Indian hospitality market holds immense promise and raises hopes

After nearly three years of restricted cross-border travel, outbound tourism from the country witnessed a strong comeback, mirroring a trend akin to the pent-up demand that fuelled domestic tourism in the last two years

The country’s hospitality industry inmarket size is estimated at $ 247.31 billion in 2024, and is expected to reach $ 475.37 billion by 2029, growing at a CAGR of 13.96% during the forecast period (2024-2029).India has been successful as a leading global destination for leisure and business travellers. This has impacted the country's hospitality sector quite positively.

India’s attractiveness as a global travel destination has been enhanced by its geopolitical stability, world-class infrastructure, and commitment to hosting international events. Therefore, these factors contribute to the growth of the tourism industry and, as a result, keep the hospitality industry firm.

India’s domestic tourism has shown remarkable resilience and strength, and an increasing preference for staycations among Indian residents has been noticed. This preference for staycation is driven by several factors, including convenience, safety, and the opportunity to discover hidden gems within India.

According to MODOR Intelligence, the growth rate of the hospitality and tourism sector has seen a notable increase. India is included in the list of the top 100 countries with favourable conditions for conducting business (EoDB) and holds the first globally regarding greenfield FDI ranking.

To enhance the cruise tourism industry, the Union Government has chosen to develop Chennai, Goa, Kochi, Mangalore and Mumbai ports as cruise tourism hubs. These ports will have various amenities such as hospitality services, retail outlets, shopping centers, and restaurants.

According to the journal Tourism Economics, remote-work flexibility also serves as a significant advantage to the travel and hospitality industries. The number of days worked from home grew from 5% before the lockdowns to 28%, more than 1 in 4 days. 34% of leisure travellers said they plan to travel while they work remotely. With more work days spent outside of the office, the duration of both leisure and business trips could increase. Hospitality offerings suited to meet these specific demands, such as hybrid hospitality with flexibility of stay, larger rooms and amenities that make one feel at home, are poised to gain greater popularity amongst travellers.

Companies like Airbnb and Oyo Rooms have transformed the hospitality landscape globally, offering affordable stays in prime locations with flexible check-in and check-out options to cater to the increasing number of travelers.

Despite the challenges posed by the Covid-19 pandemic, the hospitality and tourism industry in India continues to grow, contributing significantly to the GDP.

After nearly three years of restricted cross-border travel, outbound tourism from the country witnessed a strong comeback, mirroring a trend akin to the pent-up demand that fuelled domestic tourism in the last two years. Consequently, over 27 million Indian nationals travelled overseas during the year, registering a 26% growth compared to 2022 and 1.3% compared to 2019. The strong revival of weddings, MICE and corporate travel segments, coupled with high-profile events like the G20 meetings and the Cricket World Cup played a pivotal role in revitalizing the fortunes of the sector during the year.

There was a strong demand for hotel rooms in both business and leisure locations during the first quarter of 2024. Strong occupancy levels, averaging roughly 70%, were observed in important business markets, and these levels were bolstered by notable increases in average daily occupancy.

During January and March 2024, 90 branded hotel contracts were signed, totaling 9,710 rooms. Furthermore, 13 hotels were converted from other hotels, accounting for 12% of the inventory signed in the first quarter of the year.

Destinations across the spectrum, from bustling metros like Mumbai and Delhi to popular leisure destinations like Goa and Jaipur, and serene, lesser-explored locations such as Rishikesh and Kashmir emerged as spearheads of this growth, each telling its unique story of recovery and opportunity.

The year also marked a record number of brand signings, underlining the sector’s confidence in the Indian market’s potential. This growth was not just quantitative but strategic, with a keen focus on expanding into smaller cities and underserved markets. These developments reflect a sector that is not just recovering but reimagining its future.

Looking ahead to 2024, the outlook for India’s hospitality sector is imbued with a sense of optimistic realism.

HVS anticipates continued growth, driven by sustained domestic demand, the return of international travel to its full glory, and the growth of niche tourism segments coupled with the gigantic growth taking place in travel infrastructure across the country.

With a landscape as dynamic and diverse as India’s, the potential for innovation, expansion, and sustainable development in the travel and tourism sector is boundless.