The hotel industry in India has seen a remarkable resurgence in the past few years, overcoming the pandemic-induced lull. The increase of disposable income of the middle-class households, rise of heritage and spiritual tourism and the government’s efforts to boost tourism have helped in the impressive recovery of the hospitality sector.
With India witnessing a surge in hotel investments, the country is projected to lead Asia Pacific, excluding China, in new hotel openings till 2026. In its latest study on hotel construction pipeline trend in the Asia Pacific region, Lodging Econometrics (LE) mentioned that India closed Q2 with a record 610 projects with 75,280 rooms. This constituted 30% of the overall projects in the total Asia Pacific pipeline. India’s stellar performance was followed at a distance by Vietnam (247 projects/85,760 rooms), Indonesia (181 projects/31,550 rooms), Thailand (163 projects/38,350 rooms) and Japan (162 projects/30,122 rooms).
India’s appeal among investors is not expected to lose its shine any time soon. The country will claim 25% of Asia Pacific’s total openings this year and lead with the greatest number of new openings till 2026-end, LE analysts said.
Hotel investment volumes have posted an impressive jump in India, with the sector recording a total deal volume of $401 million, marking a four-fold increase from 2022, JLL said in a report. The number of greenfield projects signed in India also soared by around 8,000 keys in 2023, reflecting the sustained confidence of hotel developers in the sector’s long-term growth. HNIs and institutional capital represented the biggest chunk of the investments (31%) in 2023, followed by real estate developers (27%) and owner-operators (11%).
The last year saw a record number of hotel signings (25,176 keys) and openings (12,647 keys) across the country, with most of these signings concentrated in Tier-2 cities, JLL added. The total number of signings in Q4 2023 totaled 82 hotels representing 8,741 keys.
Like everywhere else, India’s RevPAR, ADR and occupancy suffered a massive blow between 2020 and 2021. However, the industry bounced back from 2022, with ADR and RevPAR outperforming pre-pandemic levels and occupancy levels showing considerable improvement. RevPAR across the country grew by 15.8% between October and December 2023 compared to the same period in 2022, revealed a JLL report.
Hotel companies have been quick to respond to this growing potential and building their portfolio in the country. IHG announced plans to double its estate in the next five years and has signed 13 new agreements across its luxury, premium and budget hotels sector in India. With its eyes on emerging markets, Hilton is also growing its portfolio and has unveiled plans to triple its Indian portfolio to 75 properties, up from 26, in three to four years. The company already has 20 hotels in the pipeline and is preparing to open up to six hotels this year. Marriott, which is one of the largest non-Indian hotel chains across India, recently opened its 150th hotel in India, following a record signing in 2023 and the first quarter of 2024. Betting big on the spiritual tourism sector, Marriott is planning to open 12 hotels this year. The past year was also a significant one for Accor, which signed a record 11 hotels and added nearly 1,000 rooms to its Indian portfolio. With a current portfolio of 62 hotels, this year will see the French hospitality company opening six hotels in the premium, midscale and economy segments and three luxury and lifestyle hotels.
With the travel and tourism and hospitality sectors experiencing phenomenal growth, the pattern is expected to continue in the next few years. The significant increase in domestic tourism, uptick in destination weddings and celebrations, popularity of spiritual tourism, rising interest for leisure and business trips to India and expansion of the hospitality industry is expected to fuel growth.