May 17, 2023: India’s hospitality sector is set to witness a total of over $2.3-billion investments over the next 2-5 years, says a report by real estate consulting firm CBRE South Asia. According to the report titled Indian Hospitality Sector: On a Comeback Trail, more than $0.4 billion of investment in the segment is expected during the 2020-2023 period.
The report, which highlights the occupancy trends and growth in the sector, also says that over 12,000 rooms are likely to be added in 2023, and the number of rooms is expected to grow at a CAGR of over 3.3% by 2025.
The report points out that the outlook for the sector improved after a strong vaccination programme, reopening of borders, removal of travel restrictions and sustained economic growth put the hospitality sector on a recovery path.
“It is estimated that a recovery in demand will remain ahead of supply addition, which will augur well for the key metrics of the hotel sector’s performance. Demand over the next few years is likely to be more equilateral and broad-based rather than being centered across only select cities/markets. CBRE expects this steady supply growth to continue for the next few years,” the report said.
Increasing investor interest has been one of the significant drivers of growth for the Indian hospitality space in the past couple of years. In addition, Indian companies are also participating actively in this segment by way of investing or expanding their presence. The international presence and acceptance of Indian chains have established the service level and visibility of these brands, it adds.
The report also states that all industry key performance indicators are expected to surpass pre-pandemic levels this year. Revenue per available room (RevPAR) witnessed 94% growth in India in 2022 as compared to 2021.
“In recent years, several international hotel chains have made significant investments in the country, looking to tap into the growing demand for hospitality services. Several PE funds have also invested in domestic and international hospitality operators looking to expand their footprint in the country. The sector has also benefited from the government’s continued focus on reforms, as a result, the government expects the country’s tourism and hospitality sector to earn $50.9 billion as visitor exports by 2028,” says Anshuman Magazine, chairman and CEO-India, South-East Asia, Middle-East and Africa, CBRE.
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