The hospitality sector is expected to cross the average occupancy of 70 per cent in 2024, a feat not achieved since 2008, according to HVS Anarock. This will be followed by a steady growth in Average Room Rates. .
Speaking at the HVS Anarock HOPE 2023 event, Mandeep Lamba, President (South Asia), HVS Anarock, said the hospitality sector has shown high resilience during tough times such as the Covid-19 pandemic and has performed very well over the past few months with exponential growth.
Lamba said, “We are going to see amazing growth, we are going to breach all marks and finally, we will breach 2008 marks, occupancy will come sooner, and then ARRs will follow. It is an important number. Both occupancy and ARRs will reach new highs. The next 12-18 months are going to see growth. I don’t see a lot of reversing. Maybe in the leisure market but it definitely not in the business segment.”
Also read: PM Modi to address post-budget webinar on developing tourism in mission mode
Currently, the occupancy rate stands at 66 per cent on an industry level, and there has been an increase in the average room rates. Rattan Keswani, former Deputy Managing Director of Lemon Tree Hotels, said Covid-19 gave the industry a way forward to charge better. He said: “Now, I don’t see this going back to pre-Covid levels. Hotels too have understood that the customers have an appetite to pay.”
An official from a listed luxury hotel chain, who requested anonymity, explained that compared to other markets, Indian hotels are still charging way below average. However, he said, “We were under tremendous pressure to keep the rates competitive. However, I think, now all the luxury hotels too have realised that there was no need to burn cash. We could co-exist and charge for the rooms accordingly.”
According to HVS Anarock’s study, India’s most developed hotel markets are still the smallest in the APAC region, with the hotel markets in Shanghai and Beijing being 10 times the size of Delhi or Bengaluru. As of December 2022, India’s branded hotel supply is over eight times the available branded supply in 1996.
Lamba said, “The supply growth is to be slower as a fallout of Covid, though we believe 57,600 rooms will be added during the next five years, and this growth will come from the tier-2 and -three markets.”
On one of the panels, Puneet Chhatwal, MD and CEO, IHCL, said he believes that international events happening in India, weddings, MICE events, along with leisure and business travel, are likely to fuel demand for hotels in the future.