The Indian hospitality sector is experiencing significant growth, with a report indicating that revenue per available room is projected to increase by around 8-9 per cent in FY25.
Strong͏͏ Performance͏͏ in͏͏ FY24:
According͏͏ to͏͏ CareEdge,͏͏ the͏͏ industry’s͏͏ revenue͏͏ per͏͏ available͏͏ room͏͏ grew͏͏ strongly͏͏ by͏͏ 14͏͏ per͏͏ cent͏͏ in͏͏ fiscal͏͏ 2024.
Future͏͏ Growth͏͏ Outlook:
For͏͏ FY25,͏͏ a͏͏ growth͏͏ of͏͏ 8-9͏͏ per͏͏ cent͏͏ is͏͏ anticipated,͏͏ building͏͏ on͏͏ the͏͏ strong͏͏ base͏͏ established͏͏ in͏͏ FY24.
CareEdge͏͏ anticipates͏͏ the͏͏ industry͏͏ will͏͏ report͏͏ average͏͏ revenue͏͏ per͏͏ available͏͏ room͏͏ growth͏͏ of͏͏ INR͏͏ 5,200-͏͏ INR͏͏ 5,400,͏͏ following͏͏ a͏͏ strong͏͏ base͏͏ in͏͏ FY24,͏͏ with͏͏ an͏͏ additional͏͏ increase͏͏ of͏͏ 5-6͏͏ per͏͏ cent͏͏ projected͏͏ for͏͏ FY26.
Continue͏͏ Exploring:͏͏ Hospitality sector to͏͏ see͏͏ 29%͏͏ investment͏͏ growth,͏͏ reaching͏͏ $436͏͏ Mn͏͏ this͏͏ year:͏͏ JLL
Expansion͏͏ of͏͏ Branded͏͏ Hotel Rooms:
India͏͏ currently͏͏ has͏͏ approximately͏͏ 166,000͏͏ branded͏͏ hotel͏͏ rooms.͏͏ Over͏͏ the͏͏ next͏͏ five͏͏ years,͏͏ the͏͏ industry͏͏ is͏͏ projected͏͏ to͏͏ add͏͏ around͏͏ 55,000͏͏ rooms,͏͏ with͏͏ supply͏͏ expected͏͏ to͏͏ grow͏͏ at͏͏ a͏͏ compound͏͏ annual͏͏ growth͏͏ rate͏͏ (CAGR)͏͏ of͏͏ 4.5-5.5͏͏ per͏͏ cent͏͏ during͏͏ this͏͏ period.
The͏͏ hospitality͏͏ sector͏͏ is͏͏ currently͏͏ undergoing͏͏ an͏͏ upcycle,͏͏ fueled͏͏ by͏͏ favourable͏͏ demographics,͏͏ strong͏͏ domestic͏͏ demand—with͏͏ supply͏͏ lagging͏͏ behind͏͏ demand͏͏ growth—increased͏͏ investments,͏͏ and͏͏ ongoing͏͏ enhancements͏͏ in͏͏ infrastructure͏͏ and͏͏ connectivity.
“Due͏͏ to͏͏ the͏͏ boost͏͏ in͏͏ domestic͏͏ consumption͏͏ and͏͏ steady͏͏ GDP͏͏ growth,͏͏ companies͏͏ in͏͏ the͏͏ industry͏͏ are͏͏ experiencing͏͏ strong͏͏ capacity͏͏ utilisation,”͏͏ noted͏͏ Ravleen͏͏ Sethi,͏͏ Director͏͏ at͏͏ CareEdge͏͏ Ratings.
With͏͏ travel͏͏ momentum͏͏ expected͏͏ to͏͏ persist͏͏ and͏͏ anticipated͏͏ demand͏͏ likely͏͏ to͏͏ surpass͏͏ current͏͏ supply͏͏ in͏͏ the͏͏ medium͏͏ term,͏͏ FY25͏͏ is͏͏ projected͏͏ to͏͏ see͏͏ an͏͏ increase͏͏ in͏͏ revenue͏͏ per͏͏ available͏͏ room,͏͏ contributing͏͏ to͏͏ an͏͏ overall͏͏ improvement͏͏ in͏͏ the͏͏ credit͏͏ profiles͏͏ of͏͏ industry͏͏ players,͏͏ Sethi͏͏ added.
The͏͏ segment͏͏ mix͏͏ is͏͏ transitioning͏͏ towards͏͏ upper͏͏ midscale͏͏ and͏͏ midscale͏͏ economy,͏͏ with͏͏ over͏͏ 60͏͏ per͏͏ cent͏͏ of͏͏ new͏͏ supply͏͏ anticipated͏͏ to͏͏ be͏͏ introduced͏͏ in͏͏ these͏͏ categories.
This͏͏ growth͏͏ is͏͏ propelled͏͏ by͏͏ various͏͏ factors,͏͏ including͏͏ a͏͏ rising͏͏ middle͏͏ class,͏͏ a͏͏ notable͏͏ increase͏͏ in͏͏ business͏͏ travel—particularly͏͏ from͏͏ small͏͏ and͏͏ medium-sized͏͏ enterprises—and͏͏ the͏͏ expanding͏͏ range͏͏ of͏͏ business͏͏ activities͏͏ in͏͏ tier͏͏ 2,͏͏ 3,͏͏ and͏͏ 4͏͏ cities.
The͏͏ report͏͏ indicates͏͏ that͏͏ over͏͏ 70͏͏ per͏͏ cent͏͏ of͏͏ the͏͏ proposed͏͏ new͏͏ supply͏͏ is͏͏ focused͏͏ on͏͏ tier͏͏ 2͏͏ and͏͏ 3͏͏ cities,͏͏ followed͏͏ by͏͏ tier͏͏ 1,͏͏ as͏͏ hotel͏͏ owners͏͏ and͏͏ operators͏͏ seek͏͏ to͏͏ tap͏͏ into͏͏ unmet͏͏ demand͏͏ in͏͏ emerging͏͏ and͏͏ underserved͏͏ markets.
