Market insights:
The hotel industry in India is a part of the travel and tourism industry. Business travelers are gradually increasing in number due to the rapid growth of the IT sector and the emergence of several global companies.
The key performance indicators (KPIs) used by the industry to measure business expansion and manage hotels are average room rate (ARR) and revenue per available room (RevPAR). The ARR stood at INR 5,458.68 in FY 2020 as against INR 5,671.00 in FY 2017. It is expected to reach INR 6,292.85 by FY 2025, while expanding at a compound annual growth rate (CAGR) of ~2.49% between FY 2021 and FY 2025. In FY 2020, the RevPAR was ~INR 1,951.34 and is expected to reach INR 3,336.28 by FY 2025. It is expected that the hotel industry will expand at a promising rate since India will be hosting the ICC Men’s World Cup in 2023. It has been assumed that this event would increase the foreign tourists’ footfall in the country.
Employee management is a major challenge faced by the industry. The attrition rate has gone up due to the lack of workforce quality and increased competition for trained employees from competing service sectors, such as aviation.

Segmentation insights:
Based on hotel type, the hotel industry can be segmented into independent/unbranded hotels, alternate accommodations, new-age hotel chain, and branded or traditional hotels. The independent/unbranded segment accounts for ~70% of the total available hotel rooms. The second-largest segment includes alternate accommodations. This is on account of the growing popularity of homestays among tourists. The new-age hotel chain is expected to hold nearly 6% of the total available hotel rooms in India in FY 2025. Moreover, the branded/traditional hotel segment, along with the major share in the organized sector, accounts for about 5% of the overall hotel industry in terms of room supply.

Government initiatives:
The industry is dependent on the tourism sector for business. The Ministry of Tourism, along with the Ministry of Railways and the Ministry of Civil Aviation, promotes tourism in the country. Therefore, government initiatives play a crucial role in its growth.
The Ministry of Tourism has undertaken schemes, such as PRASHAD (National Mission on Pilgrimage Rejuvenation and Spiritual, Heritage Augmentation Drive), SWADESH DARSHAN (Integrated Development of Tourist Circuits around Specific Themes), and the promotion of e-visa to encourage tourist inflow.
NABH Nirman, UDAN – Ude Desh ka Aam Nagrik, and Vision 2040 are some of the initiatives undertaken by the Ministry of Civil Aviation to enhance air connectivity, which would bring hotel guests even to the most remote corners of the country.
The Ministry of Railways is focused on developing railway infrastructure to ease domestic travel. Domestic travelers constitute the largest share of guest in the hotel industry.

Competition analysis:
The hotel industry is highly fragmented. It is dominated by several small and unorganized players. It has observed a shift in favor of the mid-market and budget hotel segments. Hotel aggregators’ development in the budget segment has led the massive and unorganized hotel industry towards consolidation.

Companies covered:
• Bharat Hotels Limited
• Hotel Leelaventure Limited
• ITC Hotels Limited
• Lemon Tree Hotels Limited
• The Indian Hotels Company Limited
• Sarovar Hotels Private Limited
• The Park Hotels
• Hyatt Hotels and Resorts
• Marriott Hotels India Private Limited
• Radisson Hotels Asia Private Company

The post Hotel Industry in India 2020 first appeared on CRI Report.

Market insights:
The hotel industry in India is expected to reach a value of INR 1,210.87 Bn by the end of 2023, expanding at a compound annual growth rate (CAGR) of ~13% during the 2018-2023 period, owing to the high arrival rate of foreign tourists and business delegates. In 2018, the major hotel brands operating in India were Marriott International, The Indian Hotels Company Limited (including brand Ginger), Radisson Hotel Group, ITC Hotels, Accor Hotels, Hyatt Hotels, Sarovar Hotels, Intercontinental Hotels Group, Lemon Tree Hotels, and Oberoi Hotels & Resorts. The occupancy rate (percentage of days for which rooms are booked in a given period) of the major hotels in India increased at a rate of ~65% between FY 2017 and FY 2018, due to increased demand from business and leisure travelers, and a slowdown in the addition of new hotel rooms across the country.

Market segment insights:
Kerala is anticipated to be the leading provider of hospitality services in the country, with a total of 440 approved hotels. Maharashtra, Gujarat, Rajasthan, and Tamil Nadu are the other states that make up the list of top five states with regard to hospitality services.
In terms of revenue sources for hotels, rooms have so far had the largest share. In FY 2017, on an average, ~53.6% of the total revenue of Indian hotels came from rooms, followed by food and beverages, and banquet services. Demand for hotel rooms is high across the country, owing to increased business-related and leisure travel.

Market trends:
o Hotel owners are adopting the latest marketing practices through social media, which prove to be effective in generating exposure and higher volume of bookings.
o Hotel booking apps are being used increasingly by consumers since they are easy to handle and provide users with the most suitable options based on their requirements.

Key growth drivers of the market:
o During CY 2017, the total number of foreign tourist arrivals in India stood at 10.04 Mn and reached 6.75 Mn in January-August 2018, registering a YoY growth rate of 7.5%. An increase in the number of foreign tourists and international corporate travellers looking for business opportunities in the country is driving the growth of the hotel industry in India.
o The Indian government has allowed 100% foreign direct investment (FDI) in tourism construction projects, development of hotels, resorts, and recreational facilities. This will act as a driving force for the development of new hotels across the country.

Key deterrents to the growth of the market:
The implementation of the goods and services tax (GST) has helped customers of the hospitality industry with reduced expenditure, by harmonizing taxes and reducing business transaction costs. This however, has turned out to be a disadvantage for hotel owners since the final cost that end users bear has decreased, thus reducing their profit margins.

Companies covered:

o Bharat Hotels Limited (The Lalit)
o Hyatt Hotels and Resorts
o ITC Hotels
o Lemon Tree Hotels Limited
o Marriott Hotels India Private Limited
o Mayfair Hotels and Resorts Limited
o The Indian Hotels Company Limited
o The Leela
o The Oberoi Group
o The Park Hotels

The post Hotel Industry in India (2018-2023) first appeared on CRI Report.