India Hotel Market: Industry Analysis and Forecast (2024-2030)

India Hotel Market Overview

In the year 2022, the India Hotel Market bounced back powerfully, showing not just resilience but also a solid recovery. Despite challenges from the Omicron variant, the market recovered pre-pandemic levels of revenue per available room (RevPAR). This recovery was driven by higher average daily rates (ADR) and better occupancy rates. The year had its ups and downs, with each wave of COVID-19 causing sharp rebounds. By March 2022, hotel occupancy in India exceeded 60%, even surpassing pre-pandemic levels in many areas. Domestic travel caused this impressive growth.

 

Leisure destinations were busy, and corporate travel and large conferences made a strong return. Leisure spots thrived like never before. The corporate sector wasn't far behind, with business trips and big conferences coming back to life. In the spring, a major milestone was reached the resumption of regular international flights. This further boosted the India Hotel Market, despite many challenges with COVID protocols, visa issues, and high airfares.

 

The Big Fat Indian Wedding also played a major role, pushing ADR through the roof as hotels were fully booked during the wedding season. Luxury hotels and resorts became popular for destination weddings due to travel difficulties abroad. In 2022, the year-end ADR was the highest since 2008, caused by disrupted seasonality due to Omicron and a surge in demand. Every class of hotel saw a resurgence, outperforming 2019 RevPAR levels, with business and group segments leading the way. This recovery wasn't just isolated; it spread across the entire market, showing a strong and adaptive industry.  Looking ahead, future bookings look promising with longer pickup windows, indicating growing travel confidence. However, several factors will shape this path rising inflation, international travel demand, and specific market supply dynamics.

 

In summary, the India Hotel Market's story is one of strong recovery, driven by a rise in domestic travel, the return of corporate trips, and the comeback of big events and weddings. The future will depend on economic trends, global travel patterns, and the evolving supply landscape.

 

To get more Insights: Request Free Sample Report

 

Hotel Market Dynamics

Institutional initiative driving the Indian hotel industry towards the north

One key institutional initiative driving the Indian hotel market towards growth is the Swadesh Darshan & Journey Restoration and Otherworldliness Expansion Drive (PRASAD). This midway financed combine advances Public-Private Organizations (PPP) to advance maintainability in neighbourliness plans. It incorporates arrangements for Suitability Hole Funding to help these drives according to government rules. Furthermore, the Service's Framework for Evaluation, Mindfulness, & Preparing in Neighborliness Industry (SAATHI) guarantees adherence to Coronavirus wellbeing and cleanliness conventions, converging on the security and soundness of the two workers and clients in the business.

 

Notwithstanding the growth in interests in Indian the travel industry, which is driving the India Hotel Market. Despite challenges like the pandemic, investments in the Indian travel industry surged by 174.7%, from US$ 1.07 billion in FY19 to US$ 2.94 billion in FY20. This wave of investment supports the advancement of the travel industry infrastructure, including hotels, resorts, & recreational services. It boosts the industry's growth and improves its ability to attract both domestic and international travellers, thereby driving the Indian hotel market during the forecast period.

 

Some key initiatives are listed below

Initiatives	Objective	Remarks
Union Budget 2023-24	Rs. 2,400 crores for The Ministry of Tourism	last year’s allocation showed the same amount i.e., Rs. 2400 crores
	Rs. 1412 crore for Swadesh Darshan Scheme; 50 tourist destinations to be developed under Swadesh Darshan	Last year Rs. 1,181.30 crores were allocated for the Swadesh Darshan Scheme
	Rs. 250 crores for Pilgrimage Rejuvenation and Spiritual and Heritage Augmentation Drive (PRASHAD) Scheme	Last year Rs. 235 Crores were allocated for PRASHAD scheme
Swadesh Darshan Scheme	76 projects for Rs. 5,399.15 crore for development of tourism infrastructure in the country.	As of August 2022, 50 projects were physically complete
National Integrated Database of Hospitality Industry (NIDHI)	As of September 2021, NIDHI 2.0 was launched.	The comprehensive national database of accommodation units, travel agents, tour operators, etc., will help in creating policies and strategies for the promotion and development of tourism at various destinations.
All India Tourist Vehicles Authorization and Permit Rules	A tourist vehicle operator can register online for the permit, which will be issued within 30 days of submitting the application.	Permits to be granted for 3 months or multiples thereof, up to 3 years.

