February 15, 2023 TnH Global 0

High hopes from 2023, hotel chains plan strong expansion in the New Year

For the hotel industry, 2022 was a year of sustained recovery fuelled by the surge in domestic travel demands.

Words by Prem Kumar

2020 and 2021 were the worst years for the Indian hotel industry owing to the massive disruptions caused by the pandemic and related restrictions. From late 2021, the industry started recovering and that process continued in 2022 except for a brief disruption in the early months of the year due to the third wave of the pandemic.

“Overall, 2022 was a year of resilience, recovery and positivity in the hospitality sector that bounced back with an increase in bookings and hotel occupancies due to travel excitement among Indian and international travellers,” said Nikhil Sharma, Regional Director for Eurasia, Wyndham Hotels & Resorts.

Hospitality chains such as InterContinental Hotels Group (IHG), Wyndham and others witnessed a strong rebound in their business last year. “In 2022, we saw the return of travel in India with positive consumer sentiment leading to an increase in demand across our hotels,” said Sudeep Jain, Managing Director, South West Asia, IHG. “Our business in general witnessed a significant upsurge with the growing demand for domestic leisure travel, early return of business travel, weddings and conferences & events. In 2nd quarter of 2022, IHG’s total revenue in India exceeded 2019 levels with occupancy levels jumping from 60 per cent in the first quarter to close to 75 per cent in 2nd quarter of 2022.

According to Vikramjit Singh, President, Lemon Tree Hotels, post-Covid-19, 2022 has been called the year of recovery because from 2022 the industry has been gradually returning to 2019 Rev Par levels. “The rising demand for to stay in branded hotels contributed to this recovery, as guests are more reassured by the safety, security and hygiene levels maintained by branded hotels,” said Singh.

Agreeing that 2022 was overall a positive year for the industry, Abinash Manghani, CEO of WelcomHeritage Hotels, said that the lockdown fatigue made way for the travel bug, with people even starting to discover new interests. “In 2022, the hotel industry not only rebounded but even surpassed pre-pandemic level,” said Manghani, adding that last year WelcomHeritage Hotels (WH) achieved growth in double-digit numbers.

2022 was also a year of recovery for hotels such as Sahara Star of Mumbai, which hosted many big events including weddings, ceremonial events, expos, exhibitions, and conferences. “In 2022, we welcomed back our regular patrons; our F&B teams organized various food festivals offering our guests the same variety and experience; rather more than what we did in the Pre-Covid years,” said Ash Sharma – Hotel Manager of Hotel Sahara Star.

Domestically driven recovery

The recovery in the sector was completely driven by the domestic market. According to Nikhil Sharma, “Domestic travel remained the fuel behind the industry’s growth throughout the year. Be it long weekends, festive or holiday season, the market outperformed and touched pre-pandemic numbers, highlighting the resilience of the hospitality industry as a whole.”

For brands like WelcomHeritage, which already had a strong relationship with domestic travellers, the chain used 2022 to further deepen its ties with the domestic market.

Sarbendra Sarkar, Founder & MD, Cygnett Hotels & Resorts, who is also among those who feel that 2022 was a year of recovery, agreed that the domestic market played a critical role in the recovery. According to him, in 2022 domestic tourism witnessed overwhelming demand after the pandemic-induced slowdown in the previous years. “The leisure segment, wedding and corporate segments also recorded a revival in 2022,” said Sarkar.

Inbound tourism was a dampener

2022 witnessed many positive developments, but there were a few negatives, as well. “In 2022, the hotel industry continued to evolve with advancements in technology and sustainability and at Wyndham we put a strong emphasis on continuing to adopt and develop new measures in these areas to provide guests with enhanced and seamless experiences that also protect the environment in which we live, work and enjoy,” said Nikhil Sharma.

As regards negatives, Sarkar said that the demand from inbound tourism remained slow, belying the expectation following the resumption of international scheduled flights. “International tourism is important for the hospitality sector as it helps rooms to be occupied on the weekdays also apart from the dollars added to the economy,” Sarkar underlined.

Expectations from 2023

The industry at large is quite upbeat about 2023 and hopes that the rebounding process will continue in the New Year. “We expect travel to continue to bounce back in 2023, with the country getting strong opportunities to highlight itself as an internationally acclaimed destination,” said Nikhil Sharma. “One of these opportunities includes the G20 Presidency, which is a strong opportunity to showcase India’s supreme hospitality standards. Moreover, international travel is also expected to see an uptick this year,” he added.

Like in 2022, domestic tourism will continue to be an important driver of revenues for the hotel industry in the New Year. “Domestic tourism facilitated business recovery across leisure and corporate segments, and it will continue to remain an important segment for us in 2023 as well,” said Jain of IHG. IHG has a solid presence in the mainstream category with Holiday Inn and Holiday Inn Express hotels which cater to this demand.

Vikramjit Singh of Lemon Tree Hotels hopes that this year the Indian Tourism and Hospitality industry will mature with the inflow of Inbound Tourism. According to Singh, tourism needs both international and domestic travellers against a skew towards inbound in key markets earlier. “Inbound tourism will begin coming in moderate number from January 2023 onwards,” said Singh, however, he added that domestic tourism remains the key to growth in the medium term.

Speaking on a similar line, Manghani of WH said, “While our focus on the domestic market remains undeterred, our prime revenue generator pre-covid, the inbound market is already showing a promising comeback in 2023.”

Sarbendra Sarkar of Cygnett Hotels also hopes that 2023 will be an extremely positive year for tourism and hospitality verticals provided the pandemic situation remains in control this year.

According to Sarkar, lots of new hotels especially in the mid-segment market are expected to be opened in 2023. He said that the New Year will also see demands in the corporate and MICE segments bouncing back to the pre-pandemic level.

Ash Sharma of Hotel Sahara Star says that this year his hotel will see newer demands and growth with increased international tourism, higher demand for expos and conferences, and varietal food trends in its restaurants. “We are estimating double-digit growth over the previous year,” added Sharma.

Plans for the New Year

Every hotel chain, whether home-grown or Multi-national, have robust expansion plans for India. As Nikhil Sharma of Wyndham says, “We are looking forward to further bolstering our strong portfolio in India and Eurasia with long-standing and new brands that will cater to both business and leisure travellers.” Likewise, according to Sudeep Jain, IHG looks forward to further expanding its portfolio in the South West Asia region and bringing new brands to key markets. Moreover, Jain added that IHG will continue to diversify its F&B offering across its hotels this year.

Informing about the expansion plans of Lemon Tree Hotels for the New Year, Vikramjit Singh says: “There are more than a dozen hotels that we plan to open this year, and the number is likely to go up as more conversion hotels are signed during the year. Moreover, in 2023, LTH will focus on digitization, AI and greater customer satisfaction through customization and personalization of its services.

Keeping this in mind that the domestic market will continue to remain strong in the coming years, WelcomHeritage is looking at scaling its portfolio of hotels to include destinations that are experiential and unique. “We will continue our expansion within the country with four planned openings in 2023 in places like Fort Kochi, Ooty, Kasauli and Dungarpur,” informed Abinash Manghani.

In line with the prevailing buoyancy in the industry, Cygnett Hotels & Resorts also has an impressive list of openings for the New Year. “We have 15 hotels slated to be opened in the coming months. Out of these, we expect 9 to be operational in 2023. We want to continue with the momentum gained in the last year and expand in markets where there is a lack of branded hotels,” said Sarbendra Sarkar.