Hospitality business thrives in India; find out which city emerged as standout performer
Indian hospitality has demonstrated strong growth in Q4 (October-December) 2024, with the top six markets experiencing year-over-year increases in both Average Daily Rate (ADR) and Revenue Per Available Room (RevPAR).
Interestingly, Hyderabad emerged as the standout performer, recording the highest RevPAR growth at 23.3 per cent mainly driven by a significant increase in ADR. Bengaluru also showed impressive resilience, with high RevPAR growth supported by improvements in both ADR and occupancy rates. In a recent report by JLL, the Q4 quarter saw substantial activity in hotel signings, with 99 new hotels totalling 11,943 keys being signed.
Such trends indicate continued investor confidence and expansion in the Indian hospitality market.
In terms of transactions, the total value for 2024 was estimated at approximately Rs 2,900 crore, highlighting significant investment in the sector. As per the report, Tier II and Tier III cities accounted for 50 per cent of the transactions, predominantly involving unbranded mid-scale properties. This suggests a growing interest in developing hospitality infrastructure beyond the major metropolitan areas. The investment landscape saw diverse participation, with High-Net-Worth Individuals (HNIs), family offices, and private owners contributing 51 per cent of the investment volume.
The Q4 2024 also saw a significant shift towards Tier II and III cities, which accounted for 75 per cent of new hotel signings. The midscale segment dominated, representing 53 per cent of hotel openings and 44 per cent of signings. Uttar Pradesh led in signings, with 1,744 keys. Interestingly, HNIs, family offices, and private owners contributed 51 per cent of the investment volume, indicating a growing interest from individual investors in the hospitality sector.
As per the report, new hotspots are emerging in Delhi's Yashobhoomi and Mumbai's airport district, signalling the potential for future growth in these areas. Overall, the Q4 2024 report paints a picture of a robust and expanding Indian hospitality market, with growth spread across various cities, tiers, and segments, suggesting a positive outlook for the industry.
The numbers indicate India's tourist boom which is being backed by a strong domestic travel demand both in business and leisure segments. Hotel investments saw several new groups attracted towards building new hotels especially in tier II and tier III towns. There were 367 new hotel signings and 154 new hotel openings last year. This represented 14 per cent of growth over 2023. Experts point out that this is encouraging for the hotel industry ecosystem as it will boost construction activity, and lending activity and will provide jobs across the sector.
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