Double-digit growth marks a historic year for the hospitality industry – Gudstory

In fact, due to the boom in travel after Covid, India’s hotel industry is back on track. Double-digit revenue growth was driven by domestic leisure travel, meetings, incentives, conventions and exhibitions (MICE) events, the G20 summit and the return of business travelers. The added excitement of the ICC Cricket World Cup led to overflowing hotels and a glut of unfurnished accommodation.

Many companies saw a historic year, achieving their best results during the first two business quarters. The city’s hotels, in particular, reached unprecedented lifetime highs during this period. “It was a significant year as COVID-19 disrupted business intermittently in 2020-22. “Top hotels saw unprecedented growth in occupancy and average room rates,” said Kapil Chopra, director of Untitled Hotels & Resorts, which runs the luxury brand, Postcard Hotels.

The year 2024 may see continued growth, especially in domestic travel. Premium hotels across India witnessed an impressive occupancy rate of 70-72%, with average room rates higher 6,000 per night, according to rating agency ICRA. Hotel revenues witnessed a strong growth of 20% over 2022, while operating margins crossed the 30% mark.

According to CRISIL, occupancy rates for top hotel firms with inventory of 70,000 rooms are expected to rise 10% to 74% over the last year. This estimate is well above the pre-Covid level of 66%. Additionally, room rates are also expected to increase ₹8,000 per night, 8-10% more.

The big picture looks good. “I don’t know how economies around the world will perform in the next five years, but I believe it will be better, because there is a direct relationship between GDP and travel. “Around the world and in India, there will be more travelers as advances in AI make travel easier,” Glenn D. Fogel, chief executive of Booking Holdings, said in an earlier interview in November.

The main thing according to Chopra is that the hotel business is still not crossing 30% year-on-year growth. Structurally, he said, the Indian hospitality sector is not really building inspiring and iconic luxury hotels that will attract visitors, instead, it is focusing on cookie-cutter properties, and showcasing the splendor of India. Missing the opportunity to do so. “For this kind of economy, companies need to create ambitious products.”

Nevertheless, a worrying aspect is that India continues to receive fewer international travelers compared to 2019, posing a potential challenge. To address the issues, the Indian Association of Tour Operators, representing 1,700 operators, approached the Prime Minister’s Office this month, seeking incentives for inbound tour operators, apart from aggressive overseas promotional activities including appointing trained officers at Indian embassies. Such suggestions were included.

It is well established that countries that actively promote themselves to others receive the highest number of travelers. It is noteworthy that earlier this year, India had cut its budget for foreign tour promotion, Incredible India campaign. 524 crores in 2021-22 341 crore more in FY23 only Rs 167 crore for FY2014, raising doubts over how long it will take for international travelers to return to levels seen in pre-pandemic times.

Additionally, India is facing a severe talent shortage in the hospitality industry. While there are approximately 10,000 seats available annually for hotel management graduates, only 7,000 of these seats are being occupied. Practically, one third of the potential workforce has either left the job, or preferred to join other sectors.

Hospitality is known for tough working conditions with low pay, and the talent story is under severe strain, experts say. He said that some of the best professionals are joining other service-related sectors.

“While 2024 will not see any significant change in the hotel construction pipeline, we will have to see how the economy fares by 2029, as the Indian domestic travel market is very bullish now, and hotel companies are not really concerned about international traveler arrivals , Chopra said.

Milestone alert!
Livemint tops charts as fastest growing news website in the world Click here to find out more.

Unlock a world of benefits! From informative newsletters to real-time stock tracking, breaking news and personalized newsfeeds – it’s all here, just a click away! log in now!

Published: 28 Dec 2023, 09:30 PM IST