Hotel occupancy in Delhi, Mumbai, Bengaluru bouncing back fast: Marriott

Marriott, the world’s largest international hotel operator, runs 129 hotels in India with over 27,000 keys on track to open at least a half dozen more this year. Rajeev Menon, a member of the continent’s senior leadership team oversees over 410 operating hotels and resorts under 21 unique brands as President for Marriott International Asia Pacific (excluding China). Menon talked to Fortune India about how the industry fared through the downturn & pandemic and when will rates pick up and the lessons learnt along the way.

Edited Excerpts:

How has India’s hospitality industry performed in the last two years?

Rajeev Menon: Asia was the first to go into crisis. And our world of Asia Pacific minus China has been the last to come out of the crisis. Most countries in Asia have kept borders closed. For the past few years, there have been heavy restrictions on travel, particularly quarantine measures. In the last 60 to 90 days, many countries have eased restrictions and are opening borders. Many are reducing or completely removing quarantine measures.

So we are seeing a strong bounce back in demand across Asia. The competition is between countries; based on restrictions. Those dropping curbs see stronger pickup versus those with mild restrictions. And we've learnt a lot from the West, the Middle East, the US and Europe, which are broadly open for business, or leisure travel. Asia is seeing a decent bounce back, especially India.

What is your prognosis for tourism in India vis-a-vis other markets in Asia?

Rajeev Menon: India, on a like to like basis, will recover 100% to the 2019-levels but maybe not for a full year because we lost the first quarter of 2022 due to the Omicron wave. But by the end of this year, on a like to like basis, we expect to exceed April 2019 numbers. Reservation is coming back strongly, driven by leisure and corporate travel. Pharma and automobile manufacturers are coming back in a big way.

Does that include foreign inbound and MICE (meetings, incentives, conferences, and exhibitions) business?

Rajeev Menon: Most travel right now is domestic, but international is also bouncing back. The domestic recovery is between 40%-60% of the 2019 levels, and international recovery varies from 35-40% to 55-60%, depending on markets.

What was one key challenge for everyone in the business?

Rajeev Menon: Imagine if you were running at about 75 -80% occupancy, and then you dip to 25-30%. You have to right-size the business, then suddenly your business starts to come back to 75%-80%, or even say 60%-65%. So, there's a lot of work we need to do. At Marriott, we are bringing a lot of our alumni back.

How has that impacted room rates already lagging in key tourism markets?

Rajeev Menon: Resorts across the board have come back very strongly. They are performing at rates well north of those in 2019, and discounting has really been in city hotels. As we transition out of the pandemic, the secondary-tertiary markets are bouncing back. Rates in the secondary-tertiary markets like Indores of the world are getting back to 2019 or in some cases exceeding.

City occupancies in Delhi, Mumbai, Bengaluru, Hyderabad or Delhi and Mumbai are bouncing back faster because international and corporate travel is bouncing back. Hyderabad and Bangaluru are taking a little longer because all the IT and IT-related services corporate travel has not kicked in full gear, especially from an international perspective.

By the fourth quarter of this year, across-the-board rates will come back to 2019 numbers. Rates for us are coming back a lot stronger than we'd hoped but resorts are still leading. Look at Goa, look at Mussoorie or Rajasthan –– the rates are well north of 2019 numbers.

What are your future development projects in India?

Rajeev Menon: India has about 60 hotels in the pipeline in addition to as many as 129 we already have here. We are scheduled to open six or maybe seven more this year. We will convert the Leela Goa to a St Regis by October, so that's going to be fairly high profile.