Since state governments in India began lifting restrictions in June, demand for hotel rooms gradually improved. In August, green shoots in leisure demand were noticeable, with visible weekend spikes seen across regional markets and many crossing the 50% occupancy threshold. Goa, a market that took some time to initially bounce back, has been building momentum since October with outperforming other leisure markets in the country and demand peaking during the Diwali weekend.
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It’s interesting to note that Goa, India’s most sought-after beach destination by international tourists, was the only market in the country where demand for hotel rooms decelerated in 2019. Following double-digit increases in tourist visitor numbers between 2013 and 2017, Goa’s arrivals slowed down significantly in 2018, 2019 and of course, 2020.
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Rising competition from neighbouring markets such as the Maldives and Sri Lanka, an increased supply of hotel rooms and the growth in alternative accommodations were reasons behind a sluggish performance for the market last year.
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Attracting international tourists to Goa is a distant reality given today’s circumstances. However, domestic travelers have filled that void. The ease of travel to Goa by road and flight from metro cities, open beaches and spaces, no quarantine measures on arrival, and minimal restrictions within the city have helped hotels to attract local tourists. As a result, hotel occupancy in Goa crossed the 75% mark for the Diwali weekend. This was the first time that any market in India hit that occupancy level since the pandemic began. Udaipur was the second. Also of note, improvement didn’t just come in occupancy, rather, Goa’s average daily rate (ADR) was healthy, with best available rates reaching pre-pandemic levels.
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Given the strong domestic demand, all the three submarkets in Goa have performed well. However, hotels in Goa North are trading at much higher occupancy levels given the ongoing soccer tournament. Demand from show business, which earlier was Mumbai-centric, has boosted hotel occupancy in North and South Goa. Small banner Bollywood movies, film crews shooting for Netflix and Amazon Prime special features, have recently shifted base to Goa, further inducing demand for accommodation providers.
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Given the rise in alternate accommodation, midscale and economy hotels in Goa were the worse hit in 2019. AirBnB and villa rentals continue eating a piece of the pie in this segment even today, with a big chunk of leisure travelers resorting to higher-class hotels. “Revenge spending” by transient travelers has aided performance for luxury and upper upscale hotels in Goa. In fact, ADR for this class of hotels in South Goa was just shy of INR10,000 in October 2020.
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The run up to the holiday season for hotels in Goa has started off on strong footing. However, at the time of writing this report, a new wave of government measures was being announced to combat the surge in COVID-19 infections. The states that are home to many of India’s leisure destinations, along with their source markets, were all being sounded off on new travel restrictions and curfews. The wedding MICE segment, which was contributing to a large part of demand in many leisure destinations including Goa, has already seen cancellations ringing in. With guest limits halved and further inter-state travel protocols being announced, it remains to be seen whether the recovery streak in leisure travel will continue, or if these new limitations derail the momentum.
