Skift India Report: Strong Hotel Growth to Now Return to Normal


Taj hotels

Skift Take

While the Hotelviate report does highlight the surge witnessed in India's organized hotel sector, it also approaches the future with cautious optimism. It serves as a reminder that the exceptional developments witnessed in 2022-23 were unprecedented.

The Skift India Newsletter is your go-to platform for all news related to travel, tourism, airlines, and hospitality in India.

Editor’s Note: We will not be publishing our newsletter on Tuesday, in observance of Gandhi Jayanti on October 2.

Hotels in India may not see the huge jumps in occupancy and average daily rates as they did in 2022-23. However, there will be a steady absorption of supply, coupled with sustained growth in demand, according to hospitality consulting firm Hotelviate’s 2023 Indian Hospitality Trends & Opportunities report.

In 2023-24, nationwide occupancy in the branded and organised hotel sector in India is expected to range between 68-70% with the nationwide rates likely crossing INR 7,500 ($90), according to the report.

With slight supply pressure during 2024-25, Hotelviate expects occupancy to decline slightly and the average rates to remain relatively stable.

In 2022-23, the branded and organised hotel sector in India registered an average daily rate of Rs 6,869 (the highest in 10 years) and a consequent revenue per available room of Rs 4,537 (again, the highest in a decade). The report noted that these hotels closed with a nationwide occupancy of 66% (the second highest in a decade, short by just 0.1%).

The G20 Push: According to the report, the recently-concluded G20 summit had a strong and meaningful impact on revenue for hotels not just in Delhi NCR, but across several cities in India.

Elections and IPL: However, as India goes to elections in the first quarter of 2024-25, there may be a softening of travel and consequent room-night demand for a couple of months that build up to the actual event.

  • The timing of the elections may also push the Indian cricket league IPL out of the country. This might lead to hotels losing the IPL business which has become a reliable demand generator during April and May.
  • Moreover, if the elections get scheduled earlier than the planned April-May period, that could eat into the peak winter months. These factors do create a certain level of uncertainty coming in towards the end of 2023-24 and the beginning of 2024-25.

Correction of average daily rates: The report notes that the pandemic nullified many local and corporate contracts, leading to corporate room nights paying retail rates. This led to increased average daily rates in commercial hotel markets. According to the report, average daily rates could potentially correct as negotiated rates return. Meanwhile, leisure and discretionary travel growth will likely support higher rates. The report notes it would be fair to expect this growth to be more linear and paced.

Noida Airport Gets IATA Airport Code

Delhi’s newest airport, the Noida International Airport, that is slated to start its first phase of services by the end of next year unveiled its IATA (International Air Transport Association) airport code on Wednesday. The code for the airport will be DXN.

What is an IATA airport code? Also referred to as an IATA location identifier, the IATA airport code is a three-letter geocode used to designate airports and metropolitan areas globally.

The Code Explained: DXN symbolises Delhi (D) Noida (N) and X meaning connectivity, establishing the airport’s presence in the National Capital Region (NCR), CEO of Noida Airport Christoph Schnellmann said.

Schnellmann also said that the airport is committed to the launching date for the commencement of services.

The airport officials also said that it would have 28 aircraft stands when it opens its gates to the public in 2024.

The airport is likely to cater to 12 million passengers per year in its first phase, which is estimated to grow up to 70 million per year by phase 4.

How India Buys Travel Insurance

Married couples with kids emerged as the highest travel insurance purchasing class, followed by married couples with no kids and then singles, according to findings of ICICI Lombard General Insurance’s recent consumer study on international travel behaviors of Indians.

The findings suggest that 76% travelers purchased travel insurance for their most recent trip while the intent to insure the next trip reached a whopping 92%.

Rise in Travel Insurance purchase: ICICI Lombard noted that with an exponential rise in international travel, there is a corresponding rise in the need for travel insurance.

The findings suggest that 3 out of 4 respondents purchased travel Insurance for their latest international trip.

Why buy insurance? The biggest motivator for people to purchase travel insurance include, safety and financial protection. Coverage and claim limits and the travel destination feature are other factors motivating people to purchase travel insurance.

Air India, Singapore Airlines Address Competition Concerns

In response to competition concerns arising from the proposed Vistara merger, Air India and Singapore Airlines have committed to maintaining minimum capacity levels on various domestic and international routes, including popular routes like Delhi-Sydney and Delhi-Paris.

This commitment comes after the Competition Commission of India (CCI) approved the merger on September 1, which also involves Singapore Airlines acquiring a 25.1% stake in Air India.

To address CCI’s concerns, Air India has voluntarily pledged to uphold a “minimum capacity/supply level” on specific overlapping routes, both domestically and internationally.

Domestic Routes: Bhubaneshwar-Delhi, Bengaluru-Guwahati, Cochin-Delhi, Delhi-Thiruvananthapuram, Amritsar-Delhi, Bhubaneshwar-Mumbai and Bengaluru-Delhi.

International Routes: Delhi-Sydney, Delhi-Melbourne, Delhi-Paris and Delhi-Frankfurt.

Both Air India and Vistara operate flights on these domestic and international routes.

Further, Air India and Singapore Airlines will maintain minimum capacity/ supply level between India and Singapore — Delhi-Singapore, Mumbai-Singapore, Tiruchirappalli-Singapore and Chennai-Singapore.

This merger, once finalized, will mark a significant consolidation in India’s rapidly growing aviation industry, potentially reshaping the competitive landscape.

Spiritual Travel Catches Up in India

The spiritual travel category is witnessing a steady growth in India, fuelled by the desire to pursue self-discovery among millennials and Genz, according to a report published by Oyo on the occasion of World Tourism Day.

Top spiritual destinations as per data analyzed for the first half of the year:

  • Varanasi
  • Tirupati
  • Puri
  • Amritsar
  • Haridwar

Maximum growth clocked by:

  • Puri
  • Haridwar
  • Amritsar

Destinations witnessing an uptick in demand:

  • Shirdi
  • Deoghar
  • Mathura
  • Vrindavan
  • Madurai

Top cultural and heritage destinations:

  • Jaipur
  • Agra
  • Mysore
  • Udaipur
  • Jodhpur

Interesting Take: Rajasthan alone contributes to 76% of the top bookings in this category, with Jaipur observing over 60% of the total bookings.

In terms of heritage destinations, Thekkady, situated near Periyar National Park in Kerala has witnessed a 103% increase in bookings compared to the same period last year, followed by Mysore at 42%.

Taj Hotels’ Further Expansion Into East India

Indian Hotels Company (IHCL) in partnership with the Ambuja Neotia Group has announced the opening of a 69-key Taj Guras Kutir Resort & Spa in the capital of Sikkim — Gangtok.

The Taj announcement comes two years after the hotel chain debuted its first property in the state with the 50-room Vivanta Sikkim in Pakyong.

Northeast India Expansion: With the addition of this hotel, IHCL will have 11 hotels with three under development in Northeast India. This includes three hotels across Taj, Vivanta and Ginger brands in Sikkim.

“The launch of Taj Guras Kutir Resort & Spa in Gangtok demonstrates IHCL’s commitment to the commercial and tourism potential of the region. After Pakyong, the presence in Gangtok, strengthens our footprint in Sikkim, and offers a new travel circuit,” said Puneet Chhatwal, managing director and CEO of IHCL.

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