 

Diverse shareholding pattern drives robust growth in Indian hotel market

The complex shareholding design inside Indian hotel assumes a vital role in driving the growth and elements of the Indian hotel market. Advertisers, holding a significant 38.12% of the offers with no change quarter-over-quarter, give a stable spine, assuring that the dynamic interaction lines up with the centre visualization and long-haul methodologies of the organizations inside the Indian hotel market. Unfamiliar Institutional Financial backers (FII) have expanded their shareholding by 1.18% QoQ, currently holding 24.47%, reflecting developing worldwide trust in the Indian hotel market. This surge of unfamiliar capital drives development, further grows administration principles, and works with the reception of worldwide accepted procedures, upgrading the Indian hotel business sector's strategic advantage.

 

Then again, Homegrown Institutional Financial backers (DII), holding 20.65%, have diminished their property by 1.46% QoQ, which could demonstrate a vital redistribution of resources yet at the same time means their critical job in giving solidness through significant interests in the Indian hotel market. Common Assets (MF) have additionally diminished their shareholding by 1.24% QoQ to 15.92%, possibly reflecting strategic changes in light of economic situations inside the Indian inn market. Notwithstanding these decreases, shared reserves keep on giving liquidity and backing market trust in the Indian hotel market.

 

The 'Others' classification, which incorporates different more modest financial backers, holds 16.76% of the offers with a slight increment of 0.26% QoQ. This different gathering brings various points of view and speculation systems, encouraging development and versatility inside the Indian hotel market. the diverse and dynamic shareholding structure is a main driver behind the robust growth of the Indian hotel market. It establishes a climate of solidness and development, drawing in both homegrown and international travellers and speculations, fundamental for supporting long haul development and seriousness in the Indian hotel market.

 

Indian hotels shareholding pattern

CATEGORY	NO. OF SHARES	PERCENTAGE	% CHANGE QOQ
Promoters	54,25,57,742	38.12 %	0.00
FII	34,83,63,927	24.47 %	1.18
DII	29,38,93,761	20.65 %	-1.46
MF	22,66,03,231	15.92 %	-1.24
Others	23,86,16,797	16.76 %	0.26

 

Sports tourism surge propels growth in India Hotel Market

One driver of the Indian hotel business sector's development is the increasing trend in sports tourism, particularly driven by events such as the Cricket World Cup. Sports tourism in India is on the rise, and these events have become accelerators for driving travel demand. With increasing disposable incomes & growing awareness through social media, Indian sports enthusiasts are traveling to many destinations to watch matches. According to MMR, total spending in the Indian sports tourism market, fixed at USD 9.5 billion in 2022, is expected to rise to $37.6 Bn by 2032, at a CAGR of 14.8%.

 

During the forecast period, the number of sports tourists is expected to increase from 37.2 Mn to 213.3 Mn. Within this growth, the inbound market has an expected growth rate of 9.4%, while the outbound market is expected to nearly double at 17.4%. With India hosting the upcoming Cricket World Cup in CY23, inbound tourism is expected to benefit significantly, further driving the Indian hotel business sector's robust development.

 

Challenges faced by Indian hotels market

Government approvals and licenses

The India Hotel Market faces huge difficulties because of a composite administrative climate that contains different layers of clearances, beginning from land obtaining under fluctuating state regulations. Hoteliers experience around 100 clearances expected to lay out upscale lodgings, traversing diverse legislative bodies and delaying the advancement course of events. These administrative obstacles, with natural endorsements and consistence with wellbeing standards, inflate costs and functional hardships, affecting the India Hotel Market's intensity.

 

Regardless of these snags, the Indian hotel market shows strength and development potential, upheld by extending the travel industry and monetary turn of events. Keeping an eye on regulatory complexities through efficient processes, uniform state guidelines, and further created transparency is earnest to opening the region's most extreme limit and updating adventure open entryways in India's hospitality industry.

 

Land availability and cost issues

High land costs in India, establishing a substantial 40-50% of total project expenditures compared to 15-20% globally, pose a significant obstacle for the Indian hotel market. This divergence extremely influences the improvement of spending plan & mid-market lodgings, where lower room rates can make profit testing inside such an excessive land procurement system. Thusly, engineers and financial backers frequently focus on upscale lavish hostels that can all the more likely ingest these costs through higher room rates. Mixed-use development projects, mixing hospitality with commercial, residential, and retail components, have arisen as a strategic response to these challenges.

 

However, they may not fully address the demand for separate budget accommodations in India's various hospitality landscape. The complex process of classifying and acquiring suitable land parcels further confuses hotel development, presenting delays and dissuading potential investment. Addressing these challenges through policy reforms aimed at dropping land acquisition costs and streamlining regulatory processes is imperative to cultivate a more comprehensive and sustainable growth path for the India Hotel Market.

