Omicron variant dampens sentiments for hotel industry: ICRA

Hotel industry demand will be curtailed in Q4 FY2022, at least in January 2022, because of the COVID-19's Omicron variant, according to ratings agency ICRA.

The hotel industry demand has recovered at a sharp pace post COVID-19 2.0, aided by easing restrictions, high pace of vaccination and pent-up demand.

The demand for hotel stays in the last few months has come primarily fromstaycations, weddings, travel to driveable leisure destinations, and special purpose groups, says ICRA.

Business travel pickup, mainly to projectsites/manufacturing locations, was also seen in specific sectors, although it remained low compared to pre-COVID-19 levels. However, demand will be curtailed in Q4 FY2022, at least in January 2022, because of the COVID-19 wave.

Says Vinutaa S, Assistant Vice President and Sector Head, ICRA, “The Pan-India premium hotel occupancy picked up from July 2021 post relaxation of lockdown and was 50 per cent+ in Q3 FY2022, better than our earlierexpectations. The QoQ revenue improvement was ~117 per cent in Q2 FY2022 and is expected to improve by another15 per cent sequentially in Q3 FY2022, supported by the healthy festive season travel witnessed. "

"For 9M FY2022, the estimated the Pan-India premium hotel occupancy was ~40-42 per cent (up from ~20-22 per cent in 9M FY2021). The Pan-IndiaARRs were at a 25-30 per cent discount to pre-COVID-19 levels, although some high-end hotels and leisure destinations have reported pre-COVID-19 ARRs in the last few months,”added Vinutaa S.

The rating agency stated that the operating margins are also expected to witness sequential improvement in Q3 FY2022, with better operating leverage. However, the financial performance in Q4 FY2022 is linked to the intensity of the current COVID-19 wave and the lockdowns.

Published on: Friday, January 07, 2022, 09:50 AM IST