Magazine

2024: The Year to Emulate

From the depths of 2020 to the records of 2024, it has been a remarkable roller coaster ride for Indian hospitality. A closer look reveals just how amazing this ride has been.

By Suman Tarafdar
Business| May, 29

Indian hospitality is on a high as almost never before. The industry is seeing near record-breaking levels, whether for occupancy, ADRs and RevPAR, largely fuelled by a surge in demand for travel and events. The sector is currently valued at over $24 billion and is expected to build on this growth and reach $31 billion within the next five years.

 

Investment in the sector is growing at an unprecedented pace, almost across all tourism hubs as well as major urban centres. From city centre hotels to resorts catering to various niches—leisure, wildlife, adventure, beach, mountain, etc., all are attracting ever greater interest from investors, as is religious tourism. The investment in the premium segments—
luxury, upper upscale by several institutional and branded players is especially notable, which is likely to result in a record number of branded hotels in the coming years. An unprecedented number of players in the sectors also went public, delivering an optimistic outlook for the sector.

 

The shortage of skilled staff has been actively addressed over the previous year, and even though it’s a long-term challenge, the sector is seeing increasing employment opportunities and the sector is drawing back increasing numbers, many of whom had exited during COVID.

The numbers tell the story.

And what a story.

  • 2024 reported all India occupancy at 63.9%.

 

  • The ADR was just short of 8k (₹ 7,951).

 

  • RevPAR was over ₹ 5,000.

 

  • RevPAR growth y-o-y stood at 10.7%.

 

  • India finally has over 200,000 branded hotel rooms.

 

  • About 14,400 rooms were added in 2024. New Build hotels added 11,700 rooms, conversions (net) added 2,000 rooms and another 700 from expansions or hotel completions.

 

  • The supply pipeline has grown to 105,000 rooms to be opened by 2029.

Source: CoStar

  • The total current pipeline of branded rooms stands at 113,000.  

 

  • The average size of new build hotels was 69 rooms; of conversions, 46 rooms.

 

  • 67% of supply addition in 2024 and 65% of pipeline supply were in markets outside the top 10, widening the spread of operations and demand.

 

  • 43% of pipeline supply is in leisure destinations; this includes 12% growth in religious destinations.

 

  • India had 61,000 rooms in the leisure segment in 2024, about 31% of the total supply.

 

  • Seven markets had at least 70% occupancy - Mumbai, Delhi, Chennai, Kolkata, Lucknow, Indore and Coimbatore.


 

Source: Horwath HTL

  • 23 of the 24 largest markets for hospitality in India saw RevPAR growth, Ahmedabad being the only exception.

 

  • Amongst leading markets, Udaipur had the highest ADR of ₹ 15,946 followed by Mumbai (₹ 11,500), Goa (₹ 10,900) and Delhi (₹ 10,300).

 

  • For RevPAR, Mumbai topped with ₹ 8,900 followed by Udaipur, Delhi and Goa topping the ₹ 7,000 mark.

 

  • ADR figures are remarkable – in Udaipur, the Luxury & Upper Upscale segment crossed ₹ 24,000.

 

  • Two hotel portfolios were listed, along with an owner-operator hotel company. 3 other hotel companies are listed on the SME exchange.


 

  • Market capitalisation of the sector has increased almost 12 times, from ₹ 207 billion in March 2015 to ₹ 2.5 trillion as of the end January 2025.

 

  • Increased revenues have enabled improved EBITDA margins for hotels. Data for listed companies, covering about 44,000 rooms, reflect average EBITDA margins of 36% for FY24 (+1 pt from FY23) and 32% for the half year April 24 to September 24 (similar to the corresponding previous year period).

 

  • The debt for Indian hospitality is reducing. Data from various hotel companies representing ownership of over 53,000 rooms, shows loan to value at about 12.5% reflecting lower risk levels to date.

 

  • Foreign Tourist Arrivals (FTA) for H1-24 were 4.8 million (+9.1% over 2023). The slowdown of travel from Bangladesh (the largest source market, according to GoI data) has impacted H2-24 with arrivals from January to October 2024 at 7.68 million (+2.8% over 2023), but behind 2019 levels.


 

  • The quantum of  YoY ADR gain has slowed in comparison to 2022 and 2023, but these were unusual years of recovery.

 

  • For the first time in several years, the net effect of conversions (adjusted for de-flagged hotels) was positive, adding 2,000 rooms to the overall supply. 

 

  • Among 169 new-build hotels –

      • 3 hotels with 200-225 rooms.

      • 37 hotels with 50-75 rooms. 

      • 73 hotels with less than 50 rooms.


The market is growing in capacity and size. In 2024, demand increased by 29,000 rooms per day compared to 2019.

 

Source: India Hotel Market Review 2024, Horwath HTL

 

2024’s impressive growth should augur well for the sector, despite its notorious cyclical nature. Just how durable and solid the year has been in the next five to ten years. Till then, everyone can bask, and raise a toast to the year that was.