HVS Report – Indian Hospitality Sector – Reclaiming Lost Ground

Bullish travel sentiment is helping India’s hospitality sector regain lost ground, with several markets outperforming their pre-pandemic performance in March 2022. Read on to learn more.

The recovery in travel demand in India is accelerating, thanks to the easing of restrictions, positive traveler sentiment and the resumption of scheduled international flights, which has led to a significant increase in flight and hotel bookings in the country. Just last week, Delhi International Airport grabbed headlines for replacing Dubai Airport as the world’s second busiest airport in March 2022, according to research by global data provider on travel, Official Airline Guide. This, however, is not an isolated case. Total air traffic in the country increased by more than 38% in March 2022 compared to February 2022, and by more than 44% year-on-year. In fact, according to the media, air traffic in April 2022 was around 10 million, or almost 96% of traffic in April 2019.

Upbeat travel sentiment was also a harbinger of good news for India’s hotel sector, with hotel occupancy rates nationwide crossing the 60% mark in March 2022 – a first since the start. of the pandemic – as several markets exceeded their pre-pandemic occupancy rates. for the month. Leisure markets continue to lead the recovery, but commercial markets are slowly catching up thanks to the resurgence of business travel as well as major events and conferences. For example, the start of the IPL season in Mumbai in March pushed the city’s occupancy to pre-pandemic levels for the month. As a result, the city and Goa were the main hotel markets in the country, with occupancy rates exceeding 75% during the month. Mumbai, along with Pune, also saw the highest increase in occupancy rate in March 2022 compared to the previous year.

The strong recovery in demand is also driving steady increases in average room rates, which are gradually approaching pre-COVID levels in the majority of markets. In March 2022, average rates in India were between INR 5,400 and 5,600, which is a year-over-year increase of 37-39%, but still 12% less than in March 2019. However, some markets, particularly those in the leisure sector, exceeded their pre-pandemic average rates. Even the country’s smaller leisure markets, such as Haridwar and Corbett, as well as the hill stations of Himachal Pradesh, Uttarakhand, and Jammu and Kashmir, to name a few, are experiencing unprecedented occupancy and ARRs. Goa, for example, surpassed pre-pandemic performance levels in March 2022, with occupancy rates and average rates for the month being respectively 4 percentage points and 22% higher than March 2019. Jaipur and Chandigarh are two other markets where average rates are respectively 5% and 3% higher than pre-pandemic levels. Mumbai’s average rates, meanwhile, rose 62-64% year-on-year in March 2022, but are still 20% below pre-pandemic levels.

We expect this momentum to continue into the upcoming summer holiday season, which, combined with slower growth in hotel supply, will help India’s hospitality sector break through pre-pandemic performance levels. by the end of this year. The only threat to this growing momentum is rising COVID cases in a few cities as well as inflationary pressures, which could dampen traveler sentiment and impact industry profitability in the short to medium term.

Mandeep S.Lamba, President – ​​South Asia, oversees the HVS practice in South Asia. Mandeep has spent over 30 years in the hospitality industry having worked with international hotel companies such as Choice Hotels, IHG and Radisson Hotels before becoming President of ITC Fortune Hotels in 2001. After successfully building the Fortune brand in medium-sized hotel sector in India, Mandeep ventured on an entrepreneurial journey for over 8 years, establishing JV companies with Dawnay Day Group UK and Onyx Hospitality Thailand before joining JLL in 2014, as Managing Director, Hotels & Hospitality Group – South Asia. A recognized industry leader, Mandeep has won several awards and accolades for his accomplishments. Recently, it was featured in the Hotelier India Power List of India’s Most Respected Hoteliers for the second consecutive year. Contact Mandeep at +91 981 1306 161 or [email protected]

Dipti Mohan, Senior Manager – Research with HVS South Asia, is a seasoned knowledge professional with extensive experience in creating research-based content. She has authored several “point of view” papers such as thought leadership reports, expert opinion pieces, white papers, and research reports. Contact Dipti at [email protected]

Christina A. Kroll