Hospitality has been among the sectors hit the hardest by the COVID pandemic, and large hotel management companies--hotel operators in industry parlance--believe it could take at least two years for revenues to return to pre-COVID levels. Operators manage the hotel properties owned by individuals or firms, for a fee.

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Real estate consultancy firm, JLL surveyed 15 leading hotel operators in India with a strong presence in both business and leisure segments. According to the survey, only one in five of the operators believe that their business can bounce back to 2019 Revenue Per Available Room or RevPAR levels within 6 to 12 months. Six in ten respondents believe that their portfolio should be back to 2019 levels between a year and two from now.

Luxury hotel operators are expected to ramp-up at a much slower pace with some expecting that their portfolio may take more than two years to reach 2019 levels. Qualitatively, the survey also indicated that business travel was expected to reduce in the post-COVID world as companies rationalize spending on travel. In a way, this could benefit branded economy and mid-scale hotels. The survey was conducted to understand the effects of the pandemic on the development and opening of new hotels, as well as the support required for the sustenance of the sector.

“The standard operating procedures will be significantly transformed to promote enhanced hygiene standards and to adopt technology to support social distancing policies. However, with the slowdown of hotel developments, capital assistance is needed to help hotels sustain until demand returns,” Jaideep Dang, Managing Director, Hotels & Hospitality Group (India), JLL, said.

Currently, one in two of the operators expect to resume operations within 2 weeks of lifting of lockdown/travel restrictions by the respective state governments and one in three operators expect to open within a week. Importantly, almost all operators believe that most hotels in their portfolio would need working capital infusion to continue or re-start their operations because the reserves have almost dried up.

As the sector continues to build contingency plans to alleviate the fallout of the crisis, hotel operators are extending support to the owners of the properties. Nearly seven in ten hotel owners said that they have been offered financial assistance by the operators, such as deferrment of management fees, fixed system charges etc.

From repurposing a property to adopting new strategies to complying with new rules (such as strict hygiene measures), quite a lot needs to be done to adapt to the new operating environment. Hotel developments have slowed down, and most hotel openings are likely to be deferred by at least six months. Though unlock 1.0 has allowed hotels to open in a few cities, the ride ahead seems bumpy with limited demand offtake for rooms, food and beverage and other recreational business. Hotels appear to be better off by serving as COVID support facilities in more affected cities such as Delhi and Mumbai.