From lockdown to 10x growth: India’s hospitality industry spearheads into recovery

India’s hospitality industry was poised for a phenomenal up-cycle, given the rise in disposable incomes and the arrival of a large swathe of foreign tourists. According to WTTC, India's travel and tourism industry contributed 6.8 percent to the GDP in 2019. Experts predicted that the industry was at an inflection point in 2019, however, the outbreak of the COVID-19 pandemic took the industry by storm. 

The industry is now predominantly reliant on capital infusion and has to operate with social distancing restrictions. In FY21, it recorded a massive debt due to plummeting revenues and operating losses. The slowdown in the industry proved to be worrying for most hotel and restaurant owners and caused financial stress. 

However, bracing the challenges through 2020 and now 2021, the industry is set for a comeback as trends suggest a phenomenon of revenge travel. The sector is also boosted by the government allowing select tourist visas once again and the RBI unveiling a credit line scheme.  

In a panel discussion hosted by YourStory’s Daily Dispatch, Mayank Bhatt, Business Head of SOCIAL; Sidharth Gupta, Co-founder of Treebo Hotels and Hotel Superhero; and Deep Banka, COO at Zostel, talked about the fall and the rise of the industry, and the plans to accelerate hospitality businesses. 

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The demand trajectory

Restaurant chain SOCIAL recently re-opened its fine dining services and awaits the time limit restriction to be lifted soon. 

“We are finally smiling a little bit. Compared to the first wave, the second wave recovery has been well. It took us close to four months after the first wave to come back to 70 percent of pre-COVID-19 numbers,” says Mayank Bhatt, Business Head, SOCIAL. 

The restaurant chain is run under the umbrella of Impresario Handmade Restaurants, which is owned by entrepreneur Riyaaz Amlani. The brand has seen an increase in its Average Order Value amid the pandemic. 

Many hotels and hostels are also seeing a welcoming trend of travellers again occupying vacant beds. 

Hotel chain Treebo has been seeing at least a 10X jump in growth in the last five months.  

“We have seen a pretty sharp recovery in demand over the last four to five months, particularly in the last 45 days or so. I think it is evident that the great vaccination numbers we are seeing have helped remove some of the fear psychosis that people had around the third wave,” says Sidharth. 

At Zostel, a community-led experience-driven ecosystem, the category of leisure travel has been picking up, leading to 90 percent recovery for the brand. “It remains a destination to some segments like, for example, leisure has been a better recovery as compared to corporate travel,” says Deep Banka, COO at Zostel. 

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Plans for growth

Zostel is hopeful of continuing its business development once the restrictions are lifted. “Expansion plans were sort of paused in the last one-and-a-half years,” says Deep. He adds that Zostel plans to add 12 more locations in the coming quarter. The focus area, however, is the quality of the hotels and guest experience. 

The pandemic led to a shutdown of a few SOCIAL outlets but the brand is looking to expand with the resumption of fine dining. It will be looking at new markets such as Hyderabad and Kolkata to open their franchise stores. The focus will be on enhancing their dining experience as well as deliveries. 

In the case of Treebo, Siddharth quips, “We are super hungry for supply.” The company will add over 35 properties every month to its current portfolio of about 500. It is looking at a portfolio size of 650-700 properties in the next three months. According to Siddharth, the company will break even in the next nine to 12 months, based on the demand trajectory.