Skift Take

India's devastating second wave of the pandemic is arresting the pace of the travel recovery, at least for the short-term. It's too early to tell if the shrinking industry will be able to cater to the vast pent-up demand once Covid is under control.

During the last few weeks, India has recorded the highest number of Covid-19 cases this year, with one Covid-19 related death being reported every five minutes — a staggering figure that has left the country in despair.

At present, India has 3,487,229 active cases with more than 300,000 new cases being reported every day since last week. The hard-hit travel industry in India, which was just starting to show some signs of recovery in February and March, is now facing a major  challenge.

Source: Visual Hunt/Trinity Care Foundation

Skift Research’s India-based senior analyst Varsha Arora sets out the enormous challenges the travel industry is now facing.



The hotel industry had just started recovering in the early months of this year. STR reported that the hotels in India had achieved a 50 percent occupancy level in February 2021, which was the highest level since the start of the pandemic.

An industry source working with a leading hospitality consulting firm in India spoke with Skift anonymously and commented: “In March 2021, except major metro markets like Delhi NCR, Mumbai, Pune, Hyderabad, and Bangalore, most other markets reached 60 percent of their pre-Covid occupancy levels, although the average daily rates (ADRs) were at an all-time low and will take time to recover.”

Similarly, HVS Anarock reported that nationwide occupancy levels increased by 60 percent in March, compared to March 2020. Revenue-per-available-room (RevPAR), a key metric for hotels, also increased significantly during this period, driven by the growth in occupancy.


The deadly new wave has again put the country at a standstill. Data from Google’s Community Mobility Report shows that retail and recreational visits were down by 67 percent compared to pre-pandemic levels, while use of public transport was down by 50 percent at the end of April.

Hotel occupancy rates in April were considerably lower than the market estimates. Recent articles in the media claim that the occupancy levels in April declined to low single digits or nil in many states where case counts are on the rise and the government has imposed lockdowns.

In early April, a hotelier from Rajasthan noted that: “Cancellation requests are pouring in large numbers. Almost 70 percent of the bookings for the weekend got wiped out and  the industry occupancy has again fallen to below 25 percent.”


The advent of the second wave of Covid-19 in April and restrictions imposed to combat its spread are expected to disrupt the recovery in the near term. Prior to the second wave, Hotelivate, in its recent Stats & Pulse report, estimated that fiscal year 2021 (April 1, 2020- March 31, 2021) would have recorded a nationwide occupancy of 33.8 percent and an average daily rate (ADR) of Rs 4,013 ($56 USD), representing a 50 percent decline in occupancy and 33 percent decline in ADR over fiscal year 2020.

Hotelivate, in its March report, forecasted that occupancy levels would reach pre-pandemic levels by fiscal year 2024, while pre-Covid ADRs might be achieved by fiscal year 2025.

However, the dynamic is expected to change given the recent surge in Covid-19 cases since last month. Skift reached out to  to get his insights on the impact of the second wave.

Achin Khanna, managing partner at Hotelivate, said: “As for April 2021 performance — it has been significantly lower than what we had expected even just last month. Our report forecasts a 52.7 percent nationwide occupancy for fiscal year 2022. Given the magnitude of this second wave, we expect Q1 to be severely impacted, with Q2 continuing to reel under pressure. However, the second half of the fiscal year is still being assumed to show signs of recovery and bounce back. We also at least expect some inbound travel in the winter months.

“We had projected nationwide ADR to be a little over Rs5,000 (USD70) for fiscal year 2022. That too may not happen now. Expect that to be in the 4,700 (USD66) range”, Khanna added on the daily rate levels.

Comments from industry experts and ICRA, a leading credit rating firm, suggest a similar recovery path for India’s hotel industry.

The negative impact of the second wave is bound to last until at least the first quarter of fiscal year 2022, with occupancy levels not recovering until the end of 2023, and ADR by 2024.

However, the current situation is evolving and remains uncertain. The hotel industry’s recovery depends on the fall in the number of Covid-19 cases, the pace at which vaccines are administered to the masses in India and other relevant macroeconomic factors influencing the overall consumer sentiment. Hence, recovery timelines might witness a revision in the coming months.


The hotel industry suffered losses of  Rs. 1.25trillion ($18 billion USD), and around 50 million people lost their jobs across the sector owing to the pandemic, according to the Hotel Association of India,.

India’s hotel industry is a highly leveraged industry. An industry source said he is anticipating that 10-20 percent of grade A assets will be up for sale by the end of 2021 as the industry will be forced to de-lever.

With no fiscal or monetary support from the government, hotels have started focussing on attracting leisure travelers in innovative ways, adding ancillary revenue sources and striking strategic partnerships with hospitals.

In December, when the Covid-19 case numbers started falling, five-star hotels in Mumbai, like St Regis and Marriott, started offering slashed staycation rates to attract leisure travelers and special work from hotel rates to the local business professionals. Guests were also offered activities like zumba workshops and pizza-making sessions to enhance engagement and hence ancillary revenues.

Indian Hotels Company Limited (IHCL) has offered over 1,400 rooms across its hotels in the country to partner with hospitals for quarantine centers during the second wave. Lemon Tree, a mid-scale hotel chain in India, and OYO through its OYOCare program have also tied up with hospitals, several government authorities and private sector companies to provide self-isolation and quarantine centers for health care professionals, frontline workers and offer a safe stay for relatives of Covid-19 positive patients near hospitals across cities.

Roseate House in New Delhi, started an initiative called “Care By Roseate,” where the hotel provides a touchless dining experience where guests can see food being prepared live in the kitchen. In addition, Roseate Hotels have partnered with Launderette to offer guests a contactless 24 hour laundry delivery service.


