Bengaluru and Hyderabad, key centers for Global Capability Centres (GCCs) in India, are experiencing a downturn in hotel occupancy due to the ongoing West Asia conflict. Experts indicate a significant reduction in foreign business travelers, many of whom typically transit through major aviation hubs in the Middle East like Dubai, Abu Dhabi, and Doha.
Impact on Foreign Tourist Arrivals
Shwetank Singh, Managing Director and CEO of Chalet Hotels, confirmed the adverse effects on the hospitality sector. He noted that foreign tourist arrivals have been significantly impacted, directly affecting occupancy rates in large hotels within major cities.
“The hotel business has been affected by the West Asia war. Foreign tourist arrivals have impacted, which has in turn impacted occupancy in big boxes in big cities,” said Singh.
Singh highlighted that approximately 40% of their business comes from foreign tourist arrivals, with big city hotels comprising about 60% of their portfolio. The company observed a 10% drop in occupancy during March, with Bengaluru and Hyderabad being particularly affected due to their reliance on GCC-led travel. While leisure resort businesses remain stable, the overall impact has resulted in a net loss for the company, though Chalet Hotels anticipates double-digit growth in FY27 if regional stability returns.
Traveler Caution and Rising Airfares
Rikant Pittie, CEO and Co-Founder of EaseMyTrip, commented on a more cautious approach from international travelers. He noted a trend towards shorter booking windows and increased preference for flexible travel plans. Despite these shifts, Pittie suggests that the underlying demand for premium hospitality experiences largely holds, albeit with some degree of impact from the geopolitical situation.
Pittie stated, “We are seeing a degree of recalibration rather than a sharp decline in luxury hotel bookings across metro cities in March.” He added that domestic travelers and business travel have provided a degree of stability, offsetting some of the international decline.
Adding to the challenges, rising airfares are also influencing travel demand. Pittie indicated an increase of around 5-10% on domestic routes and a more substantial 20-30% on short-haul international routes, primarily due to increased fuel surcharges and operating costs.