With the pandemic blues behind us, domestic travel has been unleashed, and notable global events like India’s G20 Presidency and the men’s cricket World Cup have amplified the excitement in 2023. As the hospitality sector prepares to check into 2024, there is a prevailing sense of optimism, envisioning an enduring celebration to tap into the vast opportunities within an underserved market.
With the popping of champagne corks to welcome the new year, the hospitality industry reflects on its recent successes, witnessing unprecedented highs in occupancy and room tariffs not only in major metros but also in smaller cities and towns. However, amid the festive atmosphere, a sense of caution lingers as the industry acknowledges potential challenges. Long-term funding accessibility, high GST rates, talent acquisition, and the intricacies of business processes are identified as factors that could potentially cast a shadow on the ongoing celebration.
“In 2023, listed hotel companies reported a double-digit revenue growth enabled by domestic demand, recovery in foreign tourist arrivals, large global events, including India’s presidency of G20 and the sporting events like the cricket World Cup, among others,” Hotel Association of India (HAI) President Puneet Chhatwal said.
According to analysts’ projections, Chhatwal, who serves as the Managing Director and CEO of Indian Hotels Company Ltd (IHCL), reported a 14 percent increase in Revenue Per Available Room (RevPar) for the first half of the current fiscal year. He anticipates further growth, estimating a potential 15-20 percent expansion in the second half of FY24.
On the outlook for 2024, he said, “India’s underserved hospitality sector when compared to the major lodging markets presents a huge opportunity. Also, being amongst the largest employment generators, the sector will be a key pillar to drive sustainable economic growth across the country.”
Federation of Hotel & Restaurant Associations of India (FHRAI) President-elect, Pradeep Shetty said,”as we reflect on the year behind us, we look towards the New Year with a blend of hopes, expectations and an acknowledgement of challenges.”
The past year showcased the sector’s resilience in navigating through unprecedented challenges, particularly amid the revival of the travel trade, he said while also acknowledging that the G20 events contributed significantly to the growth of the Indian tourism sector, marking one of the most significant highlights of 2023.
Shetty, however, struck a cautious note that the road ahead will not necessarily be a cruise on a highway.
“Our expectations lie in addressing persistent challenges, notably the surge in online booking frauds, brand reputation issues due to misleading social media content, and the need for sustainable business practices,” he said.
Furthermore, Shetty highlighted that persistent concerns such as long-term funding accessibility, elevated GST rates, talent acquisition challenges, and intricate business processes remain focal points requiring careful consideration.
The issues notwithstanding, Fortune Hotels Managing Director Samir MC said, “as we step into 2024, and step ahead towards growing our footprint across new locations in the country, we anticipate consolidation and exploration, with a shift towards sustainable practices and a focus on untapped markets to cater to varied traveller segments.”
Further, he said, “we see massive potential in smaller towns and cities that present exciting opportunities.”
In 2023, Samir said, “we witnessed a remarkable resurgence in tourism, fuelled by domestic travel and the gradual return of international visitors. The industry’s evolution post-pandemic has set the tone for any eventualities that the future may bring. This positive momentum propels us forward, painting a future brimming with opportunities.”
The hospitality business indices moved substantially northward, way beyond the pre-Covid levels, he said and added, “this coming back to life inspires us to continue our journey ahead”.
Mahindra Holidays & Resorts India Ltd Managing Director and CEO Kavinder Singh said, “the current trend in travel highlights a clear inclination toward staycations, leisurely exploration, environmentally conscious journeys, weekend getaways, and, above all, a strong desire to spend quality time with loved ones.”
The commencement of 2023 marked a positive shift for the tourism and hospitality sector, bringing a welcome change from the challenges of the past two years. He added that air traffic crossed new milestones in daily numbers, with domestic reaching 4.63 lakhs and international surpassing 1 lakh passengers.
Bullish on the long term potential of the sector, Singh said, “in line with our strategic objective, we aim to double the room count from around 5,000 to 10,000 by FY30”.
“Currently, we have Rs 835 crore of capex underway for five greenfield, brownfield, and acquisition projects, comprising about 690 keys,” he noted.
In a similar vein, Eros Hotel, New Delhi General Manager Davinder Juj said the company is optimistic about the growth prospects in 2024 building on the success of 2023.
“Our projections indicate a conservative yet promising 8-9 per cent growth in both room occupancy and ADR (Average Daily Rate) compared to 2023. This outlook is backed by continued investment in guest-centric initiatives, innovative marketing campaigns, and adaptability to emerging travel trends,” he added.
In 2024, India’s hospitality sector is hoping that beyond the hangover from 2023, it will be a new party and a new beginning to cash in on the opportunities that lie ahead.