Market Report

HVS Monday Musings: Indian Hotel Sector – H1 2023 Performance Review

July 30, 2023
This article briefly discusses the Indian hotel sector's performance in the first half of the calendar year 2023.
Demand patterns in the Indian Hotel sector are normalizing after the severe fluctuations of the past three years. Even though revenge travel is gradually declining, demand in the leisure segment remains strong. Meanwhile, the MICE segment and corporate travel segment are continuing to recover, despite the hybrid work culture, online meetings, and higher airfares slowing the turnaround rate. As a result, the sector witnessed an average nationwide occupancy rate of 63-65% in the first half of the calendar year 2023 (H1 2023), showcasing an increase of 6-8 percentage points (pp) from the same period in 2022. India’s average hotel rates saw a strong increase of 30-32% in H1 2023 compared to H1 2022 and were 21-23% higher than in H1 2019. The steady rise in average rates helped the nationwide RevPAR to reach INR4,650-4,850, reflecting a growth of 46-48% compared to H1 2022.
 
The year got off to a good start with the nationwide occupancy rate breaching the 70% mark in February 2023, a first since the pandemic. Consequently, the occupancy rate of 65-67% in Q1 2023 was 15-17 pp higher than in Q1 2022, which was impacted by the Omicron wave and the reintroduction of travel restrictions in the country. Average rates, meanwhile, experienced a year-on-year increase of 49-51% in Q1 2023, helping RevPAR to almost double during this period.
 
Demand began to stabilize in Q2 2023, with the occupancy rate reaching 62-64%, which was similar to Q2 2019 levels but 1-3 pp lower than Q2 2022. Average rates continued to rise during the quarter and were 16-18% and 23-25% higher than Q2 2022 and Q2 2019, respectively.   
 
Despite the impressive performance in H1 2023, the sector still has not been able to catch up with its all-time peak performance in 2007. The occupancy rate for H1 2023 is 6-8 pp lower than H1 2007, while average rates are 8-10% lower (without adjusting for inflation which would further impact the rate significantly), although it is important to keep in mind the large growth in inventory, which has increased more than threefold since 2007.
 
Source: HVS Research
Market Report

HVS Monday Musings: Indian Hotel Sector – H1 2023 Performance Review

July 30, 2023
This article briefly discusses the Indian hotel sector's performance in the first half of the calendar year 2023.
Demand patterns in the Indian Hotel sector are normalizing after the severe fluctuations of the past three years. Even though revenge travel is gradually declining, demand in the leisure segment remains strong. Meanwhile, the MICE segment and corporate travel segment are continuing to recover, despite the hybrid work culture, online meetings, and higher airfares slowing the turnaround rate. As a result, the sector witnessed an average nationwide occupancy rate of 63-65% in the first half of the calendar year 2023 (H1 2023), showcasing an increase of 6-8 percentage points (pp) from the same period in 2022. India’s average hotel rates saw a strong increase of 30-32% in H1 2023 compared to H1 2022 and were 21-23% higher than in H1 2019. The steady rise in average rates helped the nationwide RevPAR to reach INR4,650-4,850, reflecting a growth of 46-48% compared to H1 2022.
 
The year got off to a good start with the nationwide occupancy rate breaching the 70% mark in February 2023, a first since the pandemic. Consequently, the occupancy rate of 65-67% in Q1 2023 was 15-17 pp higher than in Q1 2022, which was impacted by the Omicron wave and the reintroduction of travel restrictions in the country. Average rates, meanwhile, experienced a year-on-year increase of 49-51% in Q1 2023, helping RevPAR to almost double during this period.
 
Demand began to stabilize in Q2 2023, with the occupancy rate reaching 62-64%, which was similar to Q2 2019 levels but 1-3 pp lower than Q2 2022. Average rates continued to rise during the quarter and were 16-18% and 23-25% higher than Q2 2022 and Q2 2019, respectively.   
 
Despite the impressive performance in H1 2023, the sector still has not been able to catch up with its all-time peak performance in 2007. The occupancy rate for H1 2023 is 6-8 pp lower than H1 2007, while average rates are 8-10% lower (without adjusting for inflation which would further impact the rate significantly), although it is important to keep in mind the large growth in inventory, which has increased more than threefold since 2007.
 
Source: HVS Research