What's Driving Growth for India's Hotel Industry? – India Report

01.08.2024 - 03:50 / skift.com / Sébastien Bazin / Bulbul Dhawan

The hotel industry in India is estimated to reach around $247 billion in 2024, and projected to hit $475 billion by 2029, according to market research firm Mordor Intelligence. That’s an annual growth rate of nearly 14%. 

Now, a new report from the India Brand Equity Foundation (IBEF) highlights the factors that will drive this growth: 

The Gaps in the Indian Hotel Industry: According to real estate company JLL, the Indian hospitality industry witnessed investments to the tune of $401 million in 2023. This figure was nearly four times the transaction volume in 2022. In 2023, 22 hotel transactions took place: the largest number of assets traded in the 10 years. 

Apart from this, the number of hotel signings have also increased significantly over a span of two years, JLL data shows. Between January and March 2022, about 3,750 keys across branded hotels were signed, and branded hotels having just over 2,300 keys were opened. 

However, between October and December 2023, the number of signed branded keys increased to about 8,750, while the number of keys opened across branded hotels stood at close to 4,200. 

Despite this, India is currently underpenetrated by the branded hotel brands. India’s domestic aviation market is now the third-largest in the world. In the 2023-24 fiscal, about 154 million domestic passengers traveled in India, according to credit ratings agency ICRA. This indicates a surge in domestic travel that needs to be catered to by the Indian hotel industry. While the hotel chains are expanding their presence, especially in smaller cities, it is not in line with the demand.

During his visit to India earlier this year, Accor CEO Sebastien Bazin said that India currently has less than 200,000 branded hotel rooms as compared to 3 million unbranded keys for a population roughly the same as China’s. The top five hotel operators in India collectively have less than 1,000 hotels, while this figure in China is 25,000.

“There is a demand and there is the emerging middle class that needs affordable accommodation and wants to discover the country,” he had said.

The Indian health ministry has launched a dedicated portal for international patients coming to India to seek medical treatment. The portal, named Heal in India, provides medical tourists with information about the types of treatments, hospitals, and doctors available in India, along with the relevant travel information. India has extended the e-medical visa facility to 165 nations, according to the portal. 

The country is attempting to increase its medical tourism. The segment has seen a steady growth in visitors over the past few years, from 183,000 medical tourists in 2020 to 475,000 in 2022. The tourism ministry also projected that between