India’s hotel industry has witnessed a robust turnaround in demand after the pandemic, led by the rising discretionary spending on tours and travels, revenge tourism, improving economic environment fuelling corporate travels and revival of mega wedding season and other cultural events. Again G20 & IPL is expected to increase demand for travel.
Industry has Strong pipeline to complement the robust demand. India’s tourism sector’s contribution to the GDP is expected to grow to USD250bn
by FY30 vs USD178bn in FY21, according to the ministry of tourism. This is backed by the fact that rising urbanisation in several tier-2 and tier-3 cities will drive the demand for hotels in different segments. Factoring this in, the industry is expected to witness a robust room addition (42,000 rooms) by FY27, which will increase total supply by 28% to almost two lakh rooms (source: Hotelivate).
Cost reduction and debt repayment bode well for margin enhancement
Hoteliers undertook various sustainable cost-reducing initiatives during the pandemic like multitasking workforce, reducing staff/room ratio, lowering overhead expenses, etc., which are yielding a high margin now, aided by improved demand and ARR. Further, shifting focus to assetlight management contracts and repayment of debt through fundraising has
helped make the companies balance sheets lean in FY22.
Industry has Strong pipeline to complement the robust demand. India’s tourism sector’s contribution to the GDP is expected to grow to USD250bn
by FY30 vs USD178bn in FY21, according to the ministry of tourism. This is backed by the fact that rising urbanisation in several tier-2 and tier-3 cities will drive the demand for hotels in different segments. Factoring this in, the industry is expected to witness a robust room addition (42,000 rooms) by FY27, which will increase total supply by 28% to almost two lakh rooms (source: Hotelivate).
Cost reduction and debt repayment bode well for margin enhancement
Hoteliers undertook various sustainable cost-reducing initiatives during the pandemic like multitasking workforce, reducing staff/room ratio, lowering overhead expenses, etc., which are yielding a high margin now, aided by improved demand and ARR. Further, shifting focus to assetlight management contracts and repayment of debt through fundraising has
helped make the companies balance sheets lean in FY22.