Take Skift
India’s hotel industry has gaps and enough potential to achieve significant growth in the next few years. However, whether the players can capitalize on them is another question entirely.
Bulbul Dhawan
According to real estate services firm JLL, branded hotel room signings in India increased by nearly 40% in the April-June quarter compared to the same period in 2023. Over 9,700 new rooms were booked in 82 branded hotels during the quarter, while another 50 hotels opened during the period.
Hotel brands continued to focus on Tier 2 and 3 cities, where 70 of the signings and 45 hotel openings took place. Mid-range and upscale hotels dominated the signings and openings during this period, while only four budget hotels were signed and opened in total.
JLL also reported a significant increase in revenue per average room (RevPAR) in five key markets: Bangalore, Chennai, Delhi, Hyderabad and Mumbai. In Goa, on the other hand, RevPAR fell by 6% even though occupancy rates in the state rose by over 1.5%. Hyderabad reported the sharpest increase in average daily rates – 15%. This led to a nearly 12% increase in the state’s RevPAR during the quarter.
Jaideep Dang, Managing Director, Hotels and Hospitality, JLL India, said, “There is strong momentum in both new developments and operational assets in the business and leisure markets. Although the summer season reduced demand for corporate accommodation in Q2 2024, the sector continued to see growth in average daily rates compared to Q2 2023.”
The gap in India’s hotels: India is an underserved market in the hospitality industry, as Accor Chairman and CEO Sébastien Bazin said earlier this year. According to Bazin, India has fewer than 200,000 branded hotel rooms – compared to 3 million unbranded rooms – despite having a population roughly the same size as China.
The top five hotel operators in India have fewer than 1,000 hotels between them, while China has 25,000, Bazin pointed out, adding: “The question facing all of us is how can we collectively go from 1,000 hotels to 15,000 hotels without having to wait 15 years. There is demand and there is an emerging middle class that needs affordable accommodation and wants to explore the country.”
The supply of operating inventory increased by less than 1% in the six markets, while demand increased by 2.7%. This discrepancy is also a positive feature for the Indian market, Hyatt CEO Mark Hoplamazian had previously said.
Air India introduces in-flight entertainment system for older fleet
Full-service airline Air India has introduced a wireless in-flight entertainment system called Vista for its older wide-body fleet, with the aim of making the service available to passengers on routes where new or refurbished aircraft are not yet operational.
Air India has partnered with digital service provider Bluebox for this service and Vista will be hosted on Bluebox’s digital service platform. Vista would allow passengers to stream content to their personal electronic devices using the Bluebox Wow wireless network system.
The airline’s newly inducted widebody aircraft have built-in entertainment systems and are therefore not part of this system. Vista will apparently remain in place until Air India’s older fleet is retrofitted.
Fortune Hotels signs contract for upscale hotel in the Indian state of Uttar Pradesh, Gorakhpur
Fortune Hotels has signed an operating agreement for an upscale hotel in Gorakhpur, Uttar Pradesh. The 74-room Fortune Park Gorakhpur is scheduled to open in 2026.
Speaking at the launch, Samir MC, Managing Director, Fortune Hotels, said the state’s potential is growing, adding that the group already has six strategic alliances in Uttar Pradesh.
In May this year, Samir had told Indian media that Fortune Hotels plans to open a new hotel every month this financial year. He added that he was confident that the industry could attract a diverse range of travellers given positive factors such as rising disposable incomes, desire for unique experiences and improved accessibility.
New South Wales expects increase in Indian tourists
New South Wales is expecting double-digit growth in tourist numbers from India this year. The region is banking on improving direct air links between Sydney and India to achieve this growth.
Destination NSW Country Manager Samar Chokshi said over 181,000 Indian tourists visited New South Wales in 2023. “Given the current trend coupled with more direct flights between India and Sydney, an increase in disposable income and an easy e-visa application process, we expect our tourism to increase and visitor numbers are likely to grow by double digits,” he added.
Chokshi added that Indians spent A$482.2 million ($325 million) in the state during their travels last year and spent a total of 7 million nights there, a 109% increase compared to pre-pandemic data.
IndiGo gains while Air India and SpiceJet lose market share in July
Budget carrier IndiGo regained its lost market share in July, while SpiceJet, Air India and Air India Express reported a decline during the month, according to data from the Directorate General of Civil Aviation (DGCA). Budget carrier Akasa Air also reported a decline in its market share.
Full-service airline Vistara, which is about to merge, also increased its market share for the second month in a row, indicating strong competition among airlines in India, even though IndiGo holds a dominant position.
Airlines are trying to expand their networks and offerings to accommodate India’s growing passenger base. While IndiGo has announced a business class configuration and a loyalty program, Vistara has introduced free Wi-Fi on select flights. Air India is also modernizing its fleet.
India’s domestic passenger traffic increased by over 7% in July compared to the same month last year, as nearly 13 million passengers travelled by air during the month. However, 2024 saw a continued downward trend in July passenger numbers, which declined from 13.8 million in May to 13.2 million in June.