 

Rising urbanisation in India: opportunities for the hotel industry

India's urban populace has been on a huge vertical direction. As per the World Urbanization Plan Report, the portion of the urban populace expanded from 27% in 2001 to 35% in 2022. This pattern is expected to continue and expected to reach 38% by 2036. This growing urbanization has been a vital driver of interest inside the lodging business, especially in the India Hotel Market. As additional people move to metropolitan regions, the interest for inn facilities, mainly in mid-cost portions, has seen impressive development.

 

Travelers are currently more leaned to explore already neglected and financial plan well-disposed objections, which has set out various open doors for hoteliers. Mid-estimated hotel have especially profited from this pattern, and a few arising objections are ready to develop further, introducing expected markets for upscale lodgings. The moving inclinations of sightseers towards notable and frugal travel encounters are probably going to keep powering this growth, driving further extension and interest in the India Hotel Market.

 

Hotel Market Segment Analysis

Based on Type, Chain hotels hold a greater market share compared to independent hotels in India. This dominance can be attributed to numerous key factors. Firstly, chain hotels benefit from strong brand recognition & well-known reputations, which instil trust and attract a larger number of visitors. They offer standardized services and facilities across their properties, ensuring a consistent and reliable experience for travellers. Additionally, chain hotels have extensive marketing funds and loyalty programs that help retain customs and encourage repeat business.

 

Their widespread presence across various locations offers more options and convenience for travellers. Moreover, chain hotels have better access to financial, technological, and managerial resources, allowing them to implement modern facilities and services more effectively than many independent hotels. These advantages collectively contribute to the larger market share held by chain hotels in India.

 

Based on Level of Service, In the Indian hotel market, the mid and upper mid-scale hotel portion holds the highest piece of the pie. This is basically because of their harmony between reasonableness and solace, which requests to many travellers, including business experts, families, & vacationists. As the Indian hotel business sector's working class keeps on developing, the interest for quality facilities that offer great incentive for cash has expanded. Mid and upper mid-scale lodgings in the Indian hotel market satisfy this need by giving preferred conveniences over financial plan and economy hotel at altogether lower costs than lavish inns.

 

Also, the ascent in business travel inside the Indian hotel market has added to the prevalence of this fragment, as these lodgings offer fundamental administrations, for example, meeting rooms, web access, & helpful areas close to business centres. The development of domestic and global the travel industry further lifts the attraction of mid and upper mid-scale lodgings in the Indian hotel market, offering agreeable stays without the high cost related with lavish inns.

Hotel Market Regional Insight

By region, The Western region of India, especially Maharashtra and Gujarat, holds the most extreme offer in the Indian lodging market. This strength in the Indian lodging market is driven by a few key variables. Urban communities, first and foremost, similar to Mumbai and Pune in Maharashtra are major financial and business centres, drawing in significant business travel that energizes interest for Indian hotel facilities. Additionally, Gujarat, with its modern communities like Ahmedabad and Surat, contributes fundamentally to the Indian hotel market interest.

 

Moreover, Western India is a unique vacationer location, flaunting rich social legacy destinations such as the Ajanta and Ellora Caverns in Maharashtra and the famous sea shores of Goa. The locale's advanced foundation, including global air terminals, major ports, and broad street and rail organizations, upgrades its openness for both domestic and global voyagers, subsequently supporting the Indian hotel market. The presence of many international partnerships and Indian aggregates with base camp or significant workplaces in Mumbai and different urban zones further lifts business travel and the Indian hotel market.

Hotel Market Scope
Market Size in 2023	USD 38.42Bn.
Market Size in 2030	USD 72.15 Bn.
CAGR (2024-2030)	9.42%
Historic Data	2018-2022
Base Year	2023
Forecast Period	2024-2030
Segments	By Type Chain Hotels Independent Hotels
	By Level of Services Service Apartments Budget and Economy Hotels Mid and Upper Mid-Scale Hotels Luxury Hotels
Regional Scope	By Region North India South India East India West India

 

Key players in Hotel Market

1. OYO (Gurugram, Haryana)
2. Lemon Tree Hotel (Delhi)
3. Treebo (Karnataka)
4. Hyatt Hotels Corporation (Chicago Chicago)
5. InterContinental Hotel Groups (United Kingdom)
6. Marriott International (United States)
7. Radisson Blue Hotels (Belgium)
8. Shangri La Hotels & Resorts (Hong Kong)
9. Taj Hotels Resorts & Places (Maharashtra)
10. The Lalit Hotels (New Delhi)
11. The Leela Palace (Maharashtra)
12. The Oberoi Group (Delhi)
13. The Park Hotels (West Bengal)
14. Bharat Hotels Limited (New Delhi)
15. Hotel Leelaventure Limited (Maharashtra)
16. ITC Hotels Limited (West Bengal)
17. The Indian Hotels Company Limited (Maharashtra)
18. Sarovar Hotels Private Limited (Maharashtra).