‘Home delivery revenue stream has long-term potential’
Although the domestic leisure travel segment is breathing life into India’s hospitality industry, a full recovery will be a long haul. Neeraj Govil speaks to Venkata Susmita Biswas about the trends in domestic travel, Marriott’s home delivery service and expansion plan for 2021. Edited excerpts:
According to industry reports, the hotel occupancy rate in the metros is now around 40% of pre-covid level. How much has your business recovered?
The Covid-19 pandemic has decimated the hospitality business. The industry tends to be the first to be impacted and the last to recover in an event of this nature. We began seeing the impact in early March, 2020, and by the October-December quarter of last year, saw some signs of stability in momentum, as many of our hotels reopened in that quarter. The announcement of the vaccines has improved sentiments, too. Despite these developments, the underlying uncertainty, such as localised lockdowns or the kind of resurgence that we are seeing in states like Maharashtra, makes it difficult to conduct business.
We are gradually witnessing signs of recovery as we enter 2021. Our aggregated portfolio across the country is seeing around 50% occupancy. Hotels in resort locations are doing better than those in metro cities, where they depend heavily on international travel and the MICE (meetings, incentives, conferences and exhibitions) business. We are forecasting an aggregate of more than 50% occupancy for the January-March quarter of 2021.
Given that domestic travel is the only avenue for business now, are you having to discount room rates?
There is a lot of pent-up demand for resort locations — whether it is our luxury, premium or select hotel brands, there is a customer for every price point. For example, we are seeing extremely high demand for both W and Fairfield hotels in Goa. For resort locations where there is high demand, our rates have not dropped. For domestic travellers, we are offering flexibility in their booking dates and a wholesome experience within the hotel.
In city hotels, we are not seeing the same average rates that we used to pre-Covid. The rates have dropped because of reduced demand; and the difference between a premium hotel and a luxury hotel is not as pronounced as it was before. With events like weddings, we are seeing buy-out requests from families to create bio bubbles for a day or two. As recovery kicks in over the next 12 months and sporting events such as IPL are held in India, room rates, too, will improve.
How are you making up for the loss in business from corporate events, exhibitions, etc?
Our recovery will not be complete until the MICE segment comes back to us. Catering for these events contributes about 20-25% to our aggregate revenue pan-India. This segment has been very heavily impacted because we have restrictions on large groups, and there is really no demand for meetings. Therefore, we have had to largely rely on weddings and other social events and celebrations where, too, we have to adhere to the cap on the number of people who can attend.
Do you plan to continue home delivery services that you launched last year, once restrictions are lifted?
Until 2020, people had to come to the hotel and order a takeaway if they wanted one. We began home deliveries in Mumbai and Pune to add a new revenue stream. Very quickly, we expanded the service to about 80 hotels across India. We crafted menus that would travel well and prices to match the market. We believe we have opened a revenue stream that has long-term potential. The demand for this service is mainly from cities such as Mumbai, Pune and Delhi. During the peak of the pandemic, about 8-10% of our restaurant business revenue came from online food delivery.
What does your 2021 expansion plan look like?
There is certainly confidence in the industry rebounding and, therefore, there is demand for new hotels in several locations. In 2021, we will be opening seven new hotels including a Westin in Anjuna in Goa, four under the Courtyard by Marriott brand in Navi Mumbai, Mahabaleshwar, Vadodara and Thiruvananthapuram, and two under the Fairfield by Marriott brand in Dehradun and Benaulim in Goa. The launch of Ritz-Carlton in Mumbai and JW Marriott in Bengaluru are scheduled for 2022- 2023.
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