Bengaluru’s Hotel Witnessed 59% Drop in RevPAR in YTD July 2020: JLL
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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 JLL’s India Hotel Recovery Guide- Bengaluru, released today, as of YTD July 2020, RevPAR declined by 59 per cent but is expected to bottom out in Q4 2020 as the Government gradually eases lockdown restrictions and domestic travel begins to pick up.
“Over the last few years, Bengaluru has evolved into a fundamentally strong hotels market on back of office demand led by IT and Fintech companies. Once life settles around COVID-19, Bengaluru’s hotel market is expected to bounce back, albeit slowly over the next couple of years. 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. Leisure destinations around Bengaluru such as Coorg, Chikmaglur and Kabini will also likely witness some revenge travel from the city dwellers although this demand could be intermittent.” says Jaideep Dang, Managing Director, Hotels & Hospitality Group (India), JLL The Silicon Valley of India is expected to see a 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. 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. “Owing to the ownership profile, a significant portion of hotel owners in Bengaluru are long-term holders with strong balance sheets and are better placed to weather out the pandemic when compared to other markets in India,” points out the report. 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 monetization, the report states.