Only special international flights for repatriation purposes were allowed during the first wave. The government started to ease international traveling as case numbers started declining last year by signing Air Bubble agreements with several countries.

In April, many countries announced a total ban or negative travel advice on flights from India, given the exponential increase in the number of Covid-19 cases.

The Indian government has restricted all scheduled international commercial passenger flight services to and from India until May 31.

While during the first wave the sector witnessed complete closure of domestic operations for about two months, at present airlines are allowed to continue domestic flights  during the second wave.

However, most states have imposed varying degrees of restrictions that started in April. While a few states have imposed a complete lockdown with only essential services allowed, a majority of states have imposed restrictions on the movement of people by implementing night curfews and weekend lockdowns.

For example, Maharashtra and Delhi, the biggest contributors to the number of Covid cases in the country, have implemented complete lockdown while states like Uttar Pradesh and Rajasthan have implemented only weekend lockdown and night curfews.

As part of the restrictions imposed, State governments have mandated negative Covid-19 test reports for travel and home quarantine requirements at domestic airports.

The reintroduction of travel restrictions as a result of the surge in infection numbers along with the current state of medical infrastructure in India has tempered consumers’ willingness to travel.

ICRA forecasted that Indian airlines will post net losses of Rs 210 billion ($3 billion USD) fiscal year 2021, as a result of the travel restrictions and impact on passenger traffic due to the pandemic.

In addition, the debt  level  of the industry will increase to Rs 500 billion ($7 billion USD) over fiscal year 2021-22 and it will require additional funding of Rs 370 billion ($5 billion USD) over fiscal year 2021-2023.


Like hotels, airlines were also on the path of recovery in the early months of 2021. A recent Morgan Stanley research report suggests that air traffic recovery was swift when travel restrictions were eased, and daily domestic passenger numbers moved from 24 percent of pre-Covid levels in July-September 2020 to 71 percent of pre-Covid levels in February.

The onset of the second wave has completely wiped out these gains. The daily passenger demand by the last week of March already dropped by 13 percent to around 246,600 passengers versus the last week of February, according to Motilal Oswal, a leading financial services firm in India.

By mid-April, daily airline passengers dipped to 162,000 per day, which is 41 percent of pre-Covid demand and 43 percent lower than February demand.

This number further fell to 126,000, 56 percent lower than February demand, by the end of April. Overall, April’s domestic air passenger traffic growth is likely to contract by 29 percent compared to March as reported by ICRA.

Credit rating agency, CRISIL forecasts net losses of Rs 100 billion ($1.4 billion USD) in fiscal year 2022 owing to the slowdown.


With the swift domestic recovery before the new wave, industry leaders were predicting a quick path to full recovery.

However, in a report released on  April 26, taking into account the impact of the second wave, Morgan Stanley Research estimates that domestic air traffic would surpass pre-pandemic levels only by fiscal year 2024.

On the other hand, ICRA in its statement, released on April 25, mentioned that it expects domestic air traffic to reach pre-Covid levels by fiscal year 2023 and international traffic to hit pre-Covid normalcy by fiscal year 2024.

The report states that international traffic growth will remain sluggish in the wake of new restrictions on travel to and from India in a bid to contain the spread of the virus.

Revival in international travel remains a question mark as scheduled international operations are yet to start. International flights are expected to continue operating under bubble arrangements rather than bilateral air services agreements for the foreseeable future.

Recovery of international traffic is still contingent on the situation in other countries. For India, only 16 percent of international inbound and outbound passengers are from the U.S. and Europe, while the majority are from developing nations, where achieving a substantial vaccination level may take some more time than developed nations, further delaying international demand recovery in India.

Overall, based on market reports, domestic air traffic levels will surpass the pre-pandemic levels after fiscal year 2023, while international air traffic will recover at a slow pace and reach pre-pandemic levels after fiscal 2024.


Before the second wave hit India, aviation experts were hopeful about the sector. Many airlines had even rolled back salary cuts of employees due to a steady recovery over the last few months.

Vinod Kannan, chief commercial officer for Air Vistara, said recently: “We saw growth through January and February and we were looking at going back to pre-Covid numbers this summer, but it may not materialize because of the second wave.”

With no direct government support and extra pressure of the government imposed floors and caps on fare levels to curb fare surges, airlines were surviving by playing the volume game with emphasis on priority add-on services like expedited baggage and check-in services.

To generate cash to keep afloat amidst rising cancellations and a sharp plunge in bookings, airlines are trying to attain liquidity by providing flexibility to the customer to change future bookings at zero cost.

Airlines are also coming up with new ways to make a bit of extra money while encouraging people back on plane. For example, SpiceJet, is offering coronavirus screening to passengers at one-third of the current market rate.

IndiGo Airlines launched the 6E double seat and 6E triple seat schemes, which would allow a passenger to book two seats/an entire row for oneself as an additional safety measure amid the coronavirus pandemic.

In order to build passenger confidence in air travel, Vistara introduced a slew of tech-enabled processes to minimize physical contact throughout the passenger’s journey. The airline heavily invested in implementing scan and fly, self-tagging, self-baggage drop and self-boarding services during the pandemic.

Airlines in India are also partnering with the government to transport vaccines and oxygen cylinders across the length and breadth of the country to boost cargo revenues as passenger tanks amid the second wave.


Travel demand showed an uptick towards the end of the first wave with domestic passenger traffic and hotel occupancy levels reviving. Onset of the second wave has slowed the path to full recovery of the sector. With the airline and hotel industry being highly leveraged, it will be interesting to see how the industries maneuver through the uncertainties, evolve and shape up to capitalize on the pent-up demand when the second wave fades away.


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Tags: air traffic, coronavirus recovery, hotels, india, lockdown, occupancy, recovery, travel ban, travel recovery

Photo credit: An underground station Issy Bailey / Unsplash

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