India’s hotel sector achieved a nationwide occupancy of 67.5%

In 2023-2024, India’s branded hotel sector reached a decade-high nationwide occupancy rate of 67.5%, with an average daily rate of Rs 8,055. Mumbai led the occupancy rates surge at 79%, closely followed by New Delhi at 78.7% and Hyderabad at 75.1%.

The Indian hospitality industry saw remarkable growth in the 2023/24 fiscal year, achieving record highs. As per the 27th edition of the Indian Hospitality Trends & Opportunities Report by Hotelivate, the nationwide hotel occupancy hit 67.5%, the highest in a decade, with the Average Daily Rate (ADR) reaching Rs8,055, an all-time peak. The resulting revenue per available room (RevPAR ) was Rs 5,439 (just short of the 2007/08 lifetime high). However, in US Dollar terms, the ADR stood at US$ 97, significantly below the US$ 199 achieved in 2007/08, due to the rupee’s depreciation.

The branded hotel sector in India, according to the report, now has over 180,000 rooms. Upscale-to-Luxury hotels account for 39% of the supply, Mid-to-Upper Midscale make up 45%, and 16% are Budget & Economy. Over the last five years, the compound annual growth rate (CAGR) for available room nights was 6.6%, while occupied room nights grew by 7.2%. This resulted in a strong RevPAR CAGR of 7.8%, reflecting a healthy market.

Mumbai led the surge in occupancy rates with 79%, followed closely by New Delhi at 78.7% and Hyderabad at 75.1%. For the second consecutive year, Hyderabad saw one of the highest RevPAR growth rates in the country, driven by a 26.2% increase in average rates.

The report highlights that five-star deluxe hotels excelled with an outstanding 147.4% increase in RevPAR over a 24-month period, the highest among all categories. Five-star hotels saw strong growth as well, with a 131% rise, while four-star hotels experienced a significant 99.3% increase.

Despite this success, certain trends call for caution. The report noted that major leisure destinations like Goa and Udaipur did not see the expected surge in international tourists, remaining below 2019 levels. Factors like the Indian government’s weak global marketing efforts and affordable airfares to international destinations like Thailand, Sri Lanka, and the UAE led domestic travelers to choose overseas holidays. Leisure hotels in India, having pushed ADRs too high, also experienced softened demand.

Business travel remained robust, but a shift away from RFP-negotiated corporate rates posed challenges. While it allowed hotels to charge more, business travelers increasingly sought competitive rates in the open market, creating a double-edged sword for hotels.

As the 2024-25 fiscal year progresses, the industry shows overall growth, but signs of a slowdown are evident in some markets. Despite this, the winter season is expected to boost performance, keeping the industry strong. While the sector is still “HOT,” closely monitoring demand trends is critical to sustaining its momentum, the report added.
(Hotelivate is a comprehensive hospitality consulting firm offering specialised services to clients across Asia Pacific and the Middle East.)