New Delhi: As the coronavirus pandemic and the eventual lockdown has hit the hospitality industry hard, the occupancy level of the Indian Hotels Company Limited (IHCL), a subsidiary of the Tata Group conglomerate, fell to about 40-45 per cent, a report by brokerage firm AnandRathi said.
It noted that taking a considered decision, the company has kept only 60 per cent of its rooms operational which is limited to in-house guests.
The IHCL is an Indian hospitality company that manages a portfolio of hotels, resorts, jungle safaris, palaces, spas and in-flight catering services, including the famous Taj Group of hotels.
The report also said that in January and February, the IHCL witnessed good occupancy rate, but it depleted in March.
"January and February were good for Indian Hotels. And 1st to 11th March was almost as good as in the year prior. Most of the properties had occupancies north of 60-65 per cent, even 70 per cent. From 12th to 23rd March, occupancy slid to 25-30 per cent; since 24th March (and ongoing), occupancy at most properties plunged to 15-10 per cent and, at some, even to low single-digits," it said.
The company decided to gradually shut down a few hotels in smaller cities where it has more than one, and use the others more efficiently, instead of low occupancy at different properties.
However, the brokerage firm projected that after COVID-19 subsides, "the company is set to outclass others, driven by its strong brand equity and all-India spread".
It added that any slow-down in the economy would lead to curtailed demand.
The report said that as 65-70 per cent of the total branded hotel rooms in India primarily exist because of corporate travel in India, and the situation is likely to be grim over the next two to three months.
"With the 'no-travel' policy and companies adopting 'work from home', we expect the impact of the virus to begin waning by Jun-Jul, and business to pick up in H2 FY21. We also assume that, as the last few months of 2020 roll in, inbound travel is likely to be a fraction of what India gets in typical years," it said.
Hospitality is among the major sectors which have been severely hit by the crisis over the past couple of months. There have been demands for a stimulus package for the industry and Finance Minister Nirmala Sitharaman has assured of coming up with a relief package.
There are market expectations that the package would also bring relief to the hospitality sector.