India Hotel Market Review 2023

Occupancy and Demand: All-India occupancy increased by 4 percentage points to 63.6% in 2023, with room demand per day up 19% compared to 2019. Major markets like Bengaluru, Gurugram, Hyderabad, and Pune showed promising demand expansion, although some still trail pre-COVID occupancy levels. Foreign traveller arrivals also grew by 16.8% year-on-year, though still below pre-pandemic levels, indicating potential for future growth. 

ADR and RevPAR Trends: The ADR in 2023 of Rs. 7,479 surpassed previous years, with luxury and upper-upscale segments seeing notable gains. Lux-UpperUp ADR grew by 36%, while the Upscale-UpMid and Midscale-Economy segments each saw a 25% increase. The ADR growth reflects India’s hotel products and services deserving better pricing, especially when compared with international standards. 

Leisure Segment Expansion: The leisure segment significantly contributed to the market’s positive performance. Room revenue share from markets like Goa, Jaipur, Udaipur, Uttarakhand, and Himachal Pradesh nearly doubled, from 8.5% in 2019 to 16.9% in 2023. Udaipur and Goa led with the highest ADRs, reflecting the strong demand for leisure travel. 

Pilgrim Centres and Regional Markets: Chain-affiliated supply at pilgrim centres has doubled since 2019, offering better quality options for visitors and raising RevPAR by 38.5% to Rs. 3,200. Additionally, regional markets outside the top 10 saw 60% of new supply additions in 2023, widening the operational spread and creating new demand avenues. 

Performance by Market:  

• Mumbai: Achieved the highest ADR among business cities at Rs. 10,641, with a strong performance in the Lux-UpperUp segment.

• New Delhi: Saw a significant ADR jump to Rs. 9,574, driven by the Lux-UpperUp segment’s 50% RevPAR growth.

• Gurugram: Despite positive growth, it remains below its 2019 occupancy levels.

• Bengaluru: Recorded the highest ADR since 2009 at Rs. 7,557, though occupancy was impacted by increased inventory and IT-centric demand.

• Hyderabad: Showed consistent performance with a 31% ADR increase.

• Chennai: Achieved its best performance since 2008 with 69.1% occupancy, though ADR growth remains a challenge.

Market Outlook and Future Trends:
The report highlights several key trends and expectations for 2024: 

• Continued strong growth from metro markets in South India. 

• Increased demand from new convention centres in Mumbai, Delhi, and Jaipur. 

• Expansion of hotel options at pilgrim centres to cater to diverse quality and price needs. 

• Growth in sports-related demand and potential bids for major events like the 2036 Olympics. 

• Development in new and evolving destinations, such as Ayodhya, Kevadiya, Kashmir, and the North-east. 

Sustainability and Responsibility:
The report emphasizes the importance of sustainability and responsible hospitality practices. It calls for planning projects with climate change in mind, avoiding environmentally harmful developments, and focusing on long-term value creation. The industry is urged to adopt a responsible approach to avoid waste and ensure resilience against potential risks. 

India’s hotel market in 2023 demonstrated robust growth, with significant improvements in ADR, RevPAR, and occupancy rates. The leisure segment and regional markets showed strong performance, while the luxury and upper-upscale segments led ADR gains. Looking ahead, the market is poised for continued growth, driven by increased demand from various sectors and strategic developments in emerging destinations.  

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