Mumbai: Hotels in India, which saw six out of every 10 rooms occupied in 2015 (as of October-end), are hoping for an encore in 2016 as well, as the addition of new rooms fails to keep pace with a rush of foreign tourists and business travellers.

Executives at Indian Hotels Co. Ltd, Hotel Leelaventure Ltd and Starwood Hotels and Resorts said they expect holiday travel demand that has started trickling in to spill over into the next few months as well.

According to a report released on 21 September by HVS Global Hospitality Services, a hospitality consulting firm, hotel occupancies in India stand at 60.3%. This is the first time in five years that pan-India hotel occupancy has crossed 60%. During 2010-2014, occupancies have ranged between 57% and 58%.

Estimates by property consultant JLL show demand for hotel rooms is growing at 11-12%, while fresh supply has fallen as much as 5% in the past year.

Occupancies up to October-end rose by around 5 percentage points from a year ago, while revenue per available room rose by 6-7%, particularly in cities such as Bengaluru and Chennai, according to Mandeep Lamba, managing director (hotel and hospitality), JLL India.

“The overall occupancy level across the country has grown by about 8-9%. We consider this as a green shoot as the supply pipeline is drying up in most places. Next year, it should be even better as we expect tourist traffic to improve," Manav Thadani, chairman, HVS Asia Pacific, said over the phone.

India’s hotel industry is primarily driven by demand from business travellers. Hoteliers and consultants said government initiatives such as Make in India, Digital India and the e-visa scheme will further drive demand. E-visa scheme refers to the electronic visa facility made available by the government to citizens of certain countries. This year, it has been expanded to 113 countries from 40.

Indian Hotels, which runs the Taj chain of hotels in India and abroad, said it has seen healthy growth in terms of occupancy in all its key markets. The average occupancy level across all its hotels remained unchanged at 64% in the year to March 2015 from the previous fiscal year.

“The good news for the Indian market is that growth in room demand is outpacing supply growth for all key markets so far this year. The year 2014-15 saw a supply growth of 4.4%, whereas demand increased by 7.8% over the previous year and the demand growth in this financial year has been even stronger for the country," said Chinmai Sharma, chief revenue officer at the Taj Group.

JLL’s Lamba also agrees that occupancy improved countrywide because fewer rooms were added. The current trend is likely to continue in the next few months due to strong double-digit growth in demand, he said.

According to the HVS report, the pipeline for proposed supply totalled 114,466 rooms in 2007-2008. However, at the close of 2014-2015, the proposed supply was down to 56,270 rooms.

As of March 2015, the total number of hotel rooms across major cities in India stands at around 112,284.

Luxury hotel chain The Leela said it has seen occupancies improve by over 5% in the past year, which is likely to rise further as it expects to see a surge in foreign travel in the ongoing travel season.

“Moving forward, we expect the e-visa facility to enable the late-booking foreign leisure travellers to consider travel to India. This, when combined with the normal late-booking surge from the domestic leisure traveller, should result in a further enhancement in occupancies," a Leela spokesperson said.

Similarly, Starwood Hotels and Resorts, which runs hotel chains such as Westin, Sheraton, St. Regis and W Hotels in India, is expecting demand to rise 8% during the peak season over last year. “Occupancy growth has been steady over the course of this year. In continuation of this trend, hotels expect to see strong, single-digit growth in demand during the peak season versus last year," said a spokesperson for Starwood.

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