High End & Premium Properties Drive Hospitality Sector Growth

As the Modi government is giving a big push to the tourism and infrastructure sector, the hospitality sector is on the upswing,  with upscale and premium hotel properties driving the growth.

SKYE Hospitality, an end-to-end hospitality & strategy consulting company has released its maiden market analysis on the pulse of the Indian hotel industry for the first six months of 2024. The analysis has shared some interesting insights and perspectives on the Indian hospitality sector. As per the analysis, there was a supply of 2706 hotel rooms in the market in H1 2024. Out of this 994 rooms ( 37 percent) comprised of upscale rooms while the remaining (63 percent ) consisted of premium inventories. A total of 22 new projects have opened in the first half of this year.  Major hospitality brands such as IHCL, ITC, Radisson, Hyatt, ROHL, Bharat Hospitality, Wyndham, etc. have opened new properties.The western region dominates the supply of new properties  with 34 percent of the new  hotels. It was followed by East (28 percent) whereas North and South contributed to 26 percent and 12 percent respectively .

“Indian hospitality industry is on a strong footing marked by rise in occupancy, new projects openings and a bullish pipeline for the future. In the first half, average occupancy in major hotels ranged between 70-75 percent. Occupancy has risen by around 15-20 percent, compared to the same period, previous year” , according to  Ankit Kansal, M anaging Director, SKYE Hospitality.

The Indian hotel industry is witnessing a robust rebound backed by rise in business events, leisure travels, wedding season, etc. Other factors such as growing trend of staycations, surge in experiential travel trends amongst millennials & Gen-Z, and rise in wellness tourism packages are also fuelling demand for hospitality business in India. The concept of revenge travel is also there, as most of the hotels operate at 100 percent occupancy during extended weekends, according to Kansal.

The government is also playing a pivotal role through concentrated policy efforts to boost the infrastructure and introduce numerous attractive schemes. Multiple schemes such as ‘Dekho Apna Desh’, ‘Incredible India’, ‘PRASHAD’, ‘Aayush’, etc. have been introduced, helping in  pushing hotel demand. There has been a notable growth in infrastructure development in the form of highways, railway corridors, airports, etc.  enhancing the overall accessibility. Consequently, major hotel brands are now launching new products in territories such as North East, J&K, Andaman, Lakshadweep, etc. These locations have been relatively less explored in the past.

During the same time period, around 243,000 sq. ft of hotel-based meeting and banquet space entered the market, as per the SKYE analysis. Eastern parts of India accounted for highest supplies (47 percent) followed by North (25 percent ). The Indian event and meeting industry are growing at a steady rate of 8-10 percent. India is becoming a reputed MICE destination internationally stemmed by growth in infrastructure, rise in economy, and rich cultural heritage.

Commenting on the future outlook of the industry, Mr. Kansal said” the next 3-5 years will see aggressive expansion in the industry, as both domestic and international brands will extend their footprint across segments.”

Many major brands are currently in an expansion mode. Taj is presently working on over 20 projects while Vivanta has  invested in around  50 new projects. International hospitality brand Accor is planning to add 5500 new rooms across various brands such as Pullman, Novotel, IBIS, etc. Oberoi Group is also planning to add around 50 projects in the  next 5 years across Oberoi Hotels and Trident brands . The group is also planning to introduce a new brand, “Oberoi Nature”, which will be a smaller format property.

Going forward, the next 3-5 years, according to Kansal , will see aggressive expansion in the industry as both domestic and international hotel brands will extend their footprint across segments.