After a year of uptick in investments in the hospitality and travel industry in FY22, it has dropped from $359.7 million in FY22 to $133 million in FY23. The investments continue to remain way below the pre-Covid mark of $1.8 billion in FY20, according to access to data from Tracxn.
According to the data, in FY19, transactions to the tune of $1.5 billion had taken place, and in FY20, $1.8 billion worth of transactions. In FY21, $148.0 million translations transactions. In FY22, when things picking up for a brief period, $359.7 million transactions happened. However, in FY23, transaction value dipped to $133 million, which was 63 per cent lower than the previous year, and even lower than the transactions that took place in FY21.
According to industry expert, Shobhit Aggarwal, MD and CEO at Anarock: “In the years prior to Covid, several transitions took place. Lemon Tree was listed, IHCL had its QIP, Brookfield bought out Leela. Even in the travel segment, there were listings and transactions. These are a few big transactions which rose substantially.”
He explained that during Covid, in order to deleverage their portfolios, big players sold off a chunk of their portfolios. “This was an attempt to reduce debt on their books. That explains the higher transactions in the previous fiscal. Given that a lot of transactions had already happened in the previous fiscal, we didn’t see a lot of action during this year,” Aggarwal explained.
In the coming fiscal, industry experts believe that the number of transactions are likely to go up. “Given that the Average Room Rates, occupancies and sales on OTAs have been at an all time high. All of a sudden, hospitality and travel industries have become a favorable sector to invest in,” another industry expert explained, requesting anonymity.
In a recent report, Poonam Upadhyay, Director, CRISIL Ratings, Indian travel operators are likely to see a good FY24, regardless of the high airfares, due to rising business travel, increasing return-to-office, preference for face-to-face meetings, and increasing consumer preference for short breaks.
HVS Anarock’s report also said that the hospitality sector is expected to cross the average occupancy of 70 per cent in 2024, a feat not achieved since 2008. This will be followed by a steady growth in Average Room Rates.
“I believe that FY24 will witness a surge of investments close to the FY19 and FY20 mark,” said Aggarwal.