HVS India Hospitality Industry Overview 2023

This report highlights the key trends in the Indian hospitality industry in 2023 along with the sector performance metrics, brand signings, and brand openings during the year. It also provides our outlook for the sector for 2024.
Mandeep S Lamba

Executive Summary

The year 2023 marked a crucial turning point for the global travel and tourism industry, as it continued its recovery while navigating challenges. Amid extreme climate changes, escalating geopolitical tensions, growing economic headwinds, and rising travel costs, the global travel industry shifted gears making vigorous strides towards pre-pandemic levels, as more and more people traveled for business, education, and leisure activities.

In this global narrative of resurgence, India stood out not just as a participant but as a beacon of growth and optimism. Buoyed by robust economic growth, historic scientific achievements like Chandrayaan-3, and the prestigious G20 presidency, India showcased remarkable resilience and dynamism. These milestones, along with the steady rise in domestic tourism and the revival of inbound tourism catalyzed the travel and tourism sector, in turn propelling the hospitality sector to new heights in 2023.

While revenge travel gradually declined, the leisure segment experienced sustained growth, driven by evolving traveler preferences and a rising interest in unique experiential travel. Inbound tourism displayed promising signs of recovery, with 9.2 million foreign tourist arrivals during the calendar year 2023, marking a remarkable 49% year-on-year growth and just over 15% short of all-time-highs last experienced in 2019. After nearly three years of restricted cross-border travel, outbound tourism from the country witnessed a strong comeback, mirroring a trend akin to the pent-up demand that fueled domestic tourism in the last two years. Consequently, over 27 million Indian nationals traveled overseas during the year, registering a 26% growth compared to 2022 and 1.3% compared to 2019. The strong revival of weddings, MICE and corporate travel segments, coupled with high-profile events like the G20 meetings and the ICC Men’s Cricket World Cup played a pivotal role in revitalizing the fortunes of the sector during the year.

The performance of the Indian hotel sector in 2023 mirrored this optimism, with key performance indicators such as occupancy rate, average rate (ARR), and Revenue Per Available Room (RevPAR) witnessing significant growth. The sector closed the calendar year 2023 with a nationwide occupancy rate in the range of 63-65%, up 3-5 percentage points (pp) from the previous year and nearly reaching the pre-pandemic level of 65-67% in 2019. The ARR for 2023 reached an impressive INR 7,400-7,600, which surpassed the figures from 2022 by 21-23% and 2019 by 24-26%, highlighting the sector’s ability to push rates driven by the buoyant demand. The growth in average rates helped RevPAR to reach INR 4,662-4,940 in 2023, indicating a significant increase of 29-31% from 2022 and 19-21% in 2019.

Destinations across the spectrum, from bustling metros like Mumbai and Delhi to popular leisure destinations like Goa and Jaipur, and serene, lesser-explored locations such as Rishikesh and Kashmir emerged as stalwarts of this growth, each telling its unique story of recovery and opportunity.

The year also marked a record number of brand signings, underlining the sector’s confidence in the Indian market’s potential. This growth was not just quantitative but strategic, with a keen focus on expanding into smaller cities and underserved markets. These developments reflect a sector that is not just recovering but reimagining its future.

Looking ahead to 2024, the outlook for India’s hospitality sector is imbued with a sense of optimistic realism. HVS anticipates continued growth, driven by sustained domestic demand, the return of international travel to its full glory, and the growth of niche tourism segments coupled with the gigantic growth taking place in travel infrastructure across the country. With a landscape as dynamic and diverse as India’s, the potential for innovation, expansion, and sustainable development in the travel and tourism sector is boundless.

We expect India-wide occupancy to improve to 66-67% in 2024, coupled with a 6-8% increase in ARR will push RevPAR to INR 5,281 during the year, almost 31-33% higher than the pre-pandemic RevPAR recorded in 2019.

We hope you find this report insightful and look forward to your feedback as we continue to navigate the evolving landscape of Indian hospitality together.
Mandeep S. Lamba, President – South Asia, oversees the HVS global hospitality practice for South Asia. He has spent over 30 years in the hospitality industry of which the last 19 have been in CEO positions. Having worked with leading International and domestic Hotel Companies such as IHG, Radisson & ITC Hotels, he also set up joint venture companies with Dawnay Day Group UK and Onyx Hospitality, Thailand to own and operate hotels in India giving him a broader exposure to the hospitality business.
An established industry leader, Mandeep has won several awards and recognitions in India and abroad for his accomplishments and contribution to the hospitality industry. He is a Certified Hospitality Administrator from the American Hotels Association (CHA), a member of the Royal Institute of Chartered Surveyors, UK (MRICS) and a member of the Tourism Council of CII (Northern India). His views are often solicited for television and print media as a spokesperson for the hospitality & tourism sector.
Prior to joining HVS in 2018, Mandeep was the Managing Director, Hotels & Hospitality Group for JLL. 

Contact Mandeep at +91 981 1306 161 or [email protected]

About Dipti Mohan

Dipti Mohan, Associate Vice President - Research with HVS South Asia, is a seasoned knowledge professional with extensive experience in research-based content creation. She has authored several ‘point of view’ documents such as thought leadership reports, expert opinion articles, white papers, and research reports across industries including hospitality, real estate, infrastructure, cement, and construction. Contact Dipti at [email protected]

About Dhwani Gupta

Dhwani Gupta, Associate - Research with HVS South Asia, studied literature for her undergraduate and believes that you can do anything with the right amount of research. After graduating, she pursued a course in Management and Liberal Arts which gave her a wider perspective of the world. As a result, the more difficult a topic is, the more fun she has writing it. Contact Dhwani at [email protected]



Submit a Question or Comment