Indian hospitality demand to outpace supply over next four years – Yes Securities

INDIA – According to a report by Yes Securities, India’s hospitality sector is expected to face a significant supply-demand gap over the next three to four years, driven by a robust post-pandemic recovery and strong recent performance.

A recent industry report forecasts that the upward trend in the hospitality sector will persist over the next three years, albeit with a more gradual increase.

The report indicates that sustained momentum in demand is anticipated to outpace the growth in supply, projecting a compound annual growth rate (CAGR) of 10.4% for demand over the FY24-FY29 period compared to a supply CAGR of 9%.

This optimism is largely attributed to a significant post-pandemic rebound driven by the revival of both domestic and international tourism, as well as strong growth in the Meetings, Incentives, Conferences, and Exhibitions (MICE) sector, which is expected to maintain its pace.

This renewed momentum has led to notable increases in average room rates (ARRs) and occupancy levels across the industry.

The report further suggests that the sector is set to enter a long-term upcycle, buoyed by evolving consumer preferences, rising disposable incomes, and increased travel spending.

In markets where supply growth is constrained, demand is projected to further outstrip supply.

Notably, the luxury and upscale segments, which currently comprise approximately 56 percent of existing supply, are expected to witness heightened demand, contributing to even higher ARRs and occupancy levels.

The MICE segment, in particular, is poised for growth, supported by India’s rising global significance and the development of new infrastructure such as convention centers in cities like Mumbai, New Delhi, and Jaipur.

These developments are expected to stimulate demand not only for hotel rooms but also for event spaces, thereby enhancing the overall performance of the hospitality sector.

India’s tourism and hospitality industry has emerged as a key driver of the country’s services sector, positioning India as one of the most popular travel destinations globally.

Tourism plays a crucial role as a significant source of foreign exchange and serves as a catalyst for socioeconomic development, much like in many other countries.

India’s rich history, diverse culture, and vibrant traditions are showcased through its tourism offerings, delivering substantial economic benefits.

Thanks to the consistent efforts of both central and state governments, the industry has recovered from the COVID-19 pandemic and now operates at pre-pandemic levels, setting the stage for sustained growth in the years ahead.

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