Consultancy Hotelivate analyzes development and performance
data, and sends a bit of a warning about expansion.
With more than 30,000 hotel rooms signed across 128 Indian
cities during the 2023/2024 fiscal year, Mumbai-based consultancy Hotelivate has
published some insightful data analyzing signing and openings – all fueled by a
strong recovery over the past 24 months that is increasing developer interest
across all sectors.
Hotelivate stated the supply increase in India is supported
by infrastructure development, improved connectivity, a manufacturing push, and
the broader positive outlook for the Indian economy. However, it added that
caution is warranted.
Over the past decade, hotel supply has grown at a 5.6% CAGR, compared to the last year which had a growth of 7.5%. Is India expanding too rapidly?
Hotelivate
Over the past decade (2013/14 to 2022/23), hotel supply has
grown at a 5.6% CAGR, compared to the last year (2023/24) which had a growth of
7.5%. This rapid expansion could lead to supply pressure in a few overheated
markets.
India finding its niche in Asia Pacific
Tier 3 cities lead growth. Fueled by new market
opportunities, Tier 3 cities captured the most significant share of signings,
exceeding 14,000 rooms. Land scarcity and prohibitive land prices limited
signings in Tier 1 cities, which saw only about 6,000 rooms signed. That being
said, there are a lot more Tier 3 destinations compared to Tier 1 destinations.
Leisure focus continues. Leisure destinations remained a
priority with nearly 16,000 rooms signed compared to 14,000 in urban locations.
Balanced operator mix. Signings were nearly equally divided
between Indian-origin and international hotel operators.
Positioning mix. Midmarket hotels comprised the largest
segment (28%), followed by upscale (24%). Notably, upper upscale/luxury hotels
represented 20% of the rooms signed across the country.
Regional distribution. North India led in signings (43%),
followed by West (28%), South (17%), and East (12%).
Quarterly trends. Q4 2023/24 witnessed the highest activity
with over 10,000 keys signed, while Q3 saw the least (under 4,000 keys) due to
the festive period.
Midmarket hotels comprised the largest segment (28%), followed by upscale (24%). Notably, upper upscale/luxury hotels represented 20% of the rooms signed across the country.
Hotelivate
Top states, cities by rooms signed. Maharashtra, Karnataka,
Uttar Pradesh, Gujarat, and Himachal Pradesh (each with over 2,000 keys) were
the top five states by signed rooms. Bengaluru, Jaipur, Goa, Navi Mumbai, and
Mumbai (each with at least a 1,000 keys) were the top five cities.
Analyzing openings, conversions
About 190 hotels opened with over 12,000 keys in 113 cities
during 2023/24. Here are the key takeaways:
Tier 2 & 3 cities lead growth. Tier 2 and 3 cities saw
significant growth in inventory, with around 4,500 and 4,200 keys opening in
each category respectively. Around 3,300 rooms opened in Tier 1 cities, led by
Mumbai followed by Bengaluru.
Midmarket and upper midmarket dominate. Midmarket and upper midmarket hotels
had the highest number of openings (29% each), followed by budget (18%) and
upscale hotels (17%). Interestingly, upper upscale/luxury represented a small
share (~7%) of the openings in the country.
Quarterly trends. Both Q2 and Q4 of 2023/24 saw the opening
of about 4,000 keys.
Domestic operators take lead. Indian operators had more
hotels opening (around 8,000 keys) than international operators (~4,000 rooms).
Regional distribution mirrors signings. North India led in
openings (37%), followed by West (33%), South (20%), and East (10%), in line
with signing trends.
Urban v. leisure split. Urban locations saw 7,000 keys open
compared to 5,000 keys in leisure locations.
Top performing states, cities. Maharashtra, Rajasthan,
Karnataka, Uttar Pradesh, and Gujarat (each with nearly 1,000 keys) were the
top five states by opened rooms. Mumbai, Bengaluru, Goa, Jaipur (each with at
least 700 rooms), and Amritsar were the top five cities.