HOTEL BUSINESS – NOW OR NEVER – Vo Jeeta Wohi Sikandar!

1.The Hospitality Industry – Expected to reach $30b in 2028 from expected 23b in 2023. And As per ‘Vision 2047: Indian Hotel Industry’ report by the Hotel Association of India (HAI) and Benori Knowledge, the direct contribution of the hotel industry to GDP was $40 billion in 2022 and is expected to reach $68 billion by 2027

2. Revenue from Hotel market is projected to reach USD 8B in2023 (About INR 66000 cr) and expected to touch about USD 11B by 2027. 

3. Sharp recovery in hotel industry with ARR surpassing the touching the pre-covid levels and it is expected to grow by 18-20% in 2023/2024. 

The average room rate (ARR) for upscale hotels increased by 13% in fiscal year 2022. It is projected to experience a further 19-21% surge this fiscal year, reaching a ten-year peak of Rs 7,500-10,000. Despite a 50% occupancy level in fiscal 2022, this fiscal year is anticipated to witness a significant rise, reaching a ten-year high of 67-72%. This stands in stark contrast to fiscal 2021, when the ARR plummeted to 20-25% and occupancy dropped by half to 31% due to the pandemic. 

While premium hotels are predicted to achieve their highest ARRs and occupancy rates in a decade, budget hotels are expected to exhibit an ARR trend 20% higher than the pre-pandemic levels. 

4. Hotel & Accommodation – Revenue is projected at $7.66 billion in 2023 to CAGR of 8-9% between 2023-27. 61m potential customers by 2027 

5. FDI – 100% FDI in Tourism Industry is allowed under automatic route. And 100% FEDI is permitted for tourism construction projects, including development of equisite hotels, resorts, and recreation facilities. 

6. Improved Air travel – 61% increase in air travel passenger traffic over 2021 i.e. 294m (J-D 2022) and 50% increase in domestic air travels and 167% in international air travels. 

7. Growth in Domestic & FTA (Foreign Tourist Arrivals) – In the medium term (2027-2037), domestic tourism is predicted to rise from 677 million (2021) to 1.5 billion (2030), eventually reaching 15 billion (2047) in the long term (2037-2047).  

Regarding foreign tourist arrivals (FTAs) in India, the report anticipates an ascent from 1.5 million (2021) to 15 million (2024), progressing to 25 million (2030), and with a further estimate of drawing 100 million tourists by 2047.

8. Various strategic initiatives by Government of India –  

  • US$ 290.4 million has been allocated to the Ministry of Tourism. 
  • Launched a scheme wherein five lakh tourists will get free visas. 
  • Notable events like the G20 Summit and cricket World Cup, along with resumed foreign travel, showcase this dedication.  
  • The focus is on public-private partnerships to promote tourism with plans to upgrade 50 airports, tourism destinations, and infrastructure.  
  • Initiatives like ‘Incredible India’ have drawn more tourists.  
  • In 2023, under the ‘Visit India Year’ during India’s G20 Presidency, 100 tourist destinations will be developed. Skilling efforts align with the ‘Dekho Apna Desh’ campaign, and border villages will benefit through the Vibrant Villages Programme. 
  • Unity Malls are set to enhance tourist experiences. This underscores India’s commitment to becoming a prime global tourist destination while driving economic growth and employment. 

9. Advantage of India’s G20 Presidency – Over 200 G20 meetings are expected to be across 55 destinations in the country till November 2023. These meetings are expected to help inbound tourism significantly. 

10. Expected huge growth in tier-2 & tier-3 cities: The hotel sector in tier-2 and tier-3 cities is thriving due to improved infrastructure and evolving travel trends. Better connectivity is luring business and leisure travelers, while trends like “bleisure,” staycations, wellness retreats, and medical tourism are expanding accommodation demand. This convergence offers hoteliers a promising opportunity to cater to a growing market. 

  • Huge growth projected in Travel:  677m in 2021 to 1.5 billion by 2030 in the mid term 2027-2037 and to touch 15billion by 2047 in the long term 2037-2047 
  • India is the most digitally advanced traveller nation in terms of digital tools being used for planning, booking, and experiencing a journey. India’s rising middle class and increasing disposable income has supported the growth of domestic and outbound tourism. 
  • The end game – Accelerated Valuation. The convergence of favorable industry KPIs, strategic brand development, and tailored solutions offers a compelling opportunity for growth and valuation enhancement. Industry valuations provide tangible evidence of this potential. Embracing these strategies positions the industry on a trajectory of prosperity and distinction. A compelling brand identity, aligned with corporate values, is pivotal for valuation growth. Trust and loyalty among stakeholders are cultivated through consistent brand messaging and sound corporate governance. Personalized experiences are shaping industries, including hotels. Tailoring services to guests’ preferences enhances satisfaction and perceived value. This approach also positively influences investor valuations by showcasing responsiveness.

Enterprise Valuations Across the Landscape – Vo jeeta wohi sikandar 

  • Chalet Hotels: Valued at INR 10,100 crores ($1.2 billion USD) 
  • IndHotels: Valued at INR 45,700 crores ($5.58 billion USD) 
  • Lemon Tree: Valued at INR 6,650 crores ($810 million USD) 
  • Oriental: Valued at INR 1,500 crores ($190 million USD) 
  • OYO’s projected valuation range of $8 to $10 billion USD (INR 75,000 to 82,000 crores) underscores the potential of strategic alignment in driving valuation growth. 


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