The Indian hospitality sector is set to attract investments exceeding $2.3 billion in the next two to five years, driven by factors such as a successful vaccination program, border reopening, lifted travel restrictions, and consistent economic growth. A report by CBRE South Asia predicts the addition of 12,000 hotel rooms in 2023 and a compound annual growth rate (CAGR) of 3.3% by 2025. Demand is expected to outpace supply, leading to positive performance indicators like occupancy rates and revenue per available room (RevPAR). International hotel chains and private equity funds have shown significant interest in investing in India's growing hospitality industry.
The Indian hospitality sector is anticipated to receive investments exceeding $2.3 billion in the next two to five years, according to a report released by CBRE South Asia. During the period from 2020 to 2023, investments are expected to surpass $0.4 billion, with the addition of 12,000 hotel rooms projected for 2023 and a compound annual growth rate (CAGR) of 3.3% by 2025.
Factors such as a successful vaccination program, border reopening, lifted travel restrictions, and consistent economic growth have paved the way for the hospitality sector's recovery. The report suggests that demand is likely to outpace supply, which will have positive effects on performance indicators like occupancy rates and revenue per available room (RevPAR). Moreover, the report predicts a more balanced distribution of demand across various cities and markets.
The Indian hospitality industry has experienced substantial growth due to increasing investor interest. International hotel chains have made significant investments to meet the growing demand for hospitality services, while private equity funds have also shown interest in expanding their presence in the country. The sector has also benefited from government reforms aimed at supporting its growth.
The report highlights that key performance indicators, such as occupancy rates and RevPAR, are expected to exceed pre-pandemic levels in the current year. In 2022, RevPAR witnessed a remarkable 94% year-on-year growth, indicating a strong recovery from the pandemic's impact. The government's target is for the tourism and hospitality sector to earn $50.9 billion in visitor exports by 2028.
Overall, the report paints an optimistic outlook for the Indian hospitality sector, driven by factors such as border reopening, successful vaccination efforts, and sustained economic growth. With increased investments and positive performance indicators, the sector is poised for further growth, benefiting both domestic and international hospitality operators, and making a significant contribution to India's tourism industry and economy.
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