Villa companies set to greet a happy holiday season on uptick in Christmas, New Year travel

“It’s had a bit of a positive impact. Because both Christmas and New Year fall on a weekday, it’s actually become a longer stay for us. People are staying on from Saturday to Tuesday or Sunday to Wednesday night which, unlike other years when the average stay would be for about two nights on these dates, we’ve noticed people have increased their itinerary by one day. “Occupancies at this time are at the year’s best,” said Devendra Parulekar, co-founder of SaffronStays.

The mid-week holidays could help villa companies recover from a lean period in October.

Ritwik Khare, the founder and CEO of Elivaas, a vacation rental company, said occupancy in October was low due to the festive season but numbers in November were strong, mainly due to pent-up demand from travellers based in Gujarat, who tend to holiday all over the country after Diwali. Elivaas has 43 of its 79 luxury villas in Goa.

“December is looking good in terms of demand. But there has been a huge growth in the number of villas available for rent in Goa that is suppressing business a bit as supply has grown as much as 60-70% in the last year or so. This is also leading to some reduction in nightly rates,” he said.

SaffronStays, a player in the villa business that started only in early 2024, has its first full season in Goa. The company added about 20 villa and home listings in the state and so far, in terms of early demand, there are good booking numbers from groups of friends and families.

For StayVista, most popular locations and homes are generally sold out during Christmas and New Year and this time, it is no different. For locations such as Goa, where homestays and villas are becoming increasingly popular, the company hopes to “activate” new villa supply so that it is ready to capitalise on the lucrative time of the season from 21 December to January 5.

Hill stations

Generally, for most businesses, rates are 50-60% higher than normal weekend holiday rates.

“Over last year to this year, there has been a nominal increment of 8% in terms of the average rates charged,” said Amit Damani, co-founder of StayVista

The same level of growth may not be there for villa rental companies in hill stations, although the snow could attract travellers. This year, demand is soft for hill station destinations in north India because many travellers tend to finalise their trips as close to the planned holiday dates as possible due to erratic weather.

“We expect that by 18-19 December, there will be a big pick-up in demand for the hills as people will want to hit the road for their New Year plans. That’s when travellers will expect a more certain experience and won’t want to be stranded,” said Parulekar.

For hill stations in Maharashtra and the south, though, it will be business as usual.

“It’s just about the timing. There will be ebbs and flows in terms of seasonality in these regions. We’ve started to see a spike in inquiries coming in for the hilly regions in the north based on the snowfall,” added Damani.

Changing travel patterns

But with supply surging in locations such as Goa, and weather uncertainty looming, the festive rush may not be without its challenges. With the resumption of work from office in most companies, many people have changed their holidaying patterns.

Mint reported previously that the trend in villa holiday bookings has evolved considerably since the pandemic, with stays becoming shorter. For SaffronStays, which manages 325 holiday homes across India, and for StayVista, occupancy rates have declined to about 9-10 nights now from an average of 15-17 nights per month during the pandemic.

There are two significant reasons for this: the return-to-office trend and the introduction of a large number of high-quality villas into the market.

The growth in villa supply, particularly in popular destinations like Goa, where each district now has 40-50 villas — many of which are of very high quality — has led to a rise in average room rates (ARRs). Smaller villas, typically with two or three bedrooms, tend to have higher occupancy during weekdays, while larger properties that are suited for big families experience lower occupancy.

Operators like SaffronStays said revenue has increased by 45-50% over the past four years by focusing on premium properties and cutting down their supply by 30%.

“We are also remaining cautious about not overpricing our inventory. Our rate will be 5-7% higher than last year and not astronomically higher,” said Parulekar of SaffronStays.

“A large number of villas started getting constructed in 2022. All of that inventory is now starting to come to play in the last two-three months. There is a massive surge in supply. As per my estimation, supply must be up by 50-70% in locations like Goa,” said Khare of Elivaas.

In the organised luxury villa market, there would be about 1,500 holiday homes. The unorganised market would be about 5-7 times larger than the organised one.