● The hotel industry in India, partially organized and majorly unorganized

caters to ~1.8 Billion domestic travelers and 9-9.5 Million foreign travelers.

About 55% of organized hotels in India belong to 3-star or higher categories.

● Tamil Nadu and Uttar Pradesh account for more than 35% of all domestic

tourist visits in India.

● Air traffic reform in India, initiated in 2005 with the rise of low cost carriers

had a major role in driving the hotel industry growth in India. As a result the

tourism industry in India has been growing and has vast potential for

generating employment and earning foreign exchange.

● In the organized hotel industry in India, the Indian consumer internet market

is largely concentrated in urban and affluent cities. As a result of that, most

of the online bookings for hotels are done by residents of tier-1 and tier-2

cities.

● The operating margin for budget and mid-category hotels is between 18-

25% in India, which can be even lower considering heavy discounting by

online hotel aggregators and thus the market will always need high inventory

and >60% occupancy rates. In the organized sector, more than 60% of

bookings are done online, just 2 days in advance.

 ● The GST council`s rate cut on from 28% to 18% for upscale hotels, and

from 18% to 12% for mid-scale is expected to be a major growth driver for

hotel industry in India in coming years.

● The “revenge travel” tendencies of Indians have provided a much-needed

boost to the country’s hospitality sector over the last couple of months. But

it will be a while before the sector goes back to pre-pandemic growth levels

● Occupancy rates at hotels in India are currently higher than in April when

the second wave of Covid-19 picked pace, however, room tariffs are under

pressure, especially at luxury hotels. Several luxury properties are not

making enough money because they have been forced to cut rates to attract

customers.

3 Star Hotels

These hotels are generally more stylish and comfortable than one and two-star

hotels, and they offer a wider range of services and amenities: a fitness center, a

pool, business services, an on-site restaurant, room service, conference rooms, and

valet services.
Since 1990, the 20-fold rise in the middle group has set the tone of Indian

economic growth. The middle-class makes up 28 per cent of the total population

and 79 per cent of the total taxpayer base. It also contributes 70 per cent to the total

consumer spending. Nearly 55% of the Indian population is expected to join the

ranks of the middle class. In fact, because India’s demographics are much younger

compared to China and the US, India’s middle class could be the largest in the

world (in terms of numbers of people) by 2025. It is not an exaggeration to say that

future growth will depend on the rising middle class, and the evolution of the

middle class will depend on growth.

Arrival of 3rd Wave in India

Amid third Covid wave scare, as many as 17 cases of the Delta variant AY.4.2

strain has emerged in India. These samples were collected between May,

September 2021.

Several states including Andhra Pradesh have reported 07 cases of new strain,

Kerala 4, Karnataka and Telangana 2 cases each, Jammu & Kashmir and

Maharashtra have reported 1 case, respectively taking the total tally to 17.

Adapting to new Needs after Covid-19

 1. Efficiency, Technology, & Automation

Technology will play a key role in the comeback or recovery of the hospitality

industry. Hotels of both segments will need to adopt new-age technologies and

automate various operations to bring efficiency as well as ensure safety of guests.

Hotels will need to focus on technology, automation and efficiency as core USPs

while running their hotels, selling their hotels, and providing safe & reliable guest

satisfaction. From taking a reservation, checking in a guest, providing in-house

services to the guest, and post checkout services, all such tasks will see a greater

advent of AI, AR, VR and device based automation, that will ensure hotels stay

efficient, and customers stay safe.

2. Reduced Manpower

Tracking manpower performance in different and multi-skilling of existing staff

will be critical points in the recovery process of hotels. The motive is to reduce

staff to room ratios to ensure profitability, efficiency and cost savings.

3. Marketing / Sales Using Online Channels with Dynamism & AI

More hotels will start using cloud-based integrated Property Management Systems

and dynamic pricing algorithms to maximize revenues. Online distribution, pricing

management, and reservation management will all be brought under one umbrella.
This will not only reduce the need for day to day management but will also result

in maximizing revenues due to use of AI & Data Analytics.

Conclusion

The hospitality industry is undoubtedly adversely affected by the pandemic, and a

lot needs to change before the industry can find its feet again. Currently, business

planning and strategising is in a volatile state as no one can predict what could

happen next. Even the government has ignored the hospitality industry, even

though it’s a huge source of employment and has a multiplier effect on the

economy. The third wave can potentially be a final nail in the coffin for business

hotels, where the last hope for survival will give way to complete restructuring.