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Hotel Volatility Index (HVI by Hotelivate)

Tuesday, November 27, 2018, 11:17 Hrs  [IST]

Hotelivate, leading hospitality consultancy company, has released a performance benchmark report - Hotel Volatility Index (HVI) - tracking the performance of 80 well-established and stabilised hotels in India recently. The study has brought out insightful information on the performance of urban and leisure properties in the country. These sample size comprised 60 urban and 20 leisure hotels operational since 2011 with an inventory size of 17,000 rooms. HVI revealed extra-ordinary performance by leisure hotels and resorts compared to their urban counterparts.

Figure 01: illustrates the occupancy, average rate and RevPAR performance of the 80 hotels between 2011/12 and 2017/18, further categorised by location.

HVI showed significant increase of 10.8% in average rate and 4.8% growth in occupancies between 2013/14 and 2017/18. However, despite having three consecutive years of upcycle in occupancies, these hotels weren’t able to cash in on that positive sentiment in the market and gain significant rate enhancement. The index registered only a 3.2% increase in average rate over 2016/17 while occupancy remained stable. More sophisticated revenue management strategies need to be adopted that look beyond just historical hotel data and competitor rates, the study notes.

Figure 2: Comparing the performance of the index to the national average, the HVI notes that the RevPAR of these 80 stabilised hotels (INR 6,212) was 62% higher than that of the All-India sample set (INR 3,837) in 2017/18, validating the significance of such an Index.

Also, it is interesting that leisure hotels continued to outperform their urban counterparts, recording a RevPAR premium of 61.8% in 2017/18, mainly on the back of higher average rates. At INR 14,292, the average rate of leisure hotels in the index was nearly twice that of the urban hotels (INR 7,831), growing by 7% over the previous year. Moreover, this base of 20 stabilised properties consistently recorded an occupancy of around 65% or more in the last five years, offering strong evidence of steady demand for such hotels in India. The increasing purchasing power of the domestic traveller and the rising inbound leisure travel bodes well for hotels operating in this segment.

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