Hospitality industry set for buoyant 2023

As per industry estimates, recovering from the impact of Covid-19 by the third quarter of 2022-23, the hospitality industry had touched the occupancy of 70%, while the average daily rates had moved up to Rs 7,260 as compared to Rs 6,540 in the same period in FY20. Also, the revenue per available room had increased to Rs 5,085 against Rs 4,499 in Q3FY20

The domestic hospitality industry is looking to 'fly' in 2023 cashing in on India's G20 presidency, having received the 'oxygen' to run in 2022 after being crippled in the past two years by the pandemic. Domestic travel, especially the leisure segment, gave wind to the industry this year and is expected to continue into the next.

Industry players believe that as international arrivals are also likely to pick up even further, the outlook for 2023 is buoyant. However, for travellers, room tariffs are likely to remain high going forward, with a demand-supply mismatch continuing in the hospitality sector. "I think it's really safe to say that we have overcome the real difficult period. I don't think any one of us can deny that it was really difficult, in all terms - occupancies, daily average rates and revenue per available room (during the pandemic)," Hotel Association of India Vice President KB Kachru said.

"But, I'm really happy to state that post-Covid, we have really bounced back. Our occupancy rates, average rates and the bottom line is all looking up," Kachru, who is also the Chairman Emeritus and Principal Advisor of South Asia Radisson Hotel Group, further said. As per industry estimates, recovering from the impact of Covid-19 by the third quarter of 2022-23, the hospitality industry had touched the occupancy of 70 per cent, while the average daily rates had moved up to Rs 7,260 as compared to Rs 6,540 in the same period in FY20. Also, the revenue per available room had increased to Rs 5,085 against Rs 4,499 in Q3FY20. Mahindra Holidays & Resorts India Ltd (MHRIL) Managing Director and CEO Kavinder Singh said, "I will say (that) in 2022, the hospitality industry finally got the oxygen that it deserved in terms of the number of people coming into the hotels, resorts and cities".

A "clearly unlock year" after the omicron wave of Covid-19 in January and February, he said the feeling of getting unlocked, the feeling of getting unshackled in life and the ability to breathe free sums up the year that's passing by. In 2021, industry players had slowly started walking, Singh said, adding "then, in 2022, we started running, and 2023 is the time to fly". "The big trend that we noticed was that the leisure occupancies were higher, as well as the ARR (average room rate) have been higher, RevPAR (revenue per available room) of leisure players were higher than the city players. This is something that is now becoming a trend that people are willing to pay more for leisure accommodation...," he added.

InterGlobe Hotels Head – Asset Management, Manoj Agarwal said that while easing of Covid-19 restrictions, domestic travel and strong leisure travel demand have been instrumental in the recovery of the sector, resumption of international flights and a gradual return of corporate travel have also played a role. "The industry is now thriving on domestic demand and gradual increase in international travel is expected to add further growth to it," he added.

Apeejay Surrendra Park Hotels Ltd Managing Director Vijay Dewan said the demand for FY23 is "up 15 per cent compared to pre-pandemic levels and is expected to remain in double drifts over the next 3-5 years". "In addition to this, there is a supply-side mismatch, which will drive average room rates up in the coming years," he added.

On the bright spot for 2023, Kachru said there would be a big boost not just from wedding ceremonies and long weekend getaways but also from "repositioning of India during G20, where we are hosting delegates across the country". India's G20 Presidency, he said, "would give us a great boost. Countries participating in G20, all the key people are visiting India and they're going to different places. We have to actually make them our ambassadors, who will project India and who will be talking about India".

Federation of Hotel & Restaurant Associations of India (FHRAI) Secretary General Jaison Chacko also said it is a "great opportunity for the tourism and hospitality industry", and in anticipation of its spillover benefits, the government must also reactivate the Champion Sector in Services Scheme (CSSS) to give a boost to the MICE tourism in the country. "After two years of absolute stalling, this has come as a golden opportunity for the tourism and hospitality industry. This is the time that the government should go full throttle to promote tourism under the Incredible India banner," he added. India took over the presidency of G20 in December. During India's year-long leadership of the block of countries that "account for more than 80 per cent of world GDP, 75 per cent of global trade, and 60 per cent of the global population", the country is expected to host a series of events and meetings.

It is estimated that in 2023, more than 200 meetings involving officials and civil society from these countries will be organised in India across 50 cities. As many as 30 heads of state and government from the G20 nations, and those invited, are expected to participate in the summit. Dewan agreed that the G20 will add to the high performance in FY23-24 of the industry, which is "expected to grow at a minimum of 15 per cent this year and then at a CAGR of 10 per cent over the next decade". In 2023, Agarwal said, "We believe inbound travel, MICE and in-person meeting, which had been subdued this year, would witness a significant growth, which will further strengthen the path to healthy ADR (average daily rate) recovery".