Growth of Hotel Industry in India

GrowthOf HHOOTTEL IINNDDUSTTRRY InIndia T hehospitalityindustryisadevelopingandfast-growingmarketinIndia,andithasapowerfulpositiveeffectonthecountry’seconomy andthetourismlevels.Famousforitsdiversityofculture,heritageandnaturallandscape,IndiadrawsmillionsofIndianandforeigntravellersyearinyearout,leavinghotelsasaveryimportantpartofhospitalityservices.TheIndianhospitalityindustryhasalwaysbeenablendofindigenouswaysoflivingandadvancedbookings,withaccommodationfromgrandpalacesandworld-classhotelstobudgetinns,boutiquehotels,Yogashrams,andhomestays. ThehotelindustryinIndiahasgrownphenomenallyintherecentyears,primarilydrivenbyaneconomic,social,andtechnologicalfactorsmix.Thehotelindustryinacountryplaysagreatroleinboostingtourism,promotingeconomicdevelopment,andgeneratingemployment.ThiscasestudyaimstoexplorethetrajectoryofthehotelindustryinIndia,analysingitsevolution,status,challenges,andprospects. 1 HISTORYOFINDIA’SHOTELINDUSTRY DuringtheMughalera,fortsandtheirsurroundingsservedasaccommodationsfortravellersinexchangefortalesoftheiradventuresornewsfromdistanttownsandvillages.Restinghousesknownassaraisanddharamshalaswerebuiltalonghighwaysbyancientandmedievalrulerstosupportpoliticalandpilgrimagemovements. ThehistoryofIndia’shotelindustryspansbacktothe18thcentury,withnotabledevelopmentsoccurringduringtheBritishrule.TheBritishinfluencedthemoderncateringindustryinIndia,introducingEuropean-stylehotelsandrestaurants. Originally,hotelswereestablishedtoaccommodatethelodgingrequirementsofBritishofficialsandtheincreasingnumberoftravellers.ManyearlyhotelsweremanagedbyEuropeanfamilies,suchastheBombayHotel(1799).Oneoftheearliesthotels,TheParkHotelinBengal,wasfoundedin1803byCaptainSmith.In1840,PallonjeePestonjeelaunchedthefirstWestern-stylehotel,theBritishHotel,inBombay.AnothersignificantestablishmentwasTheGreatEasternHotelinCalcutta,knownas‘theJeweloftheEast,’establishedin1840. AnimportantfigureinthisevolutionistheTajHotelsResortsandPalaces,establishedin1903byJamshedjiTata,thefounderofTataGroup.TheTajMahalPalaceHotelinMumbai,theflagshippropertyofTajHotels,emergedasthecountry’sfirstharbourlandmark. In1966,theIndiaTourismDevelopmentCorporation(ITDC)wasfoundedtoprovidecomprehensivetourismservices,involvingaccommodation,catering,entertainment,shopping,hotelconsultancy,duty-freeshops,andtravelagencyservices.ITDClatermergedwithJanpathHotelIndiaLtd.tobroadenitsserviceofferings. RECENTTRENDSININDIA’SHOTELINDUSTRY Growingmarketsize ThemarketsizeofthehospitalityindustryinIndiaisprojectedtobeapproximatelyUS$ 24.61billionin2024andisanticipatedtoreachUS$31.01billionby2029.Theprojectedgrowthisanticipatedtooccuratacompoundannualgrowthrate(CAGR)of4.73%throughouttheforecastperiodof2024-29. 2 Source:MordorIntelligence Travelindustrywasoneofthemostaffectedindustriesduring2020-21duetopandemicinducedrestrictions.Keyperformanceindicatorssuchasrevenueperavailableroom(RevPAR),occupancyrate,andaveragedailyrate(ADR)declinedfrom2019to2021.Theindustrybouncedbackin2022withADRandRevPARsurpassingpre-pandemiclevelsandoccupancyratesshowingsubstantialimprovement.Thepositivetrendcontinuesinto2023,withfurthergrowthinADR,RevPAR,andoccupancyrates,indicatingaresilientreboundofthehospitalitysector. Source:STR Note:ADR-RevPAR-RevenueperAvailableRoom,AverageDailyRate 3 Source:STR Growingaveragerevenueperuser Source:STR 4 Theaveragerevenueperuser(ARPU)inthehospitalityindustry,asdepictedfrom2017toprojectedfiguresin2028,showsaconsistentupwardstrajectory.StartingatUS$163.6in2017,ARPUremainedstableoverthenextfewyears,beforeexperiencingincrementalgrowth.Theyear2023witnessedanotableincreasetoUS$166.5,followedbyfurtheranticipatedgrowthintheforecastyears.By 2028,ARPUisexpectedtoreachUS$174.1,indicatingasteadyriseinrevenuegenerationperuseroverthespanofadecade.Severalfactorscanbeattributedtothisgrowthtrajectory,particularlydrivenbyeconomicexpansion,risingpercapitaincomeandthegrowingmiddleclass,whichcollectivelyfuelincreasedspendingonleisureandhospitalityservices. Increasingonlinepenetration Source:Statista Distributionchannelsbetweenthehospitalityindustryhaveundergoneaprofoundchangeintherecenttimes.In2017offlinechannelsprovedtobemoresuccessfulscoring58%marketsharethatonlinesourceswith42%oftheonlinemarket.Conversely,thecontinuousmoveofonlinesaleschannelstothecentrestageisafact,asthesewaysofsellingaregraduallytakingover.Inthatyear,onlinesaleswereaboveofflinechannelpeakforthefirsttimemeaningahugeshiftintothedigitalworldofretail.Thisdevelopmentwillnotcease,andwithonlinechannelsbeingprojectedatgreaternumbersregisteringahighermarket 5 shareof61%by2028.Thisshiftpointstotheemergingtrendofcustomerswhonowlookforconvenience,bookingsononlineportalsplustheyareadoptingdigitaltechnologiesatmuchhigherrate.Alongthelinesofhoteliersandbusiness-relatedtohospitalityoperatingtheironlinepresencetothetopmostwhileemployingdifferentdigitalmarketingstrategiestomakethe mostofthegrowingimportanceofanonlinesaleschannelinthetoughercompetitivesituation,themagnitudeofrevenueofaggregatorsisjustparalleltothehighdepende