Business Bureau :
LARGE hospitality companies’ revenue may decline 65 per cent in 2020-21, as the pandemic put a brake on discretionary travel and occupancy, according to a report. Despite 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 of over the past four years, it added. Revenue of large hotel companies is expected to decline by about 65 per cent year-on-year in FY21, Icra said in the report.
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 hotels closures and low occupancies led to deep losses, the report noted. About 70 per cent of the entities are on a negative credit outlook, compared to 92 per cent of the entities with a stable outlook in January 2020, it added.