he Indian Hotel industry is reeling under stress due to the current imposed lockdown which has extended for more than 120 days. The demand for the hotel industry is just coming from medical staff & patients, passengers traveling back in the Vande Bharat Mission, and airlines & shipping crew. With restricted demand, and continued restrictions on travel, the hotel industry is expected to continue witnessing demand from the current list of travelers only.
In the current scenario, with low demand and restricted travel, many hotel owners who already have over leveraged their credit facilities are either looking to dilute their equity or liquidate their assets. The moratorium offered by RBI on the principal amount is also coming to an end on 31st August 2020. This situation opened the door for many investors who were looking to enter the hotel’s industry but were not sure whether to build a new asset or invest into an operational asset.
Top reasons which indicates that this is the best time to buy a hotel:
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Travel and tourism industry contributes nearly 9% to the overall GDP in the country making it an important industry towards the revival of the Indian economy. As per Ministry of Tourism, as of 2018, India is the 7th most visited country by ITAs within the Asia & the Pacific region and 25th most visited country across the world. The rich and diverse tourism that India has to offer to its visitors makes it one of the most prominent countries when it comes to tourism. The country which is estimated to employ more than 42 million people directly and indirectly in the tourism industry is estimated to bounce back stronger than ever and is expected to breach the 2019 occupancy levels and ARR levels within the next 24 months.
Looking at the current scenario, HNI’s and family offices are showing a lot of interest in the hospitality segment with a prime focus on cities like Mumbai, Hyderabad, Bengaluru, Goa, and in established leisure destinations. Change in consumer patterns post the lockdown regarding work from home and e-retailing becoming more prominent as the imposed lockdown and restrictions have changed the daily way of life. However, there is no alternative to travel and vacations; consumer behavior towards the hotel industry is expected to increase further leading to HNI’s and family offices shifting focus towards the hospitality segment.