Investments in Indian hospitality industry to exceed $2.3 billion over 2-5 years: CBRE

All industry KPIs, such as occupancy rate, average rental revenue per occupied room, and revenue per available room, are expected to surpass pre-pandemic levels this year

Saurav Anand
Updated17 May 2023
India will add approximately 12,000 rooms in 2023. (File Photo)
India will add approximately 12,000 rooms in 2023. (File Photo)

New Delhi: Investments in India’s hospitality industry are likely to surpass $2.3 billion over the next two to five years, according to a report by real estate consulting firm CBRE South Asia.

The report, titled ‘Indian Hospitality Sector: On a Comeback Trail’ released on Wednesday highlights the positive outlook for the sector, driven by a successful vaccination program, reopening of borders, removal of travel restrictions, sustained economic growth.

According to the report, the recovery path for the hospitality sector is becoming clearer, with more than $400 million in investment expected during 2020-23. It also predicts the addition of approximately 12,000 rooms in 2023, with numbers expected to grow at a compound annual growth rate (CAGR) of around 3.3% by 2025.

The report suggests that demand recovery is likely to outpace supply, benefiting key performance metrics of the hotel sector.

CBRE expects demand in the coming years to be more evenly distributed across various cities and markets, rather than concentrated in select areas. The steady growth in supply is anticipated to continue for the foreseeable future, attracting increased investor interest in the Indian hospitality space.

The report also highlights that all industry key performance indicators (KPIs), such as occupancy rate, average rental revenue per occupied room, and revenue per available room, are expected to surpass pre-pandemic levels this year. In 2022, India witnessed a 94% growth in revenue per available room, compared with 2021, indicating a smooth recovery from the impact of the pandemic.

Anshuman Magazine, chairman & CEO - India, South-East Asia, Middle East & Africa at CBRE, said, “International hotel chains have been making significant investments in the country in recent years, capitalizing on the growing demand for hospitality services.” He also highlighted the active participation of Indian companies in the sector, both through investments and expanding their presence. The acceptance and global recognition of Indian hospitality brands have further contributed to the sector’s growth.

Rami Kaushal, managing director, Consulting & Valuation Services, India, Middle East & Africa at CBRE, said that the easing of pandemic restrictions, pent-up demand, and India’s affordability compared to other global destinations have contributed to steady growth in the sector. He noted the rising popularity of “bleisure” travel, the focus on domestic, medical, and religious tourism, and the industry’s adaptability to operational changes brought about by the pandemic.

CBRE’s report reflects the positive trajectory of India’s hospitality sector, driven by investments, rising demand, and evolving consumer preferences. The government’s continued focus on reforms is also expected to further enhance the sector’s growth, with projections indicating that India’s tourism and hospitality sector may earn $50.9 billion as visitor exports by 2028.

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