Hotel room rates in India are set to remain elevated due to a slow 1.4% growth in supply, with the total number of rooms reaching 191,000 by June 2024. Major cities like Delhi, Mumbai, and Bengaluru saw only a 0.6% increase in room availability, while strong domestic demand continues to drive up occupancy rates. As the peak travel season approaches, industry experts anticipate further rate hikes, particularly in luxury segments, amid a forecasted 10% growth in hotel room demand, outpacing the expected 8% annual increase in supply until 2027.
As travel seasons approach, hotel room rates in India are likely to remain elevated due to a slower increase in new hotel openings and strong domestic demand. According to the recent data from hospitality consultancy Horwath HTL, the total number of hotel rooms in India reached 191,000 by the end of June 2024, an increase of just 1.4% from the previous year.
The major metropolitan areas, including Delhi, Mumbai, and Bengaluru, saw only a slight rise in room availability, with an increase of approximately 0.6%. This limited supply is coupled with a consistent demand for hotel rooms as more Indians choose to travel, particularly for leisure and business purposes. In the Delhi-NCR region, Tata group-promoted Indian Hotels Company (IHCL) reported a 10% rise in revenue per available room, indicating robust customer interest. Occupancy rates in this region also increased by 2% to reach 82%.
Experts anticipated a rebound in demand following a sluggish April-June quarter. Factors such as extreme heat and reduced MICE (meetings, incentives, conferences, and exhibitions) activities, attributed to the recent elections, negatively impacted initial demand. However, the upcoming months are expected to see a surge as the wedding season and increased business travels take off, particularly from October to December.
Vikram Oberoi, the managing director and CEO of EIH, which operates Oberoi Hotels, noted that with foreign travel picking up and a strong inclination for luxury stays among Indian consumers, hotel rates could be adjusted upward. The company expects significant demand and occupancy growth in the latter half of the year.
The way people plan vacations has also evolved, with travelers now often deciding on short trips within 3 to 5 days, changing from the longer planning periods of several weeks in the past. Mahesh Iyer, CEO of Thomas Cook India, reported a rise in forward bookings, anticipating double-digit growth for the November-December travel season.
A concerning trend remains the slow growth in the availability of branded hotel rooms across India. Analysts predict that by the end of fiscal year 2027, only about 50,000 new branded rooms will come into the market, equating to an annual growth rate of 8%. This is significantly lower than the anticipated 10% growth in demand for hotel rooms.
Currently, India's penetration of branded hotel rooms is notably low at just 0.1 rooms per 1,000 people, in stark contrast to the United States, which boasts 16.3 rooms per 1,000 citizens, and China, with 3.2 rooms per 1,000. This discrepancy highlights the underdevelopment of the hospitality sector in India relative to its demand, indicating potential opportunities for growth in the future.
In conclusion, as India gears up for a bustling travel period, the combination of limited hotel room supply and high demand is expected to maintain high room rates. The hospitality sector faces challenges and opportunities, setting the stage for a dynamic market over the coming months.
Advertisement
Facebook
Whatsapp
