Despite increasing occupancy and boost due to G20, hospitality industry investors worried as foreign tourist arrivals are yet to reach pre-Covid levels and rising average room rates. However, industry analysts remain confident of incoming investments as well as industry growth.
businessline had recently reported, quoting Tracxn’s data, that investments in the hospitality and travel industry in FY22 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 two investors that businessline spoke with, the reason why investors continue to be iffy is the slow recovery and sustenance of the domestic leisure industry and the foreign tourist arrivals (FTAs) continuing to remain below pre-Covid levels. “As international markets open up, people are traveling abroad. As per our estimates, FTAs too will not reach pre-Covid levels at least over the next year or two,” said the first investor requesting anonymity.
However, Karan Khanna, CFA, Research Analyst, Ambit Capital, who tracks the sector, countered that “In CY23, the FTAs are at 80 per cent, would be 9 million. This will be an additional 2.8 million over CY22’s 6.2 million.”
G20 push
The second investor too said that the uptick in occupancies have been driven up because of the G20. “India needs a sustainable way of driving up occupancies even post G20.”
Besides this, Khanna said, over 3,00,000 room nights on a base of 60,000 branded upscale and luxury rooms implies a total of additional 5 room nights created for the industry as a whole. “In 365 days, it creates an incremental occupancy of 1.4 per cent, giving a boost to the industry over and above the G20,” he said.
Massive uptick
The travel sector has seen a massive uptick in the past two quarters, and the travel, aviation and hospitality players all believe that the sector will see an uptick in FY24 too.
“Despite the challenging period caused by the pandemic, the Indian hotel industry is showing signs of recovery and gaining momentum. According to the report, the majority of markets have surpassed 2019 levels, indicating a positive trend for the industry,” an NOESIS report stated.
In conclusion, while the investor confidence remains lukewarm, industry players believe that there is an uptick expected in FY24.