According to the ICRA report, the domestic hospitality industry, which has been severely affected by the COVID-19 related disruptions, is likely to witness a decline of over 65% in 2020-21.

Notwithstanding several measures taken by the players to drastically cut costs, the industry is likely to report massive operating and net losses in wiping out the cumulative profits over the past four years, the report added.

Revenue of large hotel companies is expected to decline by about 65 percent year-on-year in FY21, ICRA said. The agency expects sentiments to improve in the seasonal peak of the second half of FY22, however, the situation is still evolving, with numerous headwinds as seen with the restart of crowd control and lockdowns with an increase in COVID cases in India and globally.

While widespread vaccination rollout could ease things to an extent, the situation is evolving and remains monitorable, the report said, adding that pan-India ARRs (average room rates) would still be at a discount to the FY19 levels in FY22. It further said the recovery to pre-COVID levels will take about 2-3 years. The severe impact of the pandemic has resulted in a sharp increase in downgrades as hotel closures and low occupancies led to deep losses, the report noted. About 70 percent of the entities are on a negative credit outlook, compared to 92 percent of the entities with a stable outlook in January 2020, it added.  The report further noted that demand pickup was visible in the recent months from staycations, drive-to-leisure and social MICE, and occupancy inched closer to 50 percent in the fourth quarter of FY21 providing a dose of optimism to the industry.

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