Horwath HTL, a leading global hospitality consultant, in its year-end report called 2022 a dream year for the Indian hospitality industry.
Salient features of the report:
- 65% of respondents to a survey conducted by Horwath HTL (HHTL) say it was their best year ever; another 30% ranked it as among the three best years ever for their hotel.
- All India ADR (Average Daily Rate) grew nearly 38% over 2021.
- Leisure is now clearly a business and not a side investment. Leisure destination ADRs are so much higher than the main business cities with Udaipur leading the pack, and Goa, Himachal Pradesh, Mumbai and Uttarakhand following.
- High demand and rates in cities such as Mumbai and Delhi are pushing hotels to seek a reduction in crew rooms. Five markets – Mumbai and Delhi among business cities, and Goa, Udaipur and Jaipur – have 26.8% supply share but delivered 37.3% of the room revenue earned in India in 2022. The impact of concentration would have been even greater but for the fact that the 4 other metro cities – Bengaluru (BLR), Chennai, Hyderabad and Kolkata – have 23.4% supply share but delivered a sub-par 21.5% of room revenue. Once these markets get back to a better normal (and some premiums), the all-India numbers would be brighter. These nine markets control half of India’s supply.
- Lack of Scale remains a serious concern. The average size of new supply created in 170 hotels in 2022 was 65 rooms. 93 of these hotels had 50 rooms or less. Just 2 hotels had more than 300 rooms; 2 others with large room count opened with partial inventory but will ultimately fall in the larger inventory category.
- Airport enhancement and the spread of regional airports are opening up new opportunities for business, and for drawing larger visits. Mopa is a landmark for Goa. Pushkar and Ajmer have gained from Kishangarh airport; Jaisalmer, Varanasi and the Doon valley have gained from new/ expanded airports; Hampi can gain from Hubli airport – these are just some examples. The Government expects to have 220 operating airports by 2026, including the major new airports at Jewar and Navi Mumbai
- Margins could be under some pressure as payroll costs (employee numbers and salaries/benefits), the cost of supplies and of doing business, are rising. Revenue increases will be offset but absolute costs will rise.
Looking Forward:
- To a continued golden period, with pragmatism on the expectation of year-on-year growth particularly if your reporting period is April to March.
- Newer markets and newer opportunities – Varanasi, Kevadiya, North-East, pilgrim centres, Uttar Pradesh, Navi Mumbai.
- Continued revival of the manufacturing sector – this will widen the business travel demand base.
- Positivity in the IT sector.
- Inbound travel, across all purposes.
- Solid attention to sector education, training and employment attractiveness.
