India records increase of 6.2 per cent in RevPAR in 2010: STR Global
Monday, February 14, 2011, 14:00 Hrs [IST]
Source: STR Global
The 2010 gains are tempered by the fact that 2009 comparison figures were weak and rates in particular have fallen from a high base point. To more realistically assess the state of the Indian hotel market, one should compare current performance with that of the most recent peak during 2008, before the global financial crisis.
The chart below shows the ground that needs to be made up when compared to 2008, particularly with regard to rates. ADR in Bengaluru during 2010 lags that of 2008 by 37.34 per cent. For Mumbai, the difference is 30.33 per cent. Chennai, Delhi and Hyderabad all saw ADR decreases of 20 per cent or more since 2008.
Per cent changes year-end 2010 v year-ended 2008 (Indian Rupees)
Source: STR Global
Certain specific situations warrant further attention, namely the terror attacks in Mumbai in November 2008 and the staging of the Commonwealth Games in Delhi in October 2010. In Mumbai, year-on-year occupancy was already in double-digit decline for each of the six months before the attacks, which then accelerated to a fall of 47.5 per cent during December 2008. This was followed by double-digit declines in occupancy until July 2009, with occupancy gains arriving a year after the incident. Nevertheless Mumbai is a major tourist hub and the most popular point of entry for foreigners. Mumbai's demand in terms of occupied rooms grew by 14.5 per cent for 2010 over 2009 with 11 out of 12 months during 2010 showing double-digit, year-on-year growth.
Meanwhile, Delhi's hosting of the Commonwealth Games proved beneficial to the economy, but the impact on hotel performance was muted. Actual occupancy of 73.4 per cent for the month of the Games (October 2010) was down 1.2 per cent compared to the previous year. In the face of this, hoteliers managed to improve year-on-year ADR by 14.9 per cent.
Many commentators have seen the fall in rates as a long overdue correction, and pressure is likely to remain acute for some time given the increase in supply. The Pipeline Report from STR Global shows more than 46,000 rooms due to open before 2015, representing a 30 per cent increase in current branded hotel stock in the market.
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