Market Trends of Hospitality Industry In India
Increase in the Number of Hotel Projects is Driving the Market
India's hospitality sector has experienced a notable boost due to the surge in hotel projects. The industry saw an increase in occupancy rates ranging from 60-67% compared to the previous year. Despite this, average rates (ARR) have fully recovered, showing a significant rise of 37-39 % from the prior year. Consequently, Revenue per Available Room (RevPAR) has seen a remarkable growth of 89-91% in the current year compared to the previous year.
Driven by a robust rebound in demand, hotel companies have expedited their expansion strategies this year, leading to a more than 35% increase in brand signings by keys compared to the previous year. According to the TopHotelProjects construction database, India is set to welcome 481 projects with 57,879 rooms. For example, IHCL aims to incorporate 8,700 rooms, while LTH plans to add 2,600 rooms by FY26. Additionally, Marriott International anticipates opening 12 hotels in India this year, contributing around 1,200 rooms to the hotel chain's current portfolio in the country. Radisson Hotel Group has also extended its footprint in India by signing 21 hotels across nine brand portfolios last year. Hoteliers have been expanding their presence in leisure destinations and Tier-3 and -4 cities, acknowledging the vast untapped potential in these regions.
Moreover, during India's G20 presidency until November 2023, over 200 G20 meetings were held in 55 different locations nationwide. This significantly benefited the Indian hotel sector, as there was a notable increase in demand for hotels in the cities hosting these meetings.
Government Initiatives to Attract More Tourism and Rise in Tourism is Driving the Market
The Indian hospitality industry is primarily fueled by strong domestic demand and the Indian government's renewed focus on expanding the tourism sector. Recognizing the sector's potential as a major employment generator, the government actively promotes it through public-private partnerships and a mission-oriented approach involving all stakeholders. The government plans to revive 50 additional airports, heliports, and water aerodromes to enhance regional air connectivity. It also aims to develop fifty tourism destinations as comprehensive packages for domestic and international tourists. The government's continued emphasis on infrastructure development, including significant railways and last-mile connectivity investments, is expected to benefit the sector.
Moreover, the recent reduction in personal income tax will boost disposable income, thereby driving demand in the tourism and hospitality sectors. The Ministry of Tourism has undertaken a revitalization of its Swadesh Darshan Scheme as Swadesh Darshan 2.0 (SD2.0) and introduced the National Integrated Database of Hospitality Industry (NIDHI) to facilitate digitalization and ease of doing business in the hospitality and tourism sector. This initiative, now upgraded as NIDHI+, aims to include not only Accommodation Units but also Travel Agents, Tour Operators, Tourist Transport Operators, Food & Beverage Units, Online Travel Aggregators, Convention Centres, and Tourist Facilitators.
The top states in terms of domestic visits in India are Uttar Pradesh, Tamil Nadu, Andhra Pradesh, Karnataka, and Gujarat. India witnessed a promising recovery in the tourism sector, with a notable rise in Foreign Tourist Arrivals (FTAs) from various countries.
