Executive Summary

The year 2023 marked a crucial turning point for the global travel and tourism industry, as it continued its recovery while navigating challenges. Amid extreme climate changes, escalating geopolitical tensions, growing economic headwinds, and rising travel costs, the global travel industry shifted gears making vigorous strides towards pre-pandemic levels, as more and more people traveled for business, education, and leisure activities.

In this global narrative of resurgence, India stood out not just as a participant but as a beacon of growth and optimism. Buoyed by robust economic growth, historic scientific achievements like Chandrayaan-3, and the prestigious G20 presidency, India showcased remarkable resilience and dynamism. These milestones, along with the steady rise in domestic tourism and the revival of inbound tourism catalyzed the travel and tourism sector, in turn propelling the hospitality sector to new heights in 2023.

While revenge travel gradually declined, the leisure segment experienced sustained growth, driven by evolving traveler preferences and a rising interest in unique experiential travel. Inbound tourism displayed promising signs of recovery, with 9.2 million foreign tourist arrivals during the calendar year 2023, marking a remarkable 49% year-on-year growth and just over 15% short of all-time-highs last experienced in 2019. After nearly three years of restricted cross-border travel, outbound tourism from the country witnessed a strong comeback, mirroring a trend akin to the pent-up demand that fueled domestic tourism in the last two years. Consequently, over 27 million Indian nationals traveled overseas during the year, registering a 26% growth compared to 2022 and 1.3% compared to 2019. The strong revival of weddings, MICE and corporate travel segments, coupled with high-profile events like the G20 meetings and the ICC Men’s Cricket World Cup played a pivotal role in revitalizing the fortunes of the sector during the year.
 
The performance of the Indian hotel sector in 2023 mirrored this optimism, with key performance indicators such as occupancy rate, average rate (ARR), and Revenue Per Available Room (RevPAR) witnessing significant growth. The sector closed the calendar year 2023 with a nationwide occupancy rate in the range of 63-65%, up 3-5 percentage points (pp) from the previous year and nearly reaching the pre-pandemic level of 65-67% in 2019. The ARR for 2023 reached an impressive INR 7,400-7,600, which surpassed the figures from 2022 by 21-23% and 2019 by 24-26%, highlighting the sector’s ability to push rates driven by the buoyant demand. The growth in average rates helped RevPAR to reach INR 4,662-4,940 in 2023, indicating a significant increase of 29-31% from 2022 and 19-21% in 2019.

Destinations across the spectrum, from bustling metros like Mumbai and Delhi to popular leisure destinations like Goa and Jaipur, and serene, lesser-explored locations such as Rishikesh and Kashmir emerged as stalwarts of this growth, each telling its unique story of recovery and opportunity.

The year also marked a record number of brand signings, underlining the sector’s confidence in the Indian market’s potential. This growth was not just quantitative but strategic, with a keen focus on expanding into smaller cities and underserved markets. These developments reflect a sector that is not just recovering but reimagining its future.

Looking ahead to 2024, the outlook for India’s hospitality sector is imbued with a sense of optimistic realism. HVS anticipates continued growth, driven by sustained domestic demand, the return of international travel to its full glory, and the growth of niche tourism segments coupled with the gigantic growth taking place in travel infrastructure across the country. With a landscape as dynamic and diverse as India’s, the potential for innovation, expansion, and sustainable development in the travel and tourism sector is boundless.

We expect India-wide occupancy to improve to 66-67% in 2024, coupled with a 6-8% increase in ARR will push RevPAR to INR 5,281 during the year, almost 31-33% higher than the pre-pandemic RevPAR recorded in 2019.

We hope you find this report insightful and look forward to your feedback as we continue to navigate the evolving landscape of Indian hospitality together.