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Majority of India hotel markets remain in Recession territory

India hotels achieved a 50% occupancy level in February, which was the first time the country eclipsed that monthly mark since the start of the pandemic.

Occupancy climbed to 54.5% (-23.5% year over year), while average daily rate (ADR) reached INR4,361.46, a drop of 31.4% year over year. The ADR level was the second highest since the start of the pandemic, trailing behind December 2020 (INR4,554.29).

While the actual levels are something to cheer about, the year-over-year percentage changes have become less actionable when analyzing performance recovery. STR’s new Market Recovery Monitor compares the performance of key markets within the country to the same month in 2019, considered the pre-pandemic “normal.”

This model represented below, places markets into four recovery buckets, based on their indices to the same month in 2019 for occupancy, ADR and revenue per available room (RevPAR).

The indices are calculated by dividing the market’s current performance against performance in the same month in 2019.

The recovery buckets are:

  • Depression: Markets with an index of 50 or below against the benchmark
  • Recession: Markets with an index of between 50 and 79.9
  • Recovery: Markets with an index of between 80 and 99.9
  • Peak: Markets with an index of 100 or higher.

At a collapsed-class level for RevPAR, Luxury & Upper Upscale classes remain in the Depression phase, whereas the Upscale & Upper Midscale classes and Midscale & Economy classes are in the Recession phase.

ADR for the Midscale and Economy classes shows early signs of recovery.

India by collapsed class

The markets tracked in this piece include a bucket of key locations within India.

As far as RevPAR goes, most markets in India are in either the Depression or Recession phase. Leisure demand is the primary driver in performance, with Goa in the Recovery phase and Himachal Pradesh Regional in the Peak phase across each of the three key performance metrics.

Markets still deep in the Depression phase include Kochi and Agra, along with key metro cities such as Bengaluru, Mumbai and Delhi. This is due to depressed business demand and a second rise in active case numbers.

With India at the brink of a second wave and impending lockdowns in some cities, industry resilience will determine how recovery progresses.

India Key Markets

Fortunately, there are myriad ways to track recovery moving forward, including a simple index. Indexed data compares current performance to performance in a baseline period to determine what percent of the baseline has been achieved. Have a look at this article, which showcases how benchmarking can be achieved in this manner and the importance of doing so.

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