow in India. Hotel chains have introduced new brands across different cities in India that cater to different customer segments and preferences. For instance, Marriott launched Fairfield brand in Bengaluru for the budget conscious customer,” said Singh, adding, “At the same time, brands like the Ritz Carlton are going to grow in the country. Strong initiatives have been made to engaging with guests through the mobile device. For instance, Marriott’s loyalty programme is the first to offer geo-targeted, mobile offers using beacon technology. This year too, mobile check-in and check-out facility was also rolled out at Marriott’s 4000 plus properties globally.” Vishal Singh, GM, Hyatt Pune Kalyani Nagar said that year 2014 was a mix bag: first half was slow due to the political uncertainty and General Elections being held in India but the arrival of a stable government post elections at the centre got a good cheer from the industry and raised a lot of Hopes. He added, “The second half was optimistic in view of the growth and development intent shown by the new govt. The rates were stretched in all the markets due to demand supply gap.” As for achievements of the industry in 2014, Vishal Singh said that the initiative of the government last year on e-visa is a major step towards promoting Tourism in the country and the industry will benefit from it. Amit Jain, Director of Finance, Bengaluru Marriott Whitefield, said that hotel industry in India witnessed two noticeable scenarios in 2014. “There was an overall fall in revenue compare to last year whereas budget and economy hotels registered the highest revenue growth. Because of election season tourism and hospitality industry were not in their peak,” said Jain, adding, “But post election with new govt. we could see many changes. Foreign tourist arrivals (FTAs) and domestic market sentiment has improved. In the second year of operation, Bengaluru Marriott Hotel Whitefield ramped up brilliantly and registered a growth of 58% in total revenue over last year.” According to Abhilash K Ramesh, Group Director, Kigali Ayurvedic Group,

“The year 2014 in general was a minor improvement for the Indian hotel industry but due to various unforeseen factors it was not able to reach optimum levels.” Key achievements in his opinion were the Visa on arrival, and the stabilization of the political scenario with mass positive publicity has helped built international tourist confidence in India. “Hopefully this will work towards a brighter 2015 for the hotel industry,” said Ramesh. Rohit Vig, MD –India, Staywell Hospitality Group, feels that the hospitality industry in India is showing signs of recovery with hotels reporting an improvement in room occupancy in the third quarter of the calendar year, although it's helped by discounted room rates. “Average room occupancy rate in the quarter ended September — traditionally the lowest period of business for hotels in the year — stood at 56.5 per cent, up from 53.2 per cent in the year-ago period. For the nine months to September, hotel occupancies were 58.2 per cent against 56.4 per cent last year, according to STR Global that tracks supply and demand data for hotel industry,” said Viz. He added, “The sentiment has improved after the change in government; it has yet to translate into a big boost in their business. Some of their gains of the third quarter were offset by a poor show in October, but most said their business has improved this month. In spite of inbound tourism reducing by about a third, corporate travel getting affected in October due to various festival holidays and elections, India losing out to international tourism due to media reports leading to India being unsafe destination to travel to, etc. It is commendable that Hotels have managed to maintain occupancies in this scenario.” Expectations from 2015 With changing economic scenario and sentiment in the country, the hotel industry of the country are quite optimistic about 2015. “Hoteliers are cautiously optimistic for FY15/16. The Visa on Arrival scheme and the attention to Tourism bodes well. However a lot will depend upon the budget announcements in Feb, 2015 and on how the Government handles the safety/security issues in a lot of the cities,” said Rattan Keswani, adding, “Investment policy announcements and infusion into Capex cycles will drive traffic-however the parliamentary stalemate may lead to a loss of business confidence. We would prefer to adopt a wait/watch approach for the moment.” On his expectations from 2015, Bakaya said, “ With the new government aggressively inviting ‘Make in India’ entrepreneurs, opening up of FDI in insurance and others to follow, business travel increase can already be felt in metro locations. Domestic leisure too is on upswing, however inbound from certain markets like Russia particularly to Goa has been adversely affected. Visa on Arrival and Electronic VISA will propel tourism in India.” He added, “We appreciate the development as the schemes has opened its door to the citizen of some of the major markets namely USA, Germany and Japan, which means that India has just become much more accessible to people from three of the world’s four largest economies.

