“Indian Hospitality Sector on a Strong Uptrend—Demand to Outpace Supply Until 2029”

A Yes Securities report predicts that India’s hospitality industry will continue its post-pandemic boom, with demand growing at 10.4% CAGR, outpacing supply growth over the next five years.

New Delhi, February 23: India’s hospitality sector is poised for continued expansion, with demand expected to surpass supply growth over the next three to four years, according to a Yes Securities report. The industry, which has seen a strong rebound post-pandemic, is projected to maintain its upward trajectory through FY24 to FY29.

“We believe the uptrend is likely to continue over the next three years, though the increase will be more gradual. This is because of sustained momentum in demand, which is expected to outpace supply growth,” the report stated.

At an industry level, the report predicts a 10.4% CAGR growth in demand, while supply is set to grow at a slightly lower 9% CAGR over the same period.

Key Growth Drivers: Post-Pandemic Boom & Rising Travel Demand

The post-pandemic revival of domestic and international tourism, along with a surge in demand from the Meetings, Incentives, Conferences, and Exhibitions (MICE) segment, has been instrumental in the sector’s rapid recovery.

This strong demand has led to a sharp increase in Average Room Rates (ARRs) and occupancy levels, with the hospitality industry now experiencing a long-term upcycle fueled by:

• Shifts in consumer preferences
• Rising disposable incomes
• Increased travel and business spending

Luxury & Upscale Segments Leading Growth

The report highlights that luxury and upscale hotel segments, which currently account for 56% of the total supply, are likely to see increased demand. This will contribute to higher ARRs and occupancy rates, particularly in key urban markets where supply remains limited.

MICE Industry & Infrastructure Investments to Drive Expansion

India’s growing global significance and massive infrastructure investments, including new convention centers in Mumbai, New Delhi, and Jaipur, are expected to fuel the expansion of the MICE industry.

These developments will further boost demand for hotel rooms and event spaces, enhancing profitability and long-term growth prospects for the hospitality sector.

With these factors in play, India’s hospitality industry is set to experience a period of sustained prosperity, making it an attractive market for investors, developers, and global hospitality brands.

Tags:

Indian hospitality sector, hotel industry growth, post-pandemic recovery, Yes Securities report, MICE tourism, luxury hotels, travel industry, business travel, India tourism, hotel investments, market trends, convention centers, CAGR growth