CBRE: Indian Hospitality Sector Sees Strong Recovery and Investments Surge

CBRE South Asia Pvt. Ltd. has released its first-ever hospitality report titled “Indian Hospitality Sector: On a Comeback Trail,” providing insights into the growth and occupancy trends in India’s hospitality industry. The report highlights the positive outlook for the sector, attributing it to factors such as a successful vaccination program, the reopening of borders, the removal of travel restrictions, and sustained economic growth. It forecasts investments of over USD 2.3 billion within the next 2-5 years, with an additional USD 0.4 billion expected between 2020 and 2023.

The CBRE report predicts the addition of approximately 12,000 rooms in 2023 and a compound annual growth rate (CAGR) of around 3.3% in the number of rooms by 2025. It expects the recovery in demand to outpace the increase in supply, positively impacting key performance metrics of the hotel sector. Furthermore, the report suggests that the demand in the coming years will be more evenly distributed across various cities and markets, rather than concentrated in select areas.

The Indian hospitality sector has witnessed increasing investor interest and active participation from domestic companies. International recognition and acceptance of Indian hotel chains have also enhanced their service level and visibility. The report indicates that industry key performance indicators (KPIs) such as occupancy rate, average daily rate (ADR), and revenue per available room (RevPAR) are expected to surpass pre-pandemic levels in the current year. RevPAR in India experienced significant growth of 94% in 2022 compared to 2021, demonstrating a smooth recovery from the pandemic.

Key hotel metrics in 2022:

The report also highlights new demand drivers that are contributing to the sector’s growth. These include a renewed focus on domestic tourism, the popularity of combining business with leisure travel (bleisure), changing trends in religious tourism, and India’s continued popularity as a medical tourist destination. Additionally, the report mentions the influence of technology on the hospitality industry, the rise of franchise opportunities, and the growing emphasis on environmental, social, and governance (ESG) initiatives within the sector.

The report showcases a positive trajectory for India’s hospitality industry, with strong growth prospects, increasing investments, and a recovery in key performance indicators.

Author: Jaun Shahi