Indian real estate consultancy firm CBRE South Asia Pvt. Ltd. announced the findings of its first-ever hospitality report, titled ‘Indian Hospitality Sector: On a Comeback Trail’. The hospitality industry’s growth and occupancy trends in India are highlighted in the research.
According to the report, the industry’s outlook has brightened due to a robust vaccination campaign, the reopening of borders, the lifting of travel restrictions, and sustained economic development that has set the hospitality industry on a recovery path. Over the next two to five years, more than USD 2.3 billion in investments are expected, with more than USD 0.4 billion projected between 2020 and 2023.
The report also states that 12,000 rooms will probably be added in 2023 and that by 2025, the number of rooms will increase at a CAGR of 3.3%. According to forecasts, demand recovery will continue to outpace supply growth, which is good news for the key performance indicators of the hotel industry. Instead of being concentrated in a few locations or marketplaces, demand is projected to be more evenly distributed and widespread over the coming years. For the upcoming several years, CBRE expects this consistent supply growth to continue.
One of the major forces behind the Indian hospitality sector’s expansion in recent years has been an increase in investor interest. Additionally, Indian companies actively compete in this market by investing in or expanding their presence. The international presence and acceptance of Indian chains have developed these brands’ visibility and service standards.
All industry KPIs, including occupancy rate, average daily rate (ADR), average rental revenue per occupied room at a given time, revenue per available room (RevPAR), and revenue generated by one room, are anticipated to surpass pre-pandemic levels this year, according to the report. In India, RevPAR increased by 94% in 2022 compared to 2021. The report states that the hotel sector in India experienced more visitors and a consistent increase in revenue in 2022, showing a smooth recovery from the pandemic.
New demand drivers spurring growth in the sector Renewed focus on domestic tourism
Domestic visitor spending across India in 2021 stood at about USD 151 billion, a sharp rise from the previous year, which was hit by the onset of the COVID-19 pandemic and subsequent lockdowns. India also ranked fourth worldwide in domestic travel and tourism expenditure that year. Infrastructure initiatives such as the launch of indigenous semi-high-speed trains, Vande Bharat Express, have also given a fillip to domestic tourism.
The growing popularity of combining business with leisure travel (bleisure) post-COVID-19
Often, executives now combine business with leisure trips – giving rise to ‘bleisure’ travel and ‘workcations’ As a result, business hotels are expanding their array of services by including tour packages and pre-planned itineraries for the partners/families of the business traveller as well as wellness breaks in the form of jungle safaris and stargazing setups Further, homestays, which leisure travellers have historically favoured, are offering business services such as workspace furniture, Wi-Fi connectivity and play areas for children
Changing the face of religious tourism to alter the type of hospitality demand
Religious tourism has always been a steady income generator for this sector. Leading chains have already started to tap into the changing aspirations of religious tourists, most of who now seek clean, hygienic, and family-friendly accommodations for which they are ready to pay a premium.
Continued popularity of India as a medical tourist destination
Some factors driving the country’s medical tourism are its state-of-the-art healthcare infrastructure, lower waiting time, and capability to deliver world-class care at 30-35 percent lower cost than other countries.