Bengaluru sees sharpest decline in revenue per available room amid coronavirus pandemic
Bengaluru has seen the sharpest decline in Revenue Per Available Room (RevPAR) among major Indian cities due to the ongoing COVID-19 pandemic, according to global property consultant JLL. JLLsIndia Hotel Recovery Guide- Bengaluru, released on Monday, said as of year to date (YTD) July 2020, (January to July 2020) RevPAR declined by 59 per cent year-on-year.
But RevPAR is expected to bottom out in the fourth quarter of 2020 as the Government gradually eases lockdown restrictions and domestic travel begins to pick up, it said.
Occupancy was down 53 per cent YTD July (y-o-y), it said.
Bengaluru saw 4.8 million international passenger arrivals in 2019, up 13 per cent y-o-y, while total number of branded keys at the end of last year stood at 14,987, up four
per cent y-o-y, according to a JLL statement. Over the last few years, Bengaluru has evolved into a fundamentally strong hotels market on back of office demand led by information and fintech companies.
Once life settles around COVID-19, Bengalurus hotel market is expected to bounce back, albeit slowly over the next couple of years, JLL said. "The hotels which are linked to office parks could get back to business earlier as compared to the ones with huge banqueting and conferencing facilities, said Jaideep Dang, Managing Director, Hotels & Hospitality Group (India), JLL.
The Silicon Valley of India is expected to seea greater interest from private equity players, high-net-worth individuals and distressed asset funds as they capitalise on opportunities to invest in hotel assets which would be valued at a discount to their pre-COVID-19 values, according to JLL.
However, transactions will likely only occur once travel restrictions are further eased and site visits are facilitated. The good news in case of Bengaluru city is that there will be limited distressed asset sales, it said.
"Owing to the ownership profile, a significant portion of hotel ownersinBengaluruare long-term holders with strong balance sheets and are better placed to weather
out the pandemic when compared to other markets in India," the report pointed out.
However, a few distressed sales may occur in the market from owners that are unable to service their existing debt. Some owners who had already taken a decision to sell
prior to COVID-19 are expected to still go ahead with their monetisation, it added.
