Long summer, elections made Goa hospitality sweat for business

The off season has never put off the Goa hospitality business this bad. Hotels and resorts in the country's traditional party capital have seen business hit rock bottom in May and June, thanks to the general election and mercury going through the roof for longer than usual.

The tourist, though, may yank a silver lining out of this, considering hotels rooms have been going for a song. With the monsoon here, the sun is likely to shine again on the business this month and the next, giving hotels and resorts the opportunity to catch up on lost deals.

Param Kannampilly, chairman, managing director, Concept Hospitality Pvt Ltd (CHPL), went so far as to say the May election was "disastrous" for Goa's hospitality industry, and the scenario was more or less the same in June.

"Both occupancy levels and room rates are under significant stress. Business has picked up a bit recently owing to meetings, incentives, conferences and exhibitions/events" – or MICE in hospitality jargon – "but it has to pick up much more for a revival of sorts," he said. "The industry is just not recovering from the beating it got in the month of May."

CHPL, in which Nepalese billionaire Binod Chaudhary's hospitality vertical CG Hotels and Resorts owns 51% stake, has three operational hotels (under The Fern brand) in Goa. A fourth one, The Fern Spazio Leisure Resort at Anjuna, is set to open next month.

While tourism in Goa typically slows down in May, the scenario has been especially devastating this year, thanks to a seemingly never-ending summer. The impact was more pronounced in South Goa.

Hospitality chains Marriott, ITC Hotels and Hilton did not respond to queries by DNA Money. The spokesperson from Hyatt's India office was not available for comment.

Rajesh Karki, general manager, Lotus Eco Beach Resort Benaulim Goa, said occupancy levels in his property were at 25% for May and June. And till date in July, it's been 13%. "As of now we have 20% confirmed room bookings for July and 15% for August. We have some group bookings, and business from online travel agencies (OTAs) seems to be good. We would be able to achieve 40% occupancy," he said.

Manish Khanna, owner and managing director, Jasminn by Mango Hotels, said Goa's been very disappointing in the last couple of months. "While North Goa still managed occupancy levels of 60% and above, players across accommodation segments [budget, three-, four-, five- and five-star hotels] were complaining about bad business, with about 30-35% occupancy in South Goa," said Khanna, who operates in the budget segment.

A survey by travel search website ixigo says 42% travellers postponed booking their summer holidays this year due to high airfare.

The airfare spike was a result of capacity shortage after the Jet Airways crisis. This forced many to push their travel plans (domestic as well as international) to off-peak seasons like monsoon.

In fact, bookings- and pricing-related data compiled by ixigo for DNA Money showed that flight searches for Goa in the months of May-July declined 14% in 2019 versus 2018, while there was a 12% decrease in room occupancy trends in the same period.

Aloke Bajpai, co-founder and chief executive officer, ixigo, said, "Our study also showed that advance bookings for monsoon season have increased by 38% year on year (YoY). High tariff rates for five-star hotels have also resulted in 65% travellers preferring to book budget and alternative stays over premium hotels. Travellers opting for luxury accommodation (Rs 10,000 and above) have dropped from 35% in 2017 to 13% in 2019."

Hotspot No More

What's worse, for the first time in three years, Goa has been tossed out by Indian travellers from their list of top five local summer hotspots. "Apart from domestic bookings, the state has also witnessed a decline in foreign tourist inflow mainly due to problems with the promotion and marketing strategy adopted by the state," said icigo's Bajpai.

Business is slack also because players like OYO Hotels and Homes are opening up in every nook of the state. While OYO's deep-discounting strategy is bringing tourists in Goa, it is also pulling down room rates in the budget and economy segment, forcing higher category hotels to cut prices.

Umesh Kulkarni, general manager, Pride Sunvillage Resorts and Spa Goa, said the off season has not been as good on the aggregate as the year before. "Well, there is business for Goa but not for hotels and resorts of our calibre. The type of clientele coming in Goa is looking for accommodation between Rs 800 and Rs 1,500, that too with breakfast. There is oversupply in the market and hardly any MICE business," he said.

Karki concurred that OYO has spoiled the Goa market.

The hospitality industry is majorly banking on July and August to bring more arrivals in Goa. Industry players are of the view that holidays and long weekends are likely to bring in the much-needed respite.

"Average tariff rates for three-, four- and five-star were maximum for the months of July in both North and South Goa in 2019 as compared to May and June. Average tariff for North Goa has increased by 28% for five-star hotels in July 2019 as compared to July 2018. The increase for five-star hotels in South Goa is 10% in the same period," said Bajpai, sharing highlights from the data.

For August, the ixigo data indicated a 9% increase YoY in booking trends for North Goa, and 10% for the South.