Shwetank Singh, Vice-President, Development & Asset Management, InterGlobe Hotels pens a special column for Travel News Digest readers.

Uncertainty is the order of the day. Everyone wishes they had a crystal ball. The only thing that people are sure of in the current pandemic is the economic and humanitarian havoc caused at a scale and speed that couldn’t have been imagined. Hyperconnectivity of the world and an inextricable link of people and economies have ensured that both the virus and the hoopla around it have travelled faster than ever before.

All this meant social distancing (a word hardly ever used before) making its way into every vocabulary. Lockdowns followed and people worried about their health and money brought consumption down to bare essentials. “It’s amazing how the world economy is collapsing because people are only consuming what they need” screamed a social media post thus summarizing the state of affairs in one short sentence.

Various industries have been impacted at different levels with travel and hospitality easily counting amongst the worst affected ones. Rightly so, each one of them hunkered down and went into cash conservation mode for ensuring survival. Frantic discussions on various online platforms followed and the government was inundated with requests from direct salary transfers to loan moratoriums. They had to pick their priorities as the money in the pot was limited. Their focus remained on saving lives (immediate concern) followed by saving businesses.

Today, we know more about what we are dealing with. We are aware of mortality rates, hospitalization rates, recovery rates and can make an educated guess about the timing of the vaccine. From a demand standpoint, the worst is clearly behind us and green shoots are visible across all sectors. Hence, it’s time now to plan ahead.

As the operators grapple with the key question of how to resurrect demand and improve consumer confidence for an investor the elephant in the room is around future investment decisions. The answer cannot be one that fits all as the projects/investments may be at different stages of their respective life cycles.

Here is my advice as an asset manager to you: If You Are a ….

  • Fund or Institutional owner still deciding on the best way to make future investments – The industry is under stress which will get worse for the poorly capitalized owners as moratoriums are done away with and restructuring will only be available to the highly compliant. Hence, brownfield opportunities at stressed valuations will be available thereby offering a fantastic opportunity to buy cheap and exit at a high in 4-5 years


  • Greenfield developer with the land acquisition under process – The land prices in India have been artificially high for a very long time. It is time for a correction and the current crisis will accelerate this. However, owners are going to hold on for as long as possible. My advice, therefore, is to wait for 6-9 months before going back to the market to make an offer. This will ensure that the transaction is done close to the lowest price point


  • Hotel developer with your project in the design phase – If in the money, the project should be continued as usual. Slowing down and stopping come with steep costs both in terms of time and money. The 36-48 months that it takes for a project to complete should be enough time for the demand to be on the previously projected path thereby not affecting the returns.


  • Hotel owner with your project nearing completion (3-6 months left) – This is a tricky place to be in and everyone is left guessing. Arguments can be made in favour of opening on time as well as delaying the opening as demand forecasting is difficult. My recommendation would be to make a decision based on category and location of the property. It is now emerging that hotels in ‘drive to’ leisure destinations are the first ones benefitting from pent up demand. Economy/mid-market (cash strapped companies are going to trade down) and luxury (holidays/work travel by HNI’s) are in city-centre locations should follow next. The upscale and upper-upscale will be the last one to see a significant pick up as they are largely driven by work-related/functional tourism (leisure travel with a purpose other than a holiday) travel which is going to return quite slowly. Hence a decision can be made on these factors.


  • Independent operating hotel owner – The customers today are increasingly concerned about their Health and Safety. As a result, they are going to choose a branded hotel with a better-perceived sense of health and hygiene over an independent which can be highly unpredictable, even at a premium pricing. Hence it would be prudent for an independent hotel owner to consider signing up with a renowned operator (either as a management contract or franchise). They may sign up on shorter time period contracts, implementable exit clauses and tight performance measures (with in-built cure) to protect their interests.

These are difficult times indeed for the industry but there is light at the end of the dark tunnel even though it may not be visible right away. The same hyper-connectivity of the world that caused the rapid damage acting as a bane will soon act as a boon in bouncing back the demand. Of this, I have no doubt!