Marriott to go slow on India expansion plans amid coronavirus outbreak

Faces combined impact of economic slowdown and COVID crisis

Marriott International’s expansion plans in India could face delays because of the overall economic slowdown and disruption in construction-related supplies from China after the coronavirus (COVID-19) outbreak, a top official of the firm said. 

The world’s biggest hotel operator was planning to add 20 hotels to its existing portfolio of 120. 

The owner of Le Méridien, Fairfield and 14 other brands opened seven hotels before the outbreak. The fate of the remaining ones will depend on their location, the progress of construction and the overall demand scenario, said Neeraj Govil, senior vice-president — South Asia, Marriott International.

“There will be a slowdown in openings now as it’s about two things — the prevalent demand and economic conditions. Would I want to open a hotel when there is no demand or do I push it to when demand revives? Secondly, there are delays in procuring stuff from places like China,” Govil told Business Standard.

From furniture and fixtures to glasses and bathroom fittings, hotel and hotel developers source quite a few items from China. 

Marriott globally and in India has an asset light, management contract model.  

Additionally, Marriott like other hotel chains has seen a drop in occupancy across its properties and brands because of visa restrictions and rising number of COVID-19 cases in India. “Bookings for March, April and May have reduced with lots of cancellations,” said Govil, adding that the hotel chain has waived cancellation fee for its guests till March 31.   

Compared to its business hotels, Marriott’s properties at leisure destinations like Goa are relatively less affected, but they too have been impacted. 

“Typically, in March our properties in Goa would see 90 per cent occupancy. This has fallen by 40-50 per cent this year,” said Govil.    

Marriott is reaching out to guests to inform them about the hygiene and cleanliness measures the hotel has put in place. 

“This happened with Marriott in China, so we got an early sense of what could happen. We had information on how hotels are dealing with it there,” said Govil.

He added that company’s hotels in India had a good January and a good first half of February till COVID-19’s spread to South Korea and Japan, which are big source markets for hotels in India. 

The recovery in India and non-China markets will kick in with a lag of two to three months, much like the delayed spread of the virus, believes Govil.

The luxury hotels, given their high dependence on foreign travelers, will feel a greater impact of the epidemic, according to Jaideep Dang, managing director at hotels and hospitality Group at JLL. 

“A large chunk of their business will potentially be impacted this season,” said Dang. These 

hotels will also see a decline in room rates in both the first and second quarters. 

“A full rebound may take time. Assessing the impact is a challenging proposition,” he said.