India-Pakistan Conflict Leads to Widespread Cancellations in India's Hotel Sector
Monday, 12 May 2025, 11:18 IST
• 50% booking cancellations, 40% revenue drop in May.
• IHCL and Ventive face major EBIT losses.
• Corporate travel and MICE events disrupted.
The hospitality sector in India is suffering a sharp decline as a result of the current tensions between India and Pakistan, with big hotel chains witnessing a major decline in business. Sources have confirmed that during the last week, over 50% of bookings in cities such as Mumbai, Delhi, Bangalore, and Chennai have been cancelled. Travel warnings from various companies have only added to the problem, with hotels struggling with cancellations and a shortage of new room bookings.
Due to this disruption, industry sources are estimating a 40% fall in business for May. Hospitality managers have said that the cancellations have resulted in a sharp decline in revenues, with some chains reporting substantial losses. International tourism is one of the major earning sources for large hotel chains, a report by HSBC Global states. For example, the Indian Hotels Company (IHCL), owner of the Taj hotels, derives close to 10% of its total revenue from inbound international tourism. Ventive Hospitality, the Indian ally of international hotel giants like Marriott International and Hilton Worldwide, also receives about 15% of its earnings from the segment.
The cost implications of this are very heavy. The Indian Hotels is reported by HSBC Global to lose approximately EBIT Rs 1-1.5 crore each day, whereas Ventive Hospitality stands to lose around Rs 50 lakh every day from a decrease in incoming international visitors alone. The plight of the sector has been further worsened by travel advisories made by multinational firms, including HDFC Bank, Axis Bank, and Tata Communications, advising against domestic travel. Multinational companies have also been scaling down their business coming into India, leading to a steep decline in the demand for hotel stays.
The crisis has resulted in a blanket of cancellations, not only for booking of rooms but also meetings and conferences. A five-star hotel in Chennai had 100 room bookings for an event cancelled towards the end of April. In Juhu, another five-star hotel in Mumbai lost up to Rs 1 crore in two days because of event cancellations. Business travel and MICE (conferences, exhibitions, incentives, and meetings) sectors are not escaping the sting of the present crisis either, as most businesses limit non-essential travel, encourage remote working, and reschedule events with employee safety top on their lists.
Mandeep S. Lamba, President and CEO of hospitality consultancy HVS ANAROCK, described the wider impact on the industry, stating, "Corporate travel and MICE are being significantly disrupted, as businesses have turned attention towards employee safety by restricting non-essential travel".
The travails of the hospitality industry were further exacerbated by the Board for Control of Cricket in India (BCCI) suspending the Indian Premier League (IPL). The IPL is a significant source of revenue for several luxury hotels, with more than 30 properties committed to accommodating teams, crew, and commentators over the two-and-a-half-month tournament. Luxury hotels such as Indian Hotels, Trident Oberoi, and ITC, which have agreements with the BCCI, are now threatened with cancellations because of the match suspension.
Suspension of the IPL followed after a match between Delhi Capitals and Punjab Kings in Dharamsala was postponed. Subsequently, the BCCI suspended the tournament for one week, further debilitating hotel industries that were counting on the event's extensive hospitality requirements.
As a reaction to the dipping business, hotels have started making efforts to safeguard their margins. It has been reported that several hotels conducted top-level meetings to plan on cost-saving initiatives. Several properties are now enforcing a hiring freeze, including putting off gig hiring, and making efforts to streamline heating, lighting, and power (HLP) expenses. Several hotels are even restructuring occupancy patterns by assigning bookings to particular floors to reduce energy usage.
With the hospitality sector having a rough ride to look forward to, the current geopolitical tensions between India and Pakistan are likely to continue to place pressure on businesses in the sector with no quick relief forthcoming.
• IHCL and Ventive face major EBIT losses.
• Corporate travel and MICE events disrupted.
The hospitality sector in India is suffering a sharp decline as a result of the current tensions between India and Pakistan, with big hotel chains witnessing a major decline in business. Sources have confirmed that during the last week, over 50% of bookings in cities such as Mumbai, Delhi, Bangalore, and Chennai have been cancelled. Travel warnings from various companies have only added to the problem, with hotels struggling with cancellations and a shortage of new room bookings.
Due to this disruption, industry sources are estimating a 40% fall in business for May. Hospitality managers have said that the cancellations have resulted in a sharp decline in revenues, with some chains reporting substantial losses. International tourism is one of the major earning sources for large hotel chains, a report by HSBC Global states. For example, the Indian Hotels Company (IHCL), owner of the Taj hotels, derives close to 10% of its total revenue from inbound international tourism. Ventive Hospitality, the Indian ally of international hotel giants like Marriott International and Hilton Worldwide, also receives about 15% of its earnings from the segment.
The cost implications of this are very heavy. The Indian Hotels is reported by HSBC Global to lose approximately EBIT Rs 1-1.5 crore each day, whereas Ventive Hospitality stands to lose around Rs 50 lakh every day from a decrease in incoming international visitors alone. The plight of the sector has been further worsened by travel advisories made by multinational firms, including HDFC Bank, Axis Bank, and Tata Communications, advising against domestic travel. Multinational companies have also been scaling down their business coming into India, leading to a steep decline in the demand for hotel stays.
The crisis has resulted in a blanket of cancellations, not only for booking of rooms but also meetings and conferences. A five-star hotel in Chennai had 100 room bookings for an event cancelled towards the end of April. In Juhu, another five-star hotel in Mumbai lost up to Rs 1 crore in two days because of event cancellations. Business travel and MICE (conferences, exhibitions, incentives, and meetings) sectors are not escaping the sting of the present crisis either, as most businesses limit non-essential travel, encourage remote working, and reschedule events with employee safety top on their lists.
Mandeep S. Lamba, President and CEO of hospitality consultancy HVS ANAROCK, described the wider impact on the industry, stating, "Corporate travel and MICE are being significantly disrupted, as businesses have turned attention towards employee safety by restricting non-essential travel".
The travails of the hospitality industry were further exacerbated by the Board for Control of Cricket in India (BCCI) suspending the Indian Premier League (IPL). The IPL is a significant source of revenue for several luxury hotels, with more than 30 properties committed to accommodating teams, crew, and commentators over the two-and-a-half-month tournament. Luxury hotels such as Indian Hotels, Trident Oberoi, and ITC, which have agreements with the BCCI, are now threatened with cancellations because of the match suspension.
Suspension of the IPL followed after a match between Delhi Capitals and Punjab Kings in Dharamsala was postponed. Subsequently, the BCCI suspended the tournament for one week, further debilitating hotel industries that were counting on the event's extensive hospitality requirements.
As a reaction to the dipping business, hotels have started making efforts to safeguard their margins. It has been reported that several hotels conducted top-level meetings to plan on cost-saving initiatives. Several properties are now enforcing a hiring freeze, including putting off gig hiring, and making efforts to streamline heating, lighting, and power (HLP) expenses. Several hotels are even restructuring occupancy patterns by assigning bookings to particular floors to reduce energy usage.
With the hospitality sector having a rough ride to look forward to, the current geopolitical tensions between India and Pakistan are likely to continue to place pressure on businesses in the sector with no quick relief forthcoming.