From the point of view of the hotel industry, this is a welcome change as this will help in increasing the inflow of tourists. People from these countries need not plan their travel well in advance as such, increasing the number of people who will choose India for short getaways.” Manju Sharma said, “For the year 2015 consolidation of business and occupancy for your business would be our top agenda. Keeping in view the increased supply if rooms in some markets where we are present, we shall compete with our strong products and outstanding service delivery. The ETA is definitely a big reason for all the hospitality players to cheer. The will boost the business as well as leisure travel to the country.” Talking about his expectation from year 2015, Shervani said, “We are expecting better figures for 2015 as compared to the previous year both in terms of foreign as well as domestic tourists. With more and more travellers accessing mobile applications and similar tools for planning their holidays, we have already seen a slight boost in terms of online bookings. Hoping this will continue through 2015. Furthermore, with the initiation of visa on arrival, we definitely expect a rise in foreign tourists for the coming year.” The biggest problem for the tourism and hospitality industry, said Srivastava, was that for a very long time it continued to be nowhere in Government’s scheme of things for driving socio-economic growth in the country, “which I can now say confidently” is ‘no more the case’ given the Prime Minister himself endorsing tourism as one of his 5Ts agenda to drive change. “And therefore, most certainly year 2015 will not only be much better than the previous year or the year before in business terms, but will also mark the decisive change in government’s attitude towards the sector that may as well see us looking at growth and investment friendly policies for the sector in the near future. As for industry, we need to press on the lever harder than ever before to build on this momentum.” Srivastava also feels that the current government’s emphasis on tourism development and making brand ‘India’ more powerful and inviting globally augurs very well for the hospitality sector. He said, “Simplification of Visa processes and extending Visa on Arrival to citizens of 43 countries have been the biggest achievements of the industry, which I am confident will result in better businesses across segments, including hospitality.” Rohit Dar said, “2015 is expected to be driven by the domestic market with travel for leisure, business, weddings and conferences. Inbound travel is likely to improve as well, however not at the same pace as domestic travel. The tourism policy of the government and the various initiatives for improving tourism such as improved infrastructure , safety of travelers especially women, Visa on arrival will also help in ensuring 2015 a better year.” Hasrat said, “We are looking forward to a fruitful 2015, given the new E visa policies which in turn will provide a great opportunity for an increased demand in hotels. Also there is tremendous opportunity for the industry to capture the outbound travel market that is expected to grow to 50 million from the current 14-million benchmark. While some great brands bloomed in India under the umbrella of the international parent companies, we are witnessing aggressive expansion and origination of more hotels. According to Cushman & Wakefield, the hospitality sector in India expects 52,000 new hotel rooms to be added in five years (2013-17).

This will lead to a rise of over 65 per cent in total hotel inventory in India. The National Capital Region (NCR) is expected to contribute around one-third to the total expected hotel rooms supply during the period. We hope the demand sets in, that will keep everything going.” Quite optimist of the new year, Vishal Singh said that the new year brings in a lot of hopes and expectations and is starting on a positive note due to the optimistic business sentiment, it needs to be now seen whether all the words are actually translated to decisive actions which would transform India into one of the fastest growing economies in the world. As per Gagan Deep Singh said, “Going into 2015, with focus on infrastructure and tourism, India’s hospitality industry looks optimistic. The launch of the E-visa scheme has been a great initiative by the Government which is expected to double the tourist inflow into India – this boost is welcomed by the hotel industry. Also, the depreciating Indian rupee against the dollar is good news for foreign tourists. With many new openings slated for 2015, the hotel industry which is labor intensive will continue to generate employment opportunities.

The fastest growing customer base for hotels is the Millennial and we will see an increasing effort to engage with this customer type. In the coming year, we will continue to focus on enriching the mobile booking experience for the guest and we will focus on many more aspects of the guest experience at the hotel which can be directly controlled by the guest from his device.” Amit Jain on expectations from 2015 said, “MHRS Whitefield has a very good Product, international sales and marketing network and a great service team. All these three traits of Hospitality will make sure that Bengaluru Marriott Hotel Whitefield will be a market leader in Whitefield by 2015. For next year, with growth in demand in Whitefield area, the hotel is targeting a total revenue increase of 9.9% over 2014.” Abhilash K Ramesh said, “It (2015) definitely should be a positive year for the hotel industry, by creating a more stable environment for growth. And focused approach on yoga and Ayurveda, will play favorable to all. As these are our key strengths and cannot be duplicated by any other nation. This should definitely increase arrivals and benefit all.” The next general budget of the new government will be very important for the hotel industry. Rohit Vig said, “Most hoteliers are waiting for the budget announcement to come in by February 2015 and that would decide the sentiment for the next year as well. The recent launch of e-visa facility for tourists from 43 countries will make travel in India hassle-free for foreign tourists and hence boost the sector overall. Stable government and policies should ensure a better scenario.”

 

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