How Holi and Diwali impact India hotel performance

Commonly referred to as the festivals of light and colour, respectively, do Diwali and Holi bring a ray or splash of either to India’s hotels? A 2015 Hotels.com study revealed that locals are increasingly traveling abroad during Diwali to celebrate with friends and families, while overseas tourists are drawn towards the light of these famous festivities.

This poses the interesting question of Diwali’s effect—does the relationship between inbound and outbound tourists spell success or concern for hoteliers? And with local traditions at the heart of Holi’s celebrations, how does this event affect hotel performance in comparison?

Festival performance compared with the rest of the month

When compared with the rest of the month, there is evidence of lower revenue per available room (RevPAR) on festival dates in a number of India’s key markets, especially during Diwali. While hotel average daily rate (ADR) tends to increase or decrease slightly for the event periods, significantly lower occupancy levels ensure that RevPAR lags behind the monthly average. However, there are exceptions to this rule and some markets are more affected than others.

During each of the festivals from 2015-19, Kolkata, New Delhi and Mumbai reported below-average RevPAR when compared with the rest of the respective festival months. This trend could be attributed to the general lull in business demand that is a significant performance driver for each market throughout the year. Jaipur is a curious case, as Diwali dates have failed to keep pace with monthly average performance, while Holi dates produced premiums in every year since 2016. Fittingly, the Pink City is a popular destination for tourists looking to celebrate the festival of colour in India, which is likely a factor in its Holi hotel boost.

While both events brought RevPAR below the monthly average in Bengaluru, the decline was notably more significant during Diwali. The festival of light produced levels more than 50% lower than the rest of the festival month in each year from 2015-19, while Holi only reported a worse than 20% drop once across that period. This could be a reflection of Holi’s limited impact in the south creating a business as usual environment, while Diwali is celebrated nationwide.

Goa, the exception to the rule

The same study that revealed a penchant for overseas Diwali travel confirmed a preference for Goa among domestic tourists. A 0.1% decrease in 2019 aside, the coastal market has produced Holi festival premiums in each year since 2015—the key difference with other markets being its ability to maintain occupancy levels. With celebrations taking place over two weeks, colourful parades filling the event schedule and idyllic beach settings, it is easy to understand Goa’s position as the destination of choice.

Unlike the other markets analysed here, Goa also reported Diwali premiums in three of the past five years. This could be a reflection of its different approach to the festivities, including the construction and burning of effigies of the demon Narkasur and seaside firework displays.

Curious about how the political landscape influences hotel performance? Our 2019 India Election Impact on Hotel Performance article helps to answer this question. 